Real Estate Investing, Knowing How to Close Tough Deals
Brad Hess
Real Estate Investing, Knowing How to Close Tough Deals
At a time when the real estate market is more competitive than ever, the competition is fierce. Buyers are trying to get the most for their money, sellers are trying to do the same, and those trying to make purchases are looking for properties with the best deals such as little or no money down, owner financing, bad credit financing, etc. When it comes to real estate investing, knowing how to close tough deals will get you top dollar for your investment.
Dealing With the Stubborn Seller
When dealing with banks, it's pretty easy; you go in, negotiate, and make a deal, but dealing with sellers can take you down a different road-- the road of pride. In many cases, the seller knows they have to sell or lose everything, but they will still fight you every step of the way, and are even willing to stay until the end. You could walk away, but you know you have a diamond in the rough, and you want the property. This is where you turn the tables and think smarter, not harder. It's not about outsmarting them, but compromising and offering them incentives to close the deal.
Offer a Budget for Redecorating
You can offer the seller a budget to spruce up the home. This can include paint, carpeting, or even some renovations. While this might seem a bit out of sorts, it's has a two-fold benefit. You can offer the seller more money, while you're getting repairs done that you would have to do anyway. You can put the money in escrow to be reimbursed at closing, or you can offer the cash up front with a stipulation to close within 30, 60, or 90 days.
This also works when trying to seal a deal on a sale. Because everyone has different decorating ideas, offering a budget for redecorating might be just enough to close the deal.
Offer a Pre-Sale Inspection
This tactic works best for a seller who is not pressed to sell; someone who just wants to get out of the home for personal reasons. A pre-sale inspection can be done so that you can see any potential hidden problems. Once you have the list, depending on the results of the inspection, you may be able to use this to your advantage; making the seller aware of the potential costs and the decreased value of the home if these repairs are not made. In turn, you offer to take the home as is.
Cover the Closing Costs
In the case of a sale you are trying make, offering to cover closing costs is always a welcoming clause for the buyer. You can offer to pay escrow fees or points on the loan (a tax deduction for you.) This is extremely attractive for a buyer working with a short budget.
Seller Financing
There are many options when it comes to seller financing. From putting funds in escrow to covering mortgage payments for a pre-determined amount of time, to leasing with options, or buying down the mortgage rate. If you plan on financing a mortgage, make sure that the buyer has good credit and the means to pay for the property. Many people are hesitant because they don't think they can get bank qualified for a loan. Here you can offer an alternative.
Being creative and thinking outside the box, can help you close more deals in the real estate market. Every strategy might not work in every situation, but making the deal attractive will increase the chances of sealing a deal even the tough ones.