How To Make Acceptable Offers To Buy Properties In Real Estate Investing

The biggest challenge facing most real estate investors is making acceptable offers.  The basic foundation of any real estate investing business is buying properties.

 You can only make money if you buy properties.

Here are a few tips on how to make sure your offers get accepted.

The offer you make depends on the type of property you are buying.
1)    Buying from motivated sellers
 It is important to have the following pieces of information if you buy houses from motivated sellers:

a)    Market Value
Do your due diligence to find out conservatively how much the house would be worth in a perfect condition.   You must have this information before you can make any offer.

b)    Mortgage balance
 You must know the mortgage balance before you can make an offer.   If a seller is not willing to provide this information, they are not motivated enough.  Move on to a motivated seller.

 The mortgage balance must be low enough to allow you to make a profit when you buy the house.  Thus means that the offer you give must allow you to own the property free and clear and still make money.

c)    Repairs needed
Based on the information given by the seller, you can estimate the repair costs even before you drive to see the house.

 You must know how much you need to fix up the house before you can make an offer. Of course I prefer to see the house myself.

d)    Asking price
 Taking into account the 3 pieces of information above, if the owner is asking for too much, you might never make it work.

A  good asking price must take into account the market value, mortgage balance and repairs.   Your offer can then be based on the asking price. If at all the mortgage balance and repairs allow you to make an offer that can leave you with a profit, by all means do it.

No offer can be too low, but you also have to take into consideration the seller's needs.   If they face foreclosure, their asking price might be to just walk away from the property, or they might need some moving cash.

If the mortgage balance is too high compared to the value of the house, it does not make sense to make an offer.  Move on to the next deal.

When all is said and done, the only bad offer is the one you have not made.   Always make all the offers that make sense to you.   You'll be surprised how many get accepted.

2)    Buying foreclosed properties
 The asking price and repairs are the only important considerations to make in this case.  Banks selling these properties are willing to negotiate.

In today's market, most REOs will be listed below market value.  Depending on your exit strategy, if the numbers are close to making sense, by all means make an offer.

Remember the banks are willing to negotiate, so always make an offer lower than the asking price.

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