The real estate market is hot right now, whether that makes sense or not with the current economic climate is another story. It doesn’t take away from that fact that competition is fierce in this hot market and we need to do whatever we can to make our offers stand out.
5 Ways to Help Get Your Offer Accepted
1.) Be First and Aggressive
In a seller’s market there is no time to mess around. You need to pounce on a property the moment you realize it is worth acquiring. Whether it’s a deal you find off market or something you see on pop up on the MLS. Time is of the essence. This is why understanding your market so you can be confident in your numbers is key.
Dilly dallying over the numbers because you aren’t locked into what the home values and expenses are in the area is doing a disservice to your success. Be prepared, be informed so you can get offers out quick.
2.) Lead with your best offer
Some people might think this is crazy, but again, these are tactics to help get your offers accepted in a competitive market.
If you think about it, often we’ll make an offer below what we are willing to pay only to end up with a counteroffer that lands us right around our number. In a competitive market, that lower initial offer may not even make the cut for consideration. Why not just lead with your final number and call it a day?
If they counter, you can say no. This is my number and here are reasons X,Y and Z why. The offer should be an offer that makes sense, we’re not looking to overpay, so be sure to run your numbers right and make an offer that provides a positive return on investment.
3.) Consider Waiving Contingencies
If you are able to buy in cash then wave the financing contingency. This will give you a leg up on many offers. A cash offer doesn’t mean you need to putting up all the cash yourself, you could be using private financing or hard money, especially if you are buying it as a flip project.
In those instances I’m fine with waving my financing contingency because I know the likelihood of getting funding from the hard money lender is high. Obviously the deal needs to make sense for them too lend, but you shouldn’t be buying bad deals!
Also, the inspection contingency is another one that you can use to your advantage. For instance, one of my partner’s functions as the general contractor on our properties. When I have him go view a property, it is basically an inspection. He’ll spend a good half hour or more basically inspecting the property during the showing.
From there we have a solid idea of what needs to be repaired and/or updated. Thus, most of our offers are made without an inspection clause, which gives us a leg up. I know everyone doesn’t have a scenario like this, but wanted to give an example. It is not like I always had this situation. It was created with networking, experience and time.
If you wave your contingencies and then for some reason can’t close on the deal, your earnest money deposit may be at risk. So just be aware of that.
4.) Make more than one offer
This idea throws people for some reason, but making two offers on the same property can make a lot of sense.
Let’s say you want to buy a property that the seller is asking $200,000 on. You make one cash offer at $170,00 and then another financed offer at $185,000. Rather than the seller thinking about how your cash offer is so far below the ask price, they will likely compare it to the financed offer of $185,000 and not think as much about how both offers are below the asking price.
What someone focuses on is just as important in negotiating as anything else.
5.) Close Quicker
Cash deals are much easier to offer shorter closing timelines. Instead of a seller waiting 30-45 days for a financed deal to close, you can close in two to three weeks. It makes it enticing for the seller because they get their money quicker, and we all want that! That shorter timeline can likely be had when doing hard money or if you have private financing lined up too.
Real estate investing is not a complicated business, but there are many angles that can be taken. In the end, they are all pretty easy to understand once you learn them. So get out there and make offers to get the experience! If you need help along the way, feel free to grab my education and we’ll get on a few strategy calls to get you rolling!