When you find a property you really want you need to go the extra mile to get it. It can be very demoralizing tracking a property for months only to have it end up with someone else. In most cases buyers who know how to negotiate best end up with more deals. Successful negotiation doesn’t mean overbidding on a property or making unrealistic demands. It means knowing what the seller wants and tailoring your offer to give it to them. Just a few subtle tweaks or changes in your presentation can make all the difference to the seller. Here are five ways to get your offer accepted on properties you really want.
- Organize Financing. Aside from the price the most important part of any offer is the financing. Regardless if you plan on using lender financing or cash you need to have your purchase funds organized. If you plan on using lender financing you should have your pre-qualification letter updated. In addition to the date the dollar amount must match the purchase price. While a pre-qualification is nice a pre-approval is much stronger. There are lenders that offer the ability to actually underwrite your loan with everything except for the actual property. Not only does this make your offer stronger but it cuts a few valuable weeks in the loan process. Instead of closing in 45 days you have the ability to close in 30 days or even less. If you are using either personal cash or from hard money your proof of funds letter needs to be updated. A printout from a few weeks ago offers the seller no confidence that the funds are still available. The more updated your financial documents are the stronger your offer will be.
- Solid First Offer. One of the keys to successful negotiation is knowing where you stand. In every purchase someone has the upper hand. If you are in a sellers’ market with plenty of buyer demand your first offer has to be a strong one. There are times and properties where you can make lowball offers and wait for a counter. In sellers markets a low offer may not even be met with a counter. You don’t necessarily need to make your first offer your best one but it should be pretty close. With every offer you make you need to ask yourself if you are comfortable with the number. Would you kick yourself if you found out you lost the property over a couple of thousand dollars? There are many sellers who will only negotiate with buyers who they deem are really serious about the property. If you really want the house and feel there is upside you shouldn’t lose it because of a poor first offer. First impressions are important with sellers. One lowball offer can ruin any chance of ownership before you get too far.
- Clean. Sellers will often take the offer that allows for the path of least resistance. They don’t want to have to mess around with excessive contingencies, demands and credits. It is important to walk the fine line between protection while still making your offer attractive. There are a few contingencies that are standard with every offer. Chief among them is the inspection. Unless you plan on knocking the house down you need to have an inspection. You truly never know what the foundation, attic or basement has in store at first glance. Buying a house without the inspection is just asking for trouble. The next important contingency is with the financing. The quicker you can close the better. As we mentioned trimming the financing down just a few weeks can swing the offer in your favor. It is also important that you don’t nickel and dime yourself out of the deal by asking for minor credits. Asking a seller either leave or remove an item is often a deal breaker.
- Cash. It is important that you size up the property before you make any offer. There are times when a cash offer coupled with a quick closing will get the job done. Other times you may be able to offer lender financing and see what happens. Obviously, supply and demand are key influences. Every investor should have a hard money lender at their disposal. You don’t have to use them on every deal but there are times when it is the only way to get a property. There are many sellers who are scared off at the prospect of accepting a lender financed offer. They have heard too many horror stories and don’t want to get burned. A cash offer give the seller a guarantee the deal will close and usually close in a few weeks. You should pick and choose your spots but always have access to use cash in a pinch.
- Letter. A written or typed letter included with your offer makes more sense for a primary residence but has been known to work for investors as well. The theme of the letter should have something to do with how important the property or the market is to you. Never state what you intend to do or how much you plan on making. You can mention how long you may have tracked the property and what the purchase would mean to you. Don’t’ make your letter too sugary and go overboard with how nice the property is. Sellers can spot insincerity from a mile away.
By getting just a few more offers accepted throughout the year you will see a definite bump in your business. Use these five tips to get more offers accepted.
