ARE YOU GETTING TOO MANY OFFERS ACCEPTED? By David A. Chodack On the surface, it sounds like a ridiculous question, doesn't it? How can you get too many offers accepted? The more offers you get accepted, the more properties you can buy and the more money you will make, right? Therefore, you should be happy to get all your offers accepted, right? WRONG! I'll never forget going to my first real estate convention many years ago. I quickly wound up thinking of it as a meeting of miserable millionaires, MMM for short. It seemed like every other person I ran into was a millionaire - on paper - but most of them were not very happy about it. While they were piling up riches on paper, they had no money. In fact, most of them were struggling just to support their properties and were drowning in the negative cash flow. Only a few smart investors were actually living like millionaires and most of them did not own a lot of property, because they were very selective about what they bought. Most of these smart investors, bragged about how many offers they made that did not get accepted. They were proud of the fact that their offers were lowball offers, that only truly desperate sellers would accept. They were not interested in getting a high percentage of their offers accepted, because they were not interested in dealing with the average seller. If they started getting too many offers accepted, they knew they were doing something wrong and not bargaining hard enough. They must be leaving too much on the table. They were not interested in just getting deals, they looked for great deals, outrageous deals, guaranteed to put money in their pockets, otherwise they were not interested. Most of the savvy investors often turns getting anywhere from one in ten, to one out of a hundred offers accepted, but when they did get offers accepted, they would put thousands of dollars in their pockets every time. This is the type of investor that you should strive to be. You don't have to work hard at real estate investing. You just have to work smart. Every time you write an offer, you should ask yourself, "What is in it for me? Why should I buy this property? How will I profit from it? How much profit do I need to make it worthwhile? How much profit can I reasonably expect to make? First of all, you have to look at the seller's situation. How much equity does the seller have in the property? Remember, no one can give away what they don't have. If the seller has little or no equity in the property, then they can not really offer you a good deal, even if they want to. Therefore, you may as well pass on the property and find another one. When you do find a property where the seller has some equity, don't be afraid to ask for it. Anyone can buy property at the fair market value, but that's not how you make money. You want to buy properties for 20 percent, 30 percent, even 50 percent or more below market value. You want the seller to sell you on the idea of buying the property by offering you a deal too good to resist and you have to let the seller know that we make your offer. Don't be afraid of rejection. It's all part of the game. Each rejection, brings you closer to an accepted offer on your terms. Real estate investing is a numbers game, but it's not the number of properties owned that puts money in your bank accounts. It's how you buy the property. If you're buying the right way, then your offers will be turned down more often than they are accepted and you will learn to take this as a matter of pride. At the very least, you should be getting counter-offers. If your offers are being accepted right off the bat and the sellers are not even objecting to your price and terms, then that should tell you something. You should always ask for more than you expect to get and leave the seller some room to bargain. Ask for things you don't expect to get, things you don't even care about, just so that you can give them up, in exchange for the things you really do want. One friend of mine uses a purchase agreement that is 12 pages long and full of repetitious clauses and demands that he uses as bargaining chips - and to wear the sellers down. He does not expect to get the Seller to go along with all or even most of them, but by the time they plow through the whole thing, sellers don't know whether they are coming or going. You don't have to carry it quite this far. In fact, you can keep your offers very simple. Just go to the newspaper and the multiple listings and make offers on whatever catches your fancy. Whatever the seller is asking, offer less, a lot less. Ask for terms of benefit to you. If you don't want to take on negative cash flow, then demand a positive cash flow. Make it clear to the seller, that he or she must work with you to structure the payments so that you will be able to put money in your pocket each month. If the seller is really anxious to sell, if they are the type of seller you want to deal with, then they will work with you. If they don't accept your first offer, they will come up with a counter offer that you can work with at least as a starting point for future negotiations. If they turn you down flat, then you know they're not the type of seller you want to deal with, so you just move on. Writing offers, even lots of offers, is easy. Managing properties is hard. Therefore, your goal as an investor, should be to minimize the number of properties you own and manage and maximize the profit from each property by buying right. Of course sometimes, you'll find yourself in a sellers market, where you can't really make too many demands or lowball offers. If properties are really appreciating fast enough and/or this particular property has a lot of fix up potential, sometimes it is worth the asking price. As long as you feel the sellers market will last long enough for you to turn the property over for a quick profit, it can still be a good deal. Above all, you must learn to be flexible and make offers on any property where you can see a definite profit to be made. If this means meeting the sellers price and terms, then so be it, but making a profit is not feasible at the price and terms the seller is asking, then don't be afraid to lowball it and walk away if your offer is not accepted. Real estate investing is like anything else and the more you practice the better you will get. After a while, you will start getting a higher percentage of your offers accepted, because she will learn to become more selective about making offers in the first place. You will learn to look for the type of sellers who are willing and able to give you good deals and avoid the rest. BACK TO REAL ESTATE ARTICLES PAGE CONTRACT WIZARD HOME PAGE TAX SALE RICHES HOME PAGE MORTAGE MAGIC HOME PAGE |