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Making Offers
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Making Offers
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Making Offers Contributed by: Steve
Cook Having written a
course on wholesaling, I get a ton of e-mails from people who ask me
questions about making offers and what they might be doing wrong. Many of
the e-mails that I receive read something like this:
Dear
Steve, I
recently looked at 20 homes for sale in my area. After inspecting the
homes, I decided to make 2 offers, but in each case the seller's Realtor
just laughed at me. I mean, they really laughed hard! I'm not getting any
offers accepted and I'm becoming very discouraged. I don't think that we
have deals like you do where I live. Can you
help me? It just seems like most homes in my area sell for the full
asking price or more. Discouraged Newbie is
making one or possibly two mistakes common to new investors. They aren't
targeting motivated sellers and/or they aren't making enough offers.
Targeting Motivated Sellers Where I live, most
homes sell for their full asking price and above as well. The only
difference between me and Discouraged Newbies is that I concentrate on the
sellers who are motivated to sell at something less than full price.
Typically, these are banks or individuals who have a VACANT property which
needs work. I stress the word "vacant" for two reasons: 1)
vacant properties are nothing
but trouble for the owners and 2)
99% of the properties I have bought over the past three and a half
years have been vacant.
Handling Rejection
Even though I focus
on motivated sellers, most of them aren't
motivated enough to accept my offer. If I make 30 offers, with
27-29 of them, chances are that the seller is going to say "No,"
or someone else is going to offer more. I strike out much more often than
having a seller say "Yes"
to my offer. But I'm not concerned about all of the "No's." I
accept them as part of the process and forge ahead, knowing that if I make
enough offers someone is eventually going to say "Yes",
particularly if my offers are targeted toward sellers who have some degree
of motivation. Make Lots of Offers to Keep Your Funnel Full In this business you
cannot make money without inventory. It is extremely important that you
always keep your pipeline full, and the way to do that is to constantly
make offers. Many people come and tell me that they look at homes all the
time but never buy anything. They say they find motivated sellers but none
of their deals ever goes through. My next question to them is, "How
many times have you put an offer on paper?" They are usually able to
count their answer on one hand. In order to buy properties, you must make
offers. Sounds simple, right? Yet it's surprising how many new investors
have trouble overcoming this hurdle. Personally, I average 40+ offers per
month, sometimes many more. Over the course of one weekend, I made about
40 and bought 9 houses on Monday. To this day, this stands as one of my
most productive offering sprees, netting about 1 out of every 4 properties
(each was sold separately, by the way, not as part of a
package). And you know what? I never would have bought all of those
homes if I hadn't made those 40 offers. Just like I would rarely, if ever,
buy anything if I only made one or two offers a month. When I look at 20
homes I make 20 offers, not just 2. In fact, sometimes I make 30 offers
when I look at 20 homes. I make offers even on the homes I couldn't get
out to see. If I'm targeting
the right properties (I.e., those with sellers who may be motivated), odds
are that there will be several sellers out of 20 with enough motivation to
seriously consider my offer. What I don't try to do is select who those 2
or 3 sellers might be. The chances of me picking
the right ones are very slim. And why should I? My low offers will
flush out the sellers motivated enough to respond, and thereby tell me
where I should invest my time. Too many wholesalers try to pick the
motivated sellers from a group by themselves when making offers is the
easiest way to find out. I make offers on
every single home that interests me where I think the seller might be
motivated. Some I inspect; some I don't. Some are priced ridiculously
high; others are priced ridiculously low.
Some are in great areas; some are in bad areas. Regardless of
location, condition or price, there is a number that works for every home
and that is what I offer. On occasions, I've asked sellers to pay ME to
take their homes because no other number worked for me. Sure, most of these
offers are rejected just like most of my other offers. Even on the weekend
that I bought 9 homes, most (31 of 40) of my offers were rejected. In
general, though, some of my offers are accepted, and those are the only
ones that count. I hope that this will inspire some of you to get out there and start making more offers. If you make it your goal to make an offer a day, then you will start to buy properties. If your offers are at the right price, then you will sell properties and make money. You don't need to make offers as I do, but you do have to make some if you want to buy houses. Do your homework, get your questions answered, and overcome your fears. Then make it your goal to average an offer a day because, as we all know, "An offer a day keeps the bill collectors away!" More investing information can be found on Steve's website.
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