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When you’re talking to a motivated seller, if you just make one offer, the seller will either say yes or no. 50/50 chance for each.
But if you make 2-3 offers at the same time, you really increase your odds of the seller accepting one of your offers or at least creating a dialog about how your offer is close and just needs to be modified a bit to make it work. This means you do more deals.
But what offers should you make? That question comes up all the time.
Instead of making offers based on what YOU want to do, you really need to talk to the seller to determine what they really NEED and WANT then structure your offers to match their needs and your needs too.
I plan do have a Coaching Call about making multiple offers in March.
The new Virtual Real Estate Wealth course comes with a fantastic multiple offer letter which helped Ben buy $800,000 in seller financed real estate in 2016 and hundreds of thousands of dollars worth of wholesale deals too.
Even though the course is about buying real estate in other markets ALL the techniques could be used right in your back yard too.
You can learn more about the course and the multiple offer letter at https://www.cashflowdepot.com/education/products/recorded-seminars/virtual-real-estate-investing-system/
As Jackie mentioned, having a great letter that does the “selling” and presents multiple offers to a seller is what I attribute a lot of my success to, especially in creating the more than $800,000 in seller financing in just one year.
A couple of the best deals I’ve ever made was having sellers accept an offer with only one balloon payment 10 years from the date I purchased the house. No payments, no interest to accrue, just one payment 10 years in the future.
Most sellers that I’ve worked with don’t have any idea of the possible offers we can present to them, so offering different scenarios (any of which we like) increases our chances of the seller accepting a creative offer.
Reminder — today, February 28th, is the last day for the sale on the Virtual Real Estate Wealth course which includes an amazing multiple offer letter plus much more.
Can you give us an example of some of the multiple offers you use and explain why.
When I’m doing wholesale deals, I always make three or four offers (at the same time) so the seller can pick the one they like best. Remember, if you make one offer the seller will either say yes or no but if you make multiple offers the seller is much more likely to pick one.
1st offer – lower price all cash fast –
exit strategy to do a wholesale flip for more cash
2nd offer – small down now, the rest in one payment later – usually ask for 3-5 years ( with hopes to get 2 years)
exit strategy – I can sell to a rehabber for much more & offer seller financing – will charge down payment, interest, get monthly payments
3rd offer – equal monthly payments – with no mention of interest
exit strategy – sell to a rehabber for much more because I am offering seller financing.
When you can offer financing to the buyer of your wholesale deals, you can charge more for the house, you’ll get a down payment, monthly cash flow PLUS a big payoff later.
There is also the opportunity for the deal after the deal because if I have 3 years to pay off the seller but the rehabber is ready to pay off the note early, I can negotiate a discount for early pay off or do a substitution of collateral.
Jackie- I noticed the multiple deal calculator and letter in the file vault. Is there previous training on that calculator?
We did do a few coaching calls about that multiple offer letter several years ago. It should be in the buying and selling section of the premium training
A multiple offer letter is like any other real estate document, you need to change it to meet the needs of the deal, the seller and you. All real estate should be structured by design, not by default of a form.
If you have no interest in a lease option proposal, then you should not include a lease option proposal in your MO( multiple offer). If you would like to keep the property as a rental, then seller financing, subject to or master lease offers should be in your MO. If you just want to flip the house for quick cash, it would be a completely different offer. If the property is a nice house in a nice neighborhood.– you might offer to buy subject to the mortgage or discuss the merits of a highest bidder sale or master lease.
Be design… not by default.
My multiple offer letter usually includes the following types of offers;
1) $300 down and monthly payments until offer price has been paid. This is usually a 7 to 15 year period for payments.
2) An approx. 10% down payment and monthly payments until the offer price has been paid. Offer price is a little lower than offer 1.
3) An offer price that is lower than 1 and 2 above, paid ½ now and ½ in 7 years.
4) A lower cash price paid at closing.
5) As mentioned previously, depending on the situation I will make an offer that has just one payment 10 years from the date of purchase.
I do not offer to pay interest in any of the offers I make. If a person asks about interest, I tell them the overall offer price is much higher compared to the cash price to take that into account. I also let them know I can offer the cash price with payments and interest, but they will pay tax on interest but typically not with capital gains (unless its not their home).
I like your 5 offers… Do you mind showing how it might work with an example. Jackie, you can jump in to.
Market Value: 100,000
Homes rent for $800 Month (Going Rate)
Have 22 years left on 30 year mortgage
My payment is $650 month and My interest rate is 4.5.
I’m wanting $95,000 for it.
How would 5 offers work on example like that..
Great question. Before any offers can be made, more information is needed from the seller.
Does the $650 a month include taxes and insurance?
What is the current mortgage balance?
Is the 4.5% a fixed rate? Is there a balloon?
As an investor(buyer) , you need to determine if this is a property you’d like to keep as a long term buy and hold rental OR if you just want to get in and get out with some profit as fast as possible. So, what’s your objective? This will also determine what your offers will be.
As you can see, there is not a one-size fits all approach to making multiple offers.
$650 is PITI
Mortgage Balance is $90,000
I’m the seller, so make me the 5 different offer pitch.
Hugh, You don’t always need to make 5 offers. Sometimes 2 or 3 offers are all you need:
The example you gave is a super skinny deal yet there is potential.
If it were in an area where I’d like to acquire rentals AND the house is in rent ready condition I’d offer:
The best I can do is give you payment relief by making your March 1st payment of $650 and paying all closing costs. By paying the closing costs, it will save you thousands of dollars plus you won’t need to pay $6,000 in real estate commissions.
If I bought it this way, there would be two exit strategy opportunities:(you would not discuss this with the seller)
1. Rent it out for $800 a month, getting a $250 a month cash flow
2. Sell with a seller finance wrap for $105,000, using a Highest Bidder Sale. I’d likely get $10,000 down and still get $200+ per month in cash flow. (see HBS info below)
Or, I can lease your house for $650 per month with an option to buy it for $90,000 within 10 years.
The exit strategy would be to just rent out the house for $800 a month OR sell with a lease option ( which I could not do if the house were in Texas)
You would not discuss exit strategies with the seller. I’m just pointing them out for the exercise.
An alternative offer could be to tell the seller about a Highest Bidder Sale. There is not enough room in the deal to sell to a cash buyer or someone who would get a new loan. So, the only way I Highest Bidder Sale would work would be to get an option to buy subject-to the mortgage but you’ll need get a buyer at the Highest Bidder Sale. You will most likely need to split the down payment with the seller if you do it this way so it would be the least likely offer — but could be pulled out if none of the other offers were appealing.
When making multiple offers. You do not need to present ALL options up front. You can present 2-3 offers. Then perhaps pull out another offer if the first 2-3 will not work. Or you can present 4-5 offers up front… it is a judgement call you’ll need to make based on conversations with the seller. Always ask the seller how the offer could be modified so it would work. Maybe adding 500-1000 moving money is the only thing keeping the seller from saying YES to your offer. Solving real estate problems is a team effort.
In a scenario like this, I wouldn’t be able to make multiple offers as mentioned previously. If the market value is $100,000 and the debt amount is $90,000, there is essentially no equity there.
If I were a “hands on” manager (which I’m not), liked the house, and thought it would make a long term rental, the best I might offer would be take over the debt.
A second potential offer would be to have the seller pay down the debt enough that would cause me to be interested in buying for cash or taking over the debt. Few sellers may be willing and able to do this, most will probably not.
A third would be to get an option on the house, market the property with a Highest Bidder Sale or similar arrangement, and create a spread between the buy and sale price to have some amount of quick payday. If the house is owner occupied, this may or may not be possible.
There may still be ways to work with a situation like this, but as Jackie mentioned, talking with the seller to find out all the details of their situation and what they want to have happen is critical.
Hope that helps.
Thanks Everyone. I just wanted to see how MO strategy might flow.
I’ve been meaning to ask why your son moved to Colorado. I assumed there must have either been a beneficial force pulling him to the state or a negative force pushing him out of Texas. For how long have lease options been illegal in Texas and what other strategies are off the table for us Texans?
My son has many friends who live in Colorado and his fiance was offered her dream job in Colorado. They both love exploring other areas instead of staying put in one location. In the last couple of years he has also lived in Texas, Panama and Amsterdam.
In Texas, lease options have been off the table since about 2004/2005. A long time. Contract for deed is also not allowed in Texas.
Wow!! I wish I knew that before I went to see David Tilney at his Master Lease/Lease Option course…..
Thank you for the response by the way>>>>I’m sure your son and his finance are living the dream in Colorado……..I hope to create the same opportunities for my children.
So no wraps and no lease options—–that just wipes out half our tool kit. The question now becomes what CAN we legally do?
I just read your 2016 report “The 5 Best Ways to Make Money With Real Estate” and you talk alot about seller financing/wraps/wrapping the wrap…..
Unless the property has no mortgage then how do you structure a “Seller Finance” deal in Texas when the property is encumbered with a mortgage or deed of trust?
If you’re still looking for suggestions on improving the site it would be great if we had a way to see all our posts and responses in our account tab. It’s nice being able to track those down with the link we can have emailed to us but it would be so much more efficient if that information was consolidated into one location right here in your site.
IN Texas, you can still buy with a lease option.
You just can’t sell with a lease option unless the buyer’s option consideration is non-refundable AND you give them the deed within 6 months.
Remember, with a master lease, you don’t need to get an option. You can do master leases in Texas.
You can do wraps! Buying with seller financing then selling with seller financing is still legal in Texas. If there is an underlying loan, you can either buy subject-to the mortgage or buy with a seller finance wrap.
Get options then do a highest bidder sale.
Get options then do a wholesale flip
Buy subject-to then keep as a rental
There are still a LOT of things you can do – but selling with a lease option or selling with a contract for deed are not on the list for texas
@Rafael: You can see your post history by clicking on your name. This will take you to your forum profile where the are links for “Topics Started”, “Replies Created”, etc. You can also do this for other people. Here is a link to the list of replies you created:
That was very helpful, thank you both.
I think I need to figure out the difference between a contract for deed and a seller finance wrap…..the google search I ran is telling me a contract for deed is “aka a wrap”. So contract for dead is a no no in Texas but we can do wraps. Is wrap an umbrella term for different types of transactions? Which kind of wraps are allowed in Texas?
A contract for deed is when you sell a house but the buyer does not get the deed to the property until the note is paid off.
Selling with seller financing is when you sell a house and the buyer GETS the deed to the house at the time of purchase. In Texas, there is a Deed of Trust recorded to secure the note/mortgage. The note is not recorded. The deed of trust spells out what will happen if the buyer misses a payment and what your remedies are as the seller.
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