As my assistant moves forward in his quest to buy his first owner-occupied triplex from a bank, it’s amazing to watch how his real estate agent, who is supposed to be representing him, is actually operating. You guessed it, he’s pretty much just working for himself.
Since I’m technically still an agent, I can say things like this. Sometimes real estate agents are less focused on strategy, so it’s really up to the experienced investor to drive the purchase process.
This is a classic case of the agent not knowing how to structure the offer in the best light to get the deal accepted by the bank.
Make the Deal About Them
Most of us think that the real estate deals we’re trying to get are all about us, but this is false. It’s really all about the seller.
It reminds me of when my buddy Steve meets with bankers on a regular basis and is always asking them what type of loans they are really looking for and what their parameters are. Then, he goes and makes it happen for them, and believe me, he’s been very successful. He never goes to the bank asking them for a loan; he actually does the complete opposite.
Well, it’s the same idea when writing a real estate deal. You want to connect with the seller on as many positive notes as possible.
Put Your Best Foot Forward
In order to do this, you have to know what type of seller you’re dealing with and how to best meet their needs. Are they just a regular seller looking to sell retail? Or are they a motivated seller, as in the case of an estate, FSBO property, an expired listing, or a handyman special that needs to close quickly? Or maybe like my assistant, you’re trying to buy directly from the bank.
In any case, you need to know how to structure your deal in the best light in order to get your offer accepted. Here are some examples:
- Use your deposit to your advantage. Sometimes I’ve even given a full price deposit when I was making a cash offer to show how serious I really was. Needless to say, I got a great deal. Another strategy is to pay an additional deposit after all of the inspections are done. Always use proof of funds and preapprovals if possible.
- Try to settle as quickly as possible. This can save the seller time and money.
- Know when inspections make sense and more importantly, when they don’t. If I’m buying from a retail seller, I’ll often use inspections, but if I’m buying from a bank, I try to use as few contingencies as possible. Buy “as is” if you can.
- Focus on what matters. Try not to create extra issues. I personally try to meet the seller on as many points as possible so as to have very little to negotiate over. I’d rather just negotiate price if possible.
- Remember that sometimes terms are more important than money. It’s not always what you’re paying but how you’re paying it that matters. Also, remember that people buy people, and it often pays to build rapport with the seller.
- Make your first offer your best. Sometimes it pays to do this, especially if there’s competition creeping around.
- Let time work in your favor. Sometimes it’s smart to be slow in your response to counteroffers. It gives the seller a fear of loss, and oftentimes they come around to your way of thinking.
- Don’t be an emotional buyer, especially when buying owner-occupied. I remember keeping my wife as far away as possible from the seller on our last primary residence purchase because she was totally nuts about the house.
By using some of these strategies, you can make a lower, weak offer look as strong as possible through better terms. Keep in mind which strategy to use and when it really depends on the seller’s situation and needs.
When coaching my assistant on buying from the bank, I encouraged him to beef up his deposit, try to close before year’s end, and inspect the property now before submitting his offer — and by all means submit a pre-approval and/or proof of funds. Hopefully he’ll get this one.
What tips would you add to this list that have helped you get offers accepted?
Let me know with a comment!