Making Offers on Properties for Real Estate Investors

Bonus Module

You’ve selected your real estate agent.

With the recommendations of your real estate agent, you’ve built your real estate investing dream team.

You’ve taken some time to come up with your first pass on establishing your buying criteria for the deals you’re interested in.

Using that criteria you’ve had your real estate agent set you up with automated emails to notify you when properties that match your MLS searchable criteria are listed for sale.

As you receive properties you manually analyze them for your criteria that is not MLS searchable.

For the ones that still look promising you ask your real estate agent to schedule showings and you go look at them.

Now, you’ve found a property that meets your criteria, and you want to buy it.

Let’s go over making offers to buy the property.

Table of Contents

Here’s what’s included in this module:

• Call Seller’s Agent Before Writing Offer

• Understanding Market Conditions

• What Your Agent Needs to Write an Offer For You

• Determining Your Offer Price

• Sold Price Does Not Equal Offer Price

• Earnest Money

• What Happens If You Don’t Perform

• Contingencies in Your Offer

• Financing and Pre-Approvals

• Cash Offers versus Financing Offers

• Down Payment Amount

• Dealing with Multiple Offers

• Above Asking Price Offers

• Lowball Offers

• Escalation Clauses

• Appraisal Issues

• Inspection

• Post-Closing Occupancy Agreements

• Personal Letters & Broker Letters

• Seller Concessions

• Due Diligence Requests

• Conditional Sale Contingency

• Flexibility with Closing Dates

• Offer Acceptance Deadlines

• Offer Presentation

Call Seller’s Agent Before Writing Offer

Your agent should always call the seller’s agent before you write your offer.

This call is an opportunity to gather essential information that can help you structure a stronger, more appealing offer.

Often, this call happens while you’re out looking at the property.

Your agent will try to learn what the seller wants, which can include things like the ideal closing date or flexibility on their move-out date. The seller might need time to find a replacement property, or they could be interested in post-closing occupancy, where they stay in the home for a period after closing.

Knowing these preferences helps you align your offer with the seller’s needs, making it more likely to be accepted.

Your agent should also ask if there are any other offers or how active the property has been with showings. This gives you an idea of the competition and whether you might need to make a more aggressive offer.

It’s also a good time for your agent to begin establishing confidence in your ability as a buyer to close the deal, showing that you’re well-qualified and financially prepared to move forward. This can be especially important in a competitive market.

Finally, your agent should ask about any special circumstances or preferences that could influence the seller’s decision. The more you know about the seller’s situation, the more tailored and effective your offer will be.

Understanding Market Conditions

Understanding market conditions is key when making an offer on a property.

One of the first things to assess is whether you're in a buyer's or seller's market. A buyer’s market means there are more homes available than buyers, giving you more negotiating power. A seller’s market is the opposite—more buyers than homes—often leading to higher prices and quicker sales.

The absorption rate measures how quickly homes are selling in a specific area. It's calculated by dividing the number of homes sold in a month by the number of homes available. A high absorption rate indicates a hot market, while a low rate suggests slower sales.

Your real estate agent can provide this and other key market data to help you gauge the environment.

Real estate markets can vary dramatically by neighborhood. By understanding these specifics, you can tailor your offer to match the current conditions and improve your chances of success.

What Your Agent Needs to Write an Offer For You

Your agent needs certain information from you to write a strong and accurate offer. There are other choices to be made when writing a contract, but these tend to be the big ones.

Getting these details ready upfront will help streamline the process and avoid any delays.

• Full Contact Information – Provide your name, phone number, email, and mailing address.

• Purchase Price – Decide on the price you're offering based on market conditions, comparable sales, and your financial goals.

• Seller Concessions – Let your agent know if you want the seller to cover closing costs.

  • Financing Details – Include your down payment amount and the type of loan you're using.

• Closing Date – Pick a closing date that aligns with both your needs and the seller's timeline.

• Contingencies – Specify which contingencies you want to keep and which you're okay waiving, especially in competitive markets.

• Due Diligence Documents – Request any due diligence documents, such as leases, information on solar panels or security systems if applicable, receipts on recent work completed if important, that you want included in the offer.

• Post-Closing Occupancy Agreement – If the seller needs to stay after closing, provide details for how long and under what terms.

• Conditional Sale Requirements – Let your agent know if you need to sell another property before you can buy this one.

This is what your agent will need to be able to write your offer.

Determining Your Offer Price