Presenting Offers – Part 2

Okay, now we are out at the house. Next step is to ask the seller if you can take a quick look around, and do just that. I don’t spend more than three minutes walking through the house, taking a look at it. Please do not make any com­ments if you see anything wrong with the house. You’re not there to downgrade the house. You’re there to either buy it or lease option it, and you don’t do that by upset­ting the seller. I’m sure that most sellers are clearly aware that their walls need painted or whatever you see, they can see as well.

Once you’ve looked around, the next step is to ask them if they have any questions. You’d be surprised what happens when you let them do the talking and you not doing the seminaring. Simply ask them if they have any questions. If they do, answer them shortly, to the point, but simply enough so that anyone can understand them.

If they don’t, then the worst thing you can do is start rambling off at the mouth and create questions by trying to deliver a real estate seminar. If they don’t have the questions, don’t answer the ques­tions. If they have the questions, answer the questions.

Before you leave, you must make sure they understand the facts even if they don’t have questions. I always want to make sure I’m clear on what my intent is. For example, if it’s obvious it’s an ACTS deal because it’s overlever­aged or because they’re asking retail price, you should have told them on the phone before you went out that your intent is to get an agreement and then find a tenant buyer they will approve. If you do that, then your conversation will be short and sweet at the house. But, don’t sign up an ACTS deal and leave them with the impres­sion that you’re going to person­ally close it and start making pay­ments. If you intend to stay in it on the sandwich lease option deal, then you must discuss when you’re going to begin making payments because in this case, you are going to agree to make them sometime in the future. I suggest that you get at least two months and prob­ably three. You should also discuss the price here. This is your op­portunity to lower the price if there is equity in the property, and in fact, if you don’t do this, you can easily be paying thousands of dollars more because you chose not to take a few more minutes and work hard at trying to drive that price down while you’re sitting in that seller’s home.

You should have asked them on the telephone if that’s the least they can take, and if you get that answer, fine, get out there and work them down when you get there. It would be a smart thing to take some comps out to prove your case es­pecially if their asking price is higher than market value. Even if their house is at market value, I would still think you would want to take them some low comps to encourage them to reduce that price. That’s the case whether you’re lease optioning it to stay in it and/or if you’re buying it with owner financing. Both of these are long term agreements, so right now is when your best negotiation efforts should be applied while you still have the seller’s ear. It’s very tough to negotiate after you’ve closed it.

In the case of the owner financing deals, I’m always going to get two to three months before my pay­ments start. It’s not an option. I just don’t want to buy the house if I don’t get that time period. And, of course, your discussion is going to come into play about the down payment if it hasn’t already. Be careful not to ask them how much do you want down. That indicates you will give a down payment. Your question is, “I assume you will sell it with nothing down?”

If their answer is yes, you just got it with nothing down. If their answer is no, then your question is, “What is the least you would accept down?” The answer to that question will determine whether you’re going to ACTS it and get out of it or stay in it because you got it with little or nothing down. If the seller’s required down payment is too high, then your only objective is to go find some­body who will pay more because of the easy terms you’re providing and get an assignment fee. If their down payment is little or nothing, then obviously you’re going to find the buyer or the tenant buyer first and close simultaneously and give the seller whatever down payment you agreed at the time you col­lected the money from the buyer. Or, in many cases, I’ll just go ahead and close it since there is little or no money involved and take the pressure off, and frankly, I’d suggest you do the same because you never know what can happen between the time you get a contract and the time you actu­ally send the seller to closing with your attorney.

When the deal is sweet, close it quickly. Don’t wait until you find a buyer. Now, on the monthly payment, of course, before you leave, that has to be negotiated, and this is your chance to get zero interest. My line for that is, “I’ll pay you X number of dollars until paid.” I don’t ever bring up the word interest. And, if they don’t bring it up, I just write the contract up and put zero where the percent­age goes in the “interest” blank. If they do want interest, I’ll never name the number, I’ll let them name it. I’ll always say “What interest do you have in mind?” And, then I’ll say, “Is that the best you can do?” Then I’ll work them down as low as I possibly can.

So, when you get to the house, simply fill in the blanks with the few numbers you have to negoti­ate, and once you’ve done that, you’ve presented the offer, and now it’s time to sit down and either write the contract or it should be written before you even arrive so all you’ll need to do is fill in the blanks once you arrive at the final numbers.

That’s really all there is to present­ing offers. Once that’s done, you make arrangements as to when you’re going to close and make sure you and the seller have an agreement as to when they’re going to move out and what condi­tion the house is going to be in when they move. Once you leave with the contract, you are then ready to go to the next step, which is follow-up.