How do you pick the right offer? Hey, guys. It’s Brad from probateresource.com. Today I want to talk about picking the right offer. I am a real estate investor and a real estate agent, so I know a thing or two about choosing the right offer. If you are selling a property you’ve inherited, or really selling any property for that matter, you’re probably going to get multiple offers on the property. How do you know which offer is the right offer to go with? Well, I’ve done a lot of videos about this, but I wanted to make this video because time and time again, we see this, where people are only chasing the number. And while the money is important, and it’s absolutely important, you have to look at other factors in the offer too, to determine if that money that, in fact, you’re being offered is really even going to come to fruition. And the reason I say that is because there are a lot of investors out there, or even home buyers just that are buying things to live in them, especially in the nature of this competitive market that we’re in.
Let’s look at it from the lens of you listed the house with an agent, you’re getting multiple offers. Which one do you pick? Well, there are some people and some agents who literally have the strategy… And this has happened to me before and I’ve been burned and this is why I’m saying this. They will offer you over list price just to get an offer accepted. But what you don’t know is these same people, because the market is competitive, they’re making offers on multiple properties, and it’s not until after they’re already under contract that they’re deciding which house they really want to buy. I know that sounds crazy, but there are people who will put properties… They will make multiple offers, put lots of things under contract, and then they’ll walk through them once more or whatever and say, “Well, we really like this one.” And within their due diligence period, they cancel and they terminate the contract.
What does that mean for you as a seller? Well, that means for you as the seller, that they might put your property under contract for four or five days and then decide they don’t want it and they’ll terminate, and then you’ve got to put your house back on the market again. Maybe you have backup offers and you just immediately go under contract. But you’ll say, “Well, Brad. Okay, fine. We’ll just put it back on the market. No big deal.”
Well, there is a strange phenomenon in the real estate market, which sometimes we call the kiss of death, and that’s when a property goes under contract, and then the property falls back out of contract and goes back on the market. Buyers looking at that property may think there’s something wrong with that property when, in fact, there’s nothing wrong with the property. They just got jerked around by a potential buyer who decided that they just wanted to change their mind. I’ve even had buyers back out the day before closing before. Craziness, right? Now, I got to keep the earnest money deposit. But that’s frustrating because then you have to put the house back on the market, you got to go through the whole thing again. You’ve wasted two, three, four, or five weeks of your time or whatever it is, and now you’re back to square one again.
So how do you choose the right offer? Well, if you are dealing with the traditional sense with a real estate agent, you’re looking at offers, you want to make sure, first of all, have those people even seen the property? The amount of site unseen offers that I have gotten on properties… I’ve listed properties for sale and an hour later, I get a full price offer from some agent who I know they haven’t viewed the property because my lock box keeps a record of who’s toured the property. I know they haven’t seen the property yet, but they’re making me a full price offer because they’re afraid of missing out. So they want to go ahead and lock it up under contract and then they’ll go look at it and decide later. Nope, not wasting my time with that. You need to go see the property before I will accept any offer from you. That’s actually become quite commonplace in the last couple years for that very phenomenon right there, where people will just blast out offers and put things under contract, and then go look at them and decide which one they want.
Another thing I look at as I look at their due diligence period. How long is their due diligence period? I also look at how much they’re willing to put up on earnest money. I also look at their financing contingency.
The due diligence period is the amount of, let’s call it, the inspection period. On average, it’s seven to 10 days for most traditional transactions that gives them time to inspect the property, figure out if there’s things wrong, and then you can ask for repairs to be made. There’s a process called the ATAC, agreement to address concerns. And you go through that process of, “Oh, we want you to fix this and we want you to fix that or whatever,” and you negotiate back and forth and ultimately decide on a list of repairs, and then you make those repairs, they have to be done before a certain amount of time. That’s that period.
There’s also a financing contingency. What that means is that the buyer has usually an extended period of time beyond the due diligence period where they could still back out of the contract for financing reasons and still get their earnest money deposit back. So pay attention to that financing contingency period. How long is it?
I’ve had someone back out of a contract at the last minute due to a financing contingency, or claim it was due to financing, and then I later found out they immediately went under contract on another property. Turns out they just liked that other one better and they used financing problems as their reason for terminating got their earnest money deposit back. Is that honest? Probably not. But does it happen? Yes, it happens out there. So you want to make sure you’re paying attention to that. Financing contingency period.
How much are they putting down in earnest money? Are they serious? Are they willing to put up non-refundable earnest money? That’ll bring out someone’s honesty level real quick. If they really like the house, they will put down non-refundable earnest money. If it’s refundable and they’re not willing to do that, they might be a little wishy-washy about that contract. So make sure you’re paying attention to that, talking with your agent about all of those aspects of the contract, and not just chasing the highest price.
All right. Let’s switch gears here and go over to the investor world where you’re getting offers from an investor. Maybe you have a house that needs a little bit of work, you want to sell it as is or whatever. We buy properties at Probate Resource all the time as is. A lot of times with these probate deals, we buy them with everything in it. We’ll buy it with all the junk in it. Let’s talk about that for a second. You’re going to get the gamut of offers from investors because unfortunately, in the day and age we live in today with the world of TikTok and YouTube and Instagram, there’s a lot of wannabe and investors out there who watched TikTok and think that they’re going to be a real estate investor, and someone told them to go out and cold call these numbers and make offers on houses and buy stuff. So you’re going to get offers from people who are inexperienced.
What I would suggest you to do is, just like on the other world, you need to pay attention to due diligence period, you need to pay attention to earnest money deposit, and you need to pay attention to the time to closing. Most serious investors who actually close on deals, like myself, I typically do a two to three week period for closing. If you get an offer from an investor and they’re offering you 45, 60 days to closing, you need to question that a little bit. Why aren’t they ready to close tomorrow? Why are they waiting so long to close? Now, if you request it as the seller, that’s one thing. But if your investor is requesting a 45, 60 day closing period, that’s kind of weird.
Also, pay attention to the due diligence period. How long is that due diligence period? We’re typically seven to 10 days, which is pretty standard. But I will do less of a due diligence period on my contract if for some reason, the seller feels like that’s really important and they want a shorter due diligence. I’ve done zero due diligence before on deals. I just have to go through and walk the property myself, or send one of my people over there that I trust to walk the property for me, before we’ll actually submit an offer. And I’ve done offers with no due diligence. That means my earnest money is hard from day one. What does that mean? That means that if I back out, you, as the seller, get to keep my earnest money deposit. That means I’m serious about it. So pay attention to that.
If you’ve got an offer from an investor and they’ve got a two week, three week, four week due diligence period in their contract, you need to run away from that offer. They’re probably a wholesaler. And mind you, there’s nothing wrong with wholesaling. Wholesaling’s legal. We wholesale properties. I have wholesale properties. But there’s a way that certain investors do it where their only strategy is wholesaling, they wholesale everything. They basically put as much stuff under contract as possible, and then they see what sticks and then they typically renegotiate later. That’s their strategy. Let me put 10 properties under contract this week, we’ll end up buying five of them or three of them, and then we’ll cancel the contracts on the rest of them. There are investors, even experienced big time outfits out there, who that is their strategy. It’s all a numbers game to them. Put as many properties under contract as possible, make as many offers as possible, and then do your due diligence and then analyze whether that deal even makes sense or not. Cancel it if it doesn’t, keep the ones that do.
Okay, that works for them. But what about you as the seller? What does that mean for you? Well, that means you might waste two weeks of your time dealing with this due diligence period, and then at the 11th hour, they decide to cancel the contract because they decide the deal wouldn’t work for them. Or they’re trying to wholesale that property and they can’t find a buyer for it, and then they decide to terminate because they can’t find a buyer. They’re going to throw whatever against the wall and see what sticks.
So make sure you’re paying attention to due diligence period in the contracts, make sure you’re paying attention to the time to close, and make sure you’re paying attention to the earnest money deposit. Are they putting down $100 in earnest money or $500 in earnest money? Typically speaking, and there’s no set rule for this, but traditionally, 1% is a reasonable earnest money deposit, 1% of the purchase price. So if it’s a $100,000 purchase, $1,000 earnest money, that’s pretty typical. So make sure you’re paying attention to that.
Also, some people may not have any earnest money deposited in their contract at all, depending on the state you’re living in. Some states, earnest money is required. Other states, it’s not required. You probably want to Google your state laws to figure out whether you even need earnest money. But I’ve seen some investors don’t put any earnest money down at all on any of their contracts. It’s nowhere to be found in their contract. So make sure you read through their contract.
Also, pay attention for weasel clauses, as I call them, out clauses that are subject to partner approval. Well, you don’t even know where their partner is. Their partner could be their dog, for all you know. Or subject to lender approval. Look for those ways where they can find a way out and still get all their earnest money back. That goes to show that they’re not actually serious about buying your property and they’re just jerking you around.
Also, let’s talk about price. Let’s talk about numbers. You want a certain number out of the property, right? Let’s say you get offers from four investors and three of your investors are right here, and then there’s a few that are way, way up here, way out of the question, or there’s a few that are way, way, way, way lowball. Pick one of the ones that are really tight together. If you’ve got three offers that are really close to one another, those are probably your three serious investors. They know their numbers well because the numbers are the numbers. What the house will sell for, in most cases in most neighborhoods, is not going to vary all that much.
There’s not some investor who has this secret weapon where he can sell a house for $100,000 more than everybody else can. It’s just not the case. The comps dictate the value, and all we do as investors is a formula for us. What is the house worth? What do I need to put in it? What would I like to make in a profit? What does it cost me to hold and close and sell the property? That’s what I offer you. There’s no secret to it. It’s literally that.
Sometimes we’ll get sellers that’ll come to us and say, “Hey, well, all the houses in the neighborhood are selling for $250,000 in good shape. We’d like to get an offer from an investor for $240,000.” And then say, “Well, you can’t even list the house for $250,000 and pay your real estate commissions and net $240,000. How am I supposed to make any money? I have to make money in this transaction. I’m not a charity. I don’t do this for free.” So I’ve got to make money. You’re going to make money. That’s the point of this, is that everybody wins in the scenario. It’s a win-win scenario, right?
So make sure you’re paying attention to that and where those offers are coming in at, and make sure that you’re picking the offers based off of how close they are to one another, and then also paying attention to the company you’re dealing with. Do your research on the company. Make sure you’re working with a reputable company. Go search the deed records. Figure out if they’re actually closing on transactions. Look them up in the Secretary of State website. Make sure they’re a legitimate LLC. Make sure they have a website. It’s so easy to get a website nowadays. So easy. If they don’t even have a website for you to vet them out, you should probably run away from them. It’s so simple to create a website. And if they give you some runaround answer why they don’t have a website, move on to the next one. Pick the person who you are comfortable with and you feel like is going to be able to close on this transaction.
I hope that helps you out today in picking the right offer. Again, I’m Brad with probateresource.com. We specialize in the world of probate and inheritance properties. We buy properties for cash all over the US. We also have a fantastic network of real estate agents that are probate inheritance specialists all over the US that we work with. If you want to go the traditional route and list your house with an agent, maybe you don’t think the cash offer is the best route for you, we’d be happy to refer you to one of our handpicked agents. If you’re interested in working with our company, you do have a property you need to sell, go to probateresource.com, fill out the form there on the site, and a member of our team will be in touch with you ASAP. Thanks again for checking out this video. I’m Brad with probateresource.com. Have a great day. Bye-bye.
How to choose the BEST OFFER For Your Property
Hi there, it’s Brad from probateresource.com. Today, let’s dive into the art of selecting the right offer.
As a seasoned real estate investor and agent, I’ve gained valuable insights into this process. Whether you’re selling an inherited property or any real estate, the influx of multiple offers can be overwhelming. So, how do you pinpoint the ideal offer?
While I’ve covered this extensively in other videos, I felt compelled to address it again because, often, people fixate solely on the dollar signs. While money matters, it’s crucial to assess other elements within the offer to gauge its true worth.
Let’s approach this scenario as if you’ve listed your home with an agent and now face MULTIPLE offers. Which one stands out?
Some individuals and agents employ a tactic I’ve encountered firsthand—and it’s a cautionary tale. They may inflate their offer above the listing price just to secure a deal. However, what remains hidden is their practice of submitting offers on multiple properties simultaneously. It’s not until they’re already committed that they decide which property aligns with their preferences. It might seem unbelievable, but it happens—a flurry of offers, multiple contracts, and then a sudden change of heart during the due diligence phase, leading to contract cancellations.
What does that mean for you as a seller?
As a seller, there is a risk that your property may fall out of contract after a few days.
This can happen when a buyer changes their mind about purchasing your property and decides to terminate the contract.
In such a situation, you will have to put your house back on the market again, even if you have backup offers. This can be frustrating as it wastes your time and effort. Moreover, when a property goes under contract and then falls out of contract, it can create a negative perception among potential buyers. This phenomenon is sometimes referred to as the “kiss of death.”
Buyers may think there is something wrong with the property when there isn’t. This can further delay the sale of your property. In some cases, buyers may even back out a day before closing. This can be incredibly frustrating as you will have to put your house back on the market and start the whole process all over again. It can be a waste of your time and money.
Choosing the RIGHT OFFER
Wondering how to select the best offer? Well, if you’re working within the traditional real estate framework with an agent, here’s a crucial tip: ensure that potential buyers have physically seen the property.
I’ve encountered numerous instances where agents submit offers without viewing the property firsthand. It’s become quite common for me to receive full-price offers within hours of listing, only to realize that the buyers haven’t even visited the property. They’re driven by fear of missing out and rush to lock in a deal before seeing the actual property.
I’ve made it a policy to require buyers to tour the property before considering their offer. This practice has gained traction due to the trend of agents making offers without prior viewing—a phenomenon I’ve experienced frequently in recent years.
Due Diligence
One of the things I consider when evaluating a potential buyer is their due diligence period. This refers to the inspection period during which they can assess the property and identify any issues that need to be addressed. The average duration of this period is seven to ten days for most traditional transactions. During this time, the buyer can request repairs to be made through a process called the ATAC (agreement to address concerns). The negotiation process involves identifying and agreeing on a list of necessary repairs, which must be completed within a specific timeframe.
Financing Contingency
Additionally, I also take into account the amount of earnest money they are willing to put up and their financing contingency.
It’s important to be aware of the financing contingency when you’re buying a property. It means that the buyer has a certain period of time beyond the due diligence period where they can still back out of the contract for financing reasons and get their earnest money deposit back. So it’s crucial to pay attention to the length of the financing contingency period.
In my experience, I’ve seen people back out of a contract at the last minute citing financing issues, but then I later discovered that they quickly went under contract on another property they liked better. While this might not be entirely honest, it’s not uncommon. Therefore, it’s essential to be mindful of the financing contingency period to avoid any such situations.
Earnest Money
If you’re selling a house, it’s important to pay attention to the earnest money your potential buyers are putting down. This will give you an idea of how serious they are about the purchase.
If they’re willing to put down non-refundable earnest money, it shows that they’re very interested in the house. However, if they’re not willing to do that and only want to put down refundable earnest money, they may not be as committed to the contract.
It’s important to discuss these aspects of the contract with your agent and not just focus on the highest price.
On the other hand, if you’re selling a house that needs work, you’ll likely receive offers from investors. These offers can vary greatly, and it’s important to consider the experience and seriousness of the investor. Some inexperienced investors may have watched videos on TikTok or YouTube and believe they can be successful in real estate investing. However, it’s important to carefully evaluate any offers you receive and work with a reputable investor if you choose to sell your property to an investor.
Offer From An Investor
I suggest paying attention to the due diligence period, earnest money deposit, and time to closing, just like in any other world.
Serious investors like myself typically close deals within two to three weeks.
If an investor offers a 45-60 day closing period, you should question it. If you request it as the seller, that’s one thing, but if your investor is requesting it, that’s unusual.
Also, pay attention to the due diligence period. Seven to ten days is the standard period, but if the seller wants a shorter due diligence period, I will do less.
I’ve even done deals with no due diligence period, meaning my earnest money deposit is hard from day one. That means if I back out, the seller keeps my earnest money deposit. So pay attention to these details to ensure the deal closes smoothly.
If a potential investor offers you a contract with a two, three or four-week period for due diligence, it is best to avoid it as they may be a wholesaler.
However, wholesaling is a legitimate business practice and many investors engage in it. Some investors may have a strategy where they put as many properties under contract as possible, and then renegotiate later. They may end up buying only a few properties and cancel the contracts on the rest. This is a numbers game for them. They analyze the deals after the contracts are signed and keep only the ones that make sense. So, it is important to be aware of such investors and their strategies before accepting any offers.
Offer From A Wholesaler
When you’re selling a property, the buyer may want to go through a due diligence period. This can take up to two weeks of your time. However, even after all that time and effort, the buyer may decide to cancel the contract because they feel the deal wouldn’t work for them. Alternatively, if the buyer is trying to wholesale the property and can’t find a buyer, they may also decide to terminate the contract. Basically, they may try various things to make the deal work, but if nothing works, they may cancel the contract at the last minute.
Ensure you’re attentive to the due diligence period, time to close, and earnest money deposit in your contracts. Are they offering $100 or $500 in earnest money? While there’s no strict rule, traditionally, 1% of the purchase price is considered reasonable for earnest money. For instance, on a $100,000 purchase, $1,000 in earnest money is standard.
Understand The Contract
Be aware that some contracts may not include any earnest money, depending on state laws. It’s crucial to research your state’s requirements as earnest money laws vary. I’ve encountered investors who omit earnest money entirely from their contracts. Always thoroughly review the contract details before making decisions.
Be alert for OUT CLAUSES that are subject to partner approval, which I call weasel clauses. You don’t even know who their partner is, it could be anyone.
Similarly, watch out for clauses that are subject to lender approval. These clauses provide a way out for the buyer without losing their earnest money. Such clauses indicate that the buyer is not serious about buying your property and just wasting your time.
Price Of The Property
Let’s discuss the price of the property. You have a specific amount in mind that you want to receive from the property, correct?
Suppose you get offers from four investors, three of which are similar, and the other two offer either too low or too high. In this scenario, you should choose one of the three similar offers as these are likely to be from serious investors who understand the numbers well. The selling price of the property is usually similar in most neighborhoods and doesn’t vary much.
As an investor, I don’t have any secret weapon to sell a house for more money than others. The value of the house is determined by the comps, and we use a formula to calculate what it’s worth. This formula takes into account what needs to be done to the house, the profit we want to make, and the costs involved in holding, closing, and selling the property. It’s that simple.
Sometimes sellers come to us asking for an offer that’s lower than what they could get by listing the house. In such cases, we explain that we have to make money too. We’re not doing this for free. We need to make a profit, and you’ll make one too. It’s a win-win situation for everyone.
It’s important to pay attention to the offers you receive, as well as where they’re coming from. Choose offers based on how close they are to one another and also take the time to research the companies making the offers. Verify that they are reputable by searching for them in deed records, checking their legitimacy as an LLC in the Secretary of State website and looking for their website.
If they don’t have a website, you should consider looking elsewhere. It’s easy to create a website nowadays. If a company gives you an unsatisfactory answer for why they don’t have a website, it’s best to move on to the next one. Choose a company that you feel comfortable working with and that you believe will be able to close the transaction.
Let’s Connect
I’m Brad from ProbateResource.com, and I hope the information provided today helps you pick the right offer.
Our company specializes in probate and inheritance properties and buys properties for cash all over the US. We also have a network of real estate agents who specialize in probate inheritance all over the US that we work with. If you prefer to go the traditional route and list your house with an agent, we can refer you to one of our handpicked agents. If you’re interested in working with us and need to sell your property, please fill out the form on our website at ProbateResource.com, and a member of our team will contact you promptly.
Thank you for watching, and have a great day!