First Offer

Submit the offer! Make the offer contingent upon buyers inspection and push out the closing 45-60 days upon approval. The agent will have the purchase contract. Don't worry about commisions the bank will be paying those. If you assign this contract the agent still gets the commisions, in fact if your agent is also the listing agent he will get all of the commisions. MAKE SURE YOU SIGN THE PURCHASE CONTRACT WITH AND/OR ASSIGNS EVERYWHERE YOU SIGN YOU NAME! Also, if the agent asks you why you are signing it that way you tell him that "you may bring in a partner on this one or you may keep it for yourself." The agent may ask if you are pre-approved. If you are then great. If you are not then reply back and let us know. Good luck.

cbrpower, you're a genius! Now I'm armed not only with the knowledge, but also the technical phrases, Ha! Ha!! Do you think the agent would let me include the cancellation and all those contigency clauses that would eventually rescue me? I'll call the agent tomorrow and set up appoint to make the offer. He said we'd have to prepare it in his office and submit it to the bank for consideration.

I didn't mentioned to you that I was going to use a no-money-down strategy. I don't have pre-approval. In fact, I didn't even peep at door of a bank because I have the terrible credit that I want to take care of with this wonderful program. Would that be a problem?

E

This is where it might get tricky. Most banks require a pre-approval letter submitted with offer. Try to put in a verbal offer. Let the agent know due to the condition of the house and the current economic conditions you feel the house is worth $65K. Let the agent know that you are an investor and you need to factor in margin of error because of the economy. Also, after you submit your offer verbally let the agent know that you understand the offer is a low offer but you want to leave some room for negotiation. Tell them that because the offer is a low offer you feel a verbal offer will be a way to find out whether the bank will be in the ballpark of what your looking for. This should buy you some time if it works then we will have to adjust on the fly. It is kind of a long shot but I have landed a few of them that low, I even had my agent tell me on a couple of deals that if she knew the bank would go that low she would have bought the property!

Thanks again, cbrpower. I'll send an e-mail to the realtor explaining that this was a verbal offer and stating the basis of my offer. This way he would have something to help him explain to the bank why I made such a low offer.

E

Well, I did send a verbal offer for $65K to the bank through the realtor in charge of the property. The bank turned it down and didn't even given a counter offer. So I raised the offer $10K more to $75K, and they still didn't like it. I'm starting to shake here. My exit strategy is to try and quickly assign this property to an investor but I fear to go so high that nobody would want to take it back from me.

I know I'll have to relie on the contigencies. So, I want to make an attractive offer subject to my partner's approval and also try to see if the agent would accept to add the cancellation and the Ability to Acquire Financing clauses. If they don't, I'LL WALK!!! How about that? This deal is important to me to actaully given me the confidence I need as a novice in this business but I'll like to minimize the risk. PLEASE THROW IN YOUR EXPERTISE. I'll not make the offer until next week. Please refer to my first posting to determine the your responses. Thank you all.

A little wisdom from someone wiser than myself... if it's meant to be it will be.

Don't force it, don't rush, panic or feel like you have to make it happen at all costs. Usually those are things that just aren't meant to be. There are hundreds of thousands of people caught holding the bag out there, play the numbers game. If you cast your line 100 times you are bound to get a bite when the lake it stocked this full of hungry fish. Keep lowballing.

My advice is to STOP making offers on this property. You are bidding against yourself. The bank can just keep ignoring your offers or rejecting them until...... when??

If you think the property is a smokin deal then I would put in writing the following:

"I have made X legitimate, good faith offers. The offer is based on.... condition of property, condition of market etc. If you are serious about selling, I would think you would want to at least respond to my offer."

Hello cbrpower,
What an interesting comment you sort of just threw out when answering efollah's question about "First Offer". You said that if your agent knew the bank would accept the offer you made that she would have bought the property herself! I am finding this to be a real problem in my area. I tell the agents the terms & conditions that I am looking for and they invest themselves. Through the help of Dean and investors as yourself it seems that realety agents are learning the Banks actually will accept deals like we are taught to put together.
This has been a real problem for me! I'm sure that each state is different but do you know if it is legal for an agent that is working for you to buy a property that you bring to them! I have even seen situations when the broker would actually buy the property even though the property was found using criteria other then his own. Of course who can prove how the broker & or agent actually found the property.
I just feel that this is a topic that all new investors should be more concerned about until they actually have enough experience with a Broker/Agent. Dean does a great job telling us in his book how to choose the right professionals to help us. But, NEW INVESTORS BEWARE---NOT ALL THE PROFESSIONALS ACT PROFESSIONALLY. DON'T LEND YOUR TRUST LIGHTLY UNTIL THE BROKER/AGENTS HAVE PROVEN THEMSELVES! A so called good friend/agent just may stab you in the back too if the price is right or his bills are pileing up!
This comment is not meant to discourage anyone! Follow the advice that Dean and his patners share with us and your future will be amazing!!!

No big deal. Just don't work with an agent that doesn't have character. There are so many cashflowing deals out there right now that one can't buy them all. I CREATE most of my best deals. Some of my best deals sat on the MLS listings for over 6 months for all the world to see! That is why I never worry. Once you have trained your eyes to see what the average person cannot the doors of abundance open up to you. I simply just go to the market, look at between 50-100 homes buy one and repeat. It should be systematic and unemotional.

I have to tell you guys something funny that happened today.

I was browsing the internet sites for properties. I noticed a newly-listed commercial building in our town for sale, $22,500. My jaw dropped when I looked through the photos. It was like new, in a great location. 3,420 square feet, like-new condition, overhead doors, front & back. office area, small living quarters and huge space for whatever trade business it held. The owner was retiring. Well, I looked up the owner's address in the county file on-line, looked up their phone number from there, called & talked to the wife. She was surprised to get the call.
Let me give you a little background for the question I asked her. My daughter, 21, is living 800 miles away from us right now. She has met a wonderful young man, 28, down there and they will probably be married this summer, but he does not want to move up north 1)because he doesn't like the cold and 2)(huge reason) He doesn't know if there will be enough work for him in what he does, painting cars for an auto body shop.(He's very good at what he does and very established)
Well, I asked the wife if the building could be used for something like that. She was quiet for a moment and said, "That's what it's used for now." I said, "Oh my gosh, I need to see it." So I told her thank-you, hung up, and you can imagine my excitement as I called my realtor. When I told her, Gail said, "Oh my God, you're kidding." She was out of town but said she'd have an associate set up a viewing for today and call me right back. I was almost shaking, waiting for the call.
A few minutes later I got a call. The woman's voice on the other end sounded apologetic as she said "There was a typo in the listing online. They accidentally left off a zero. I'm sorry. The real price is $225,000."
Pooh. Talk about letting wind out of your sails. Oh, well it's just one of those things.
I went back and starting looking some more.

Rina

Next time you will get that one!

Thanks!

Rina

Thanks to all of you for your words of wisdom. I think this bank is not serious about selling. So I'll cool off and look somewhere else.

E

I just received Dean's book and I don't know much about real estate but I'm ready to get into it now. I thought it was very interesting to read the comments and that alone is a learning experience. There's a lot to learn but with this site and support I know I can succeed. Thanks.

Just got done reading the book and i am excited to start investing. There is this 1 house thats no more than 15 blocks from my house. The owner of the house is a friend from a night club i manage and he is now in drug rehab and his mom has not made a mortgage payment in 4 months. This property was brought to my attention by word of mouth. It has been on the market for 1 month now and no bids have been introduced. the last appriasal was in nov of 2007 for 347k. The house was bought in 2005 for 340k and 40k down. I figure that she has not even touched the principle on it as of yet, therefore owing the bank 300k. What should i make as a first offer? also when i spoke to the listing agent she was very enthusiastic maybe just too much. Let me know what you guys think and how i could do it. thanks

E, i would just walk away from that so called DEAL.especially when you keep on making offers like that, it makes you loose your credability, you need to show them who cares if they take your offer,act like they should be privelaged that you even made an offer,thats the mindset you have to have in investing in real estate.CLASS DISMISSED,SULLY.

sounds like defurman may have something brewing,i would offer a very LOW number(low ball)because the way the market is right now you don't know what homeowners or the banks will accept, an offer that you may think is redicoulus,may mean a good offer to a bank or homeowner thats had absolutely no action or offers on the property for sale,remember to always show as many NEGATIVES as you can about a property to decrease the selling price(get creative).YOUR HERO,SULLY.

Just around the corner from my house there is this 3/2 house that is for sale by owner. The person that owns it is a recent college grad and he is moving and as of right now he has the place fully rented out to college students. he is asking for 240,000. the houses around there are a little higher but not much. he says he has to leave out of town asap with his wife and cant manage the property from another state. seems pretty desperate to sell. what should i offer him? he bought it for 189,000

189K