You’ve found the money and the deal. Now, it’s time to make an offer on the property that you’ve had your eyes on. Deals don’t get closed without an initial offer being laid out on the table. Remember, this isn’t just about expressing interest in a property, but it's also your opportunity to showcase that you are a serious investor.
Here are the 3 steps you will need to perform to get a deal under contract:
Submit Your Letter of Intent (LOI):
The Letter of Intent (LOI) should always be sent to begin negotiations on the targeted property. It immediately lets the seller know that you’re an interested buyer with intent to close. The Letter of Intent (LOI) will be your first impression and will go a long way in establishing professionalism, even if you’re dealing with a rookie real estate agent.
Nothing fancy is needed here, just standard details in a structured format. Once all the right information is accurately recorded throughout your document, send it. Make sure to email it over to the buyers agent or the listing agent (if you’re representing yourself in the deal).
When negotiating with the seller, stick to YOUR standards. All agreements should benefit your financial goals interests. If it doesn’t make dollars, it doesn’t make sense. Once your initial offer is received, a counter-offer should be expected. Don’t lose confidence here. A counter-offer is an opportunity to inch a bit closer to your end goal as well as gain a bit of insight into what is important to the seller.
It’s important to understand that there are layers to the deal negotiation process. Understanding the seller’s end-goal will help in the negotiations that will occur once the deal is under contract. If your initial offer was tactful, the seller should counter right where you want them, every time.
Be very intentional about how you conduct your negotiations. The key is to have a goal and a standard. This helps to guide all of your decision-making. Without clear goals and standards you risk losing time and, potentially, money if you were to say ‘YES’ to a bad deal. A great investor knows when to walk away from a deal.
Protect Yourself with Contingencies:
It’s important to protect yourself in any real estate related transaction, especially, Purchase and Sale agreements. And always in writing. To do this, your primary focus should be equipping your contracts with contingencies. Contingencies allow you to back out of any deal with your full earnest money deposit.
As an investor, you won’t make money on every deal but that doesn’t mean you should be losing money by agreeing to any set of terms that are thrown your way. Real estate is business, so conduct business.
Once these steps have been properly executed, take action. A wise man once said you miss 100% of the shots you don't take, so don’t get cold feet. You have proven that you are ready to get a property under contract.
Are you interested in purchasing a property? We invite you to download our Letter of Intent (LOI) document to submit to the seller's real estate agent to make an initial offer and begin negotiations.