3 KEY FACTORS WHEN MAKING AN OFFER
(In Real Estate without an Agent)
When you do this, there are 3 key points to remember.
First off, know thyself and thy weaknesses! Are you a good ‘on the spot’ negotiator? Or do you clam up when intimidated? Are you confident in your abilities? Or are you nervous? I ask this, because, when I was making an offer on my first large land deal, I did actually make the offer via fax! It worked well because I didn’t have much experience in land and I could look things up as we negotiated via fax and emails. I didn’t actually meet face to face with anyone until we had a solid deal and it was time to deliver my deposit. Worked like a charm. In fact, one seller was shocked when he commented to me that he thought I would be taller and with glasses! As if to say short, cute and female does not equate to smart or something? In the end that land deal turned out to be an excellent investment. Had I met some people in person, the deals may have been more difficult, possibly signing something prematurely. It’s better to close a great deal, than deal with a boys club. Sometimes, I find this especially as a woman, it’s a better advantage when your opposition knows as little about you as possible. And you have to be ready for schmoozing, come ons, and flattery from fellows who are trying to get more money out of you. Sometimes, it’s more work than it’s worth to keep some guys on task, which at times is time wasting and annoying, especially when his wife is in the background giving you the stink eye. You are there for the real estate deal and nothing else. This is why I say being a woman in business has different rules. It’s far easier to be successful when you avoid these risky situations and keep focused on your goals.
You must weigh out the pros and cons when negotiating. If you know your stuff, jump in and get dirty. If not, go cautiously and learn as you go and keep practicing and keep making deals. Protect your funds, and step by step, you will get good at it. And you can’t fool people with this by faking ‘know how’. They will sense your lack of confidence, so work with what you’ve got and be honest with yourself and your abilities.
Remember you are a work in progress and perfection doesn’t exist, but you will improve with consistency. Your delivery will take much practice and the learning never really ends. On the flip side, mistakes are important for learning, as long as you’re not committing your hard earned bucks on the table, and the deposit is refundable, it is safe to go ahead. Calculate the risks thoroughly, as every deal has risk. Find the best real estate lawyer in your area, and consult with him/her about basic rules of thumb on safely making offers while protecting your money if you need to back out.
One of the things I practice on every property that I’m interested in, is pulling the title from the local municipality and see who and what is registered on it. This is public knowledge to anyone and the cost is minimal. It gives me some insight on who I’m dealing with, what they owe, when they bought, who lent them money, or if they even have a mortgage. Then I take the names and address on the title, and google is my friend. I form a description of the owner(s) and the property history. This gives me a clearer picture of what I’m working with and what approach to use when I present my offer. Making an offer and negotiating never gets old for me, especially when I’m fully aware of my seller, which may not happen when I’m working with an agent.
Here are three key factors I use consistently when I’m presenting an offer without an Agent.
1. Never offer full price for a property. A huge amateurs mistake is when you worry about offending the seller with too low of an offer. Even though each deal is unique, it’s important to allow the seller to bid you ‘up’. This will put the seller at ease when you accept! But even here, hide your excitement, no matter how good of a deal you know it is. Celebrating should be saved for later, upon closing. By closing, I mean cash in hand from your friendly neighborhood lawyer. Then you can roll up your sleeves and get to work on your next exciting project and add value through renovations, renter hunting, and all of that good stuff. As you know by now I am a huge believer in passive income. I love rental income! It gives me the life I enjoy today. And you can have it too. One deal at a time, step by step.
2. Don’t shy away from competing offers. In this case, If you believe it’s worth the price their asking, then offer full price along with asking for some other things of value to be thrown in, like appliances, window coverings, or other ‘extras’. One time I negotiated a tractor in my deal, new fencing, and some other things. Your extras will depend on what the property currently has and would add value to it. Discounts are not only in the form of cold cash, so use your imagination.
3. Your first offer should never be your last dime, or your bare minimum. Give yourself some breathing room with your money, you never really know what the seller is willing to except. I have been surprised many a time, just when they seemed so convincingly staunch! If you don’t offer lower than what you have, then you will almost always deal with a counter offer higher than you planned. Then, guess what? No deal, or stay broke. And if you keep doing this you will have no deals for a long time, and no money. Allow your sellers feel they have saved some face as well as made some money. This will always work to your benefit. Bid low enough so you can give them some leg room to feel like they want to sign on the bottom line.
No deals = no rental income + no retirement play money.
There’s no better time to begin than today. Go for it! Start NOW. Dive in with both feet and have fun investing in your empire. Real Estate Investment is an exciting business and wonderfully addictive. Let the fun begin!
Until next time, be excellent!
Your Grit Girl,