Step 3 - Arm yourself
For example, bank owned properties (aka REOs) are being sold on the open market to the best bidder, which isn't always the highest bidder. The more confident the seller is that you are going to complete the purchase, the more likely they will consider your offer. Presenting a strong first offer, in both price and terms, will get their attention. TriStone Group will be there for you as you prepare to get into the game. We can help you budget for the purchase, closing costs, and expenses required to buy, fix, and prepare your new investment to start making money for you as fast as possible.
Cash is crucial. You'll need to make enough liquid assets available, and be able to show a bank statement proving that you really have the cash ready to use, before your offer will be taken seriously. If you are using outside financing, a pre-approval letter is not sufficient. You'll need to be pre-approved with a strong letter of intent from the lender indicating that everything is ready to go. All that is needed is the house. Some houses will not qualify for certain types of loans, so be sure your financing is as locked in as much as possible. A lower bid, but all cash, will look more appealing to a seller if they are concerned about your loan being approved. For that reason, having a good relationship with your local lender is another important piece of the puzzle.
"As-is" offers are the norm nowadays. That means the house is being delivered in its current condition, no repairs whatsoever. Gone are the days when you could reach agreement, hire an inspector, and use the inspection report as a wedge to lower the price or get freebies sent your way from the seller. Not happening today. Remember what you are buying - an income producing asset at pennies on the dollar compared to just a few years ago. Emotion is a non-factor in these negotiations. Bricks, wood, metal, and paint - a house. That's all it is, until it starts providing someone a safe and comfortable place to live with their family. Then it becomes a home again. Coincidentally, that's when it starts producing cash in your pocket. We want to turn houses in homes.
Be prepared to close in as short as 2 weeks, sometimes sooner! Sellers, banks in particular, don't want to hang on to this anchor on their books any longer than they have to. Presenting your offer as a quick close opportunity could be just the leverage you need to win the bid against a potentially higher offer. Time is money in the banking world. Motivated sellers understand that. Offering them time in addition to a suitable purchase price is a bonus they will find hard to resist.
When you understand what the seller's motivations are (fast close, fast cash, no headaches, no backlash), not only can you get a great deal on a cash-flowing house, but you can establish yourself as a "good buyer" in the local market place. That's a nice reputation to have in front of you for your next offer, and the next offer, and the next offer,...
We've negotiated on behalf of several of our investors and helped them win great deals. We can do that for you, too. But there's still more to do before we get you your first house. Read on!