I just wanted to drop a line out to share a few tips about how Cindy and I are currently getting deals. Right now, business is going stronger than ever. We had a lot of fun conducting our workshops, and frankly our wholesale and retail business is gangbusters and going to keep us out of the instructional business for at least months to come.
…but I didn’t want to disappear off the radar screen, and I truly want to offer some updates about what’s working for us. I thought you might find it refreshing to get some tips that work in this market from someone who has absolutely zero, nada, zip to sell…(no gimmicks, either)…we literally have no courses, no workshops, etcetera, etcetera, etcera. (except wholesale real estate deals of course : )
So….how are we currently turning 5-7 props per month? Just like most true answers, it is not rocket science or anything fancy. It’s simply about making strong offers, catching the stuff that falls through the cracks, and a lot of follow up and “stick-to-itness”. Let’s talk about how to make a strong offer, and when I get a chance the next post we’ll talk about catching the “shake”.
*** The Anatomy Of A Offer ***
There are 5 factors that make up an offer:
Price
Terms
Closing Length
Inspection Period
Earnest Depost
Now, usually price is going to be the weakest part of your offer…so the strategy then is to compensate as much as possible for low price…so simply make the other elements of your offer as strong as possible.
Terms – Terms are the conditions of your agreement that don’t have to involve price…things such as “as is”, “all cash”, “buyer to pay for closing costs”….it’s pretty simple, the stronger the language that assures the seller that the deal will close, the better…if the seller knows you aren’t going to ask for 800 things to be fixed, repair credits, and that you are a strong buyer, they will often take your offer over much higher but weaker term offers.
Closing Length – The shorter you can go to close, the less chance that something will go wrong. A short escrow is usually anything under 30 days. If you are using hard money, you can really use that to your advantage because you can close much, much faster than those using a bank loan.
Inspection/Contingency Period – This is essentially your “weasel” period. You can pretty much back out during this period and still get your entire deposit back. After this period, your deposit goes “bye-bye”. The shorter the period the seller has to wait to be assured that you have “skin” in the deal, the stronger the offer. In California, 17 days is hardwired into the contract (don’t EVER make the rookie mistake of writing “Subject To Inspection”…you needlessly make your offer look weaker). Anything less than that is very strong. If we know we can’t go wrong (you’ve got to be really, really sure), we’ve even gone with NO inspection period on rare occasions. 10 days will make your offer strong, but if you get an acceptance, you better BOOGIE and get your property checked out to your satisfaction.
Earnest Deposit – This is the “good faith” deposit that is due within a few days from the time your offer gets accepted. The larger you can go, the better. If you are a cash buyer, don’t screw around with $1,000 deposit when you can go $10,000, $15,000, or more! It makes your offer VERY strong, and it is refundable in full if you back out within your inspection period!
I hope this breakdown of what makes a strong offer helps you beat out the competition. Most of the offer makers out there are not experienced, and with some good old fashioned fortification, you will see a much higher hit rate on your offers. More to come.
Be Happy and Prosper,
Kurtis
P.S. Here’s a picture of my arm to demonstrate.
http://www.PortfolioSelect.com
Tags: Getting Deals, Southern California Real Estate, Writing Offers
