negotiation

[zerggross 0]

this seems to be my journal

this weekend i went to see 2 different sellers.

 

the first meeting went horribly. We could not agree on the final purchase price because the seller was sure the home will gain appreciation. And i finally realized that instead of sitting there trying to decide a final price, i should just write an offer sheet and leave them pondering on it.

 

the 2nd meeting was ok, except when i get to the option consideration the seller seems to be confused. Damn my mouth, even though i knew i should not bring it out voluntarily, i forgot about that throughout the conversation.

 

so anyways here is a question

it seems that i can not get sellers to sign the paper work during the first meeting. They all want a lawyer to look over the contract before they sign anything. I must be saying something wrong. maybe i should not use the word "contract", and use "agreement".

i want to know what is your experience？How do you get to sellers to sign paper work during the first meeting? or is it common to have them look over the paper work first?

[Doug Pretorius (ON) 9]

Terms: I think it's best to agree to the price and rent and possibly the length of the lease too, over the phone before you meet.

 

Consideration: Don't mention it until everything is signed, then say: "Oh by the way, I have to give you a token dollar to make this agreement legal."

 

Signing: To get sellers to sign on the spot tell them they can cancel at any time with no strings.

[MichaelC 160]

Get into the habit of making your offers sight unseen. I know it sounds odd, but look at what just happened to you. You wasted time and gained frustration, all for the "privilege" of taking a look at the homeowner's property. Big deal. You're not a Realtor. So stop acting like one. If you can't agree to terms what's the point of looking at someone's kitchen? So make your offer first, have an agreement contingent upon your final approval and inspection, then go see the house. You're the one calling the shots that way.

You'll also find this smooths the way for having the homeowner ready to sign off on the deal. They've had time to think about it, and it's less of a jump for them to finalize the deal with you.

On the other hand, some homeowners will always require their attorney to look over things. Makes them feel important to be able to make a reference to "my attorney", I suppose.

[<Steve> 82]

Make your offer via email using the Naked Investor Short Offer. After speaking with the seller on the phone and it seems like you may have a potential deal, do your comps and see which L/O technique the seller and their house can qualify. Then shoot over the short offer. This gives the seller a chance to review what you can do for them and ask any additional questions. If it is smooth sailing to this point, "then" go take a look at the house, sign the agreements and close the deal.

[happyardy 0]

Make your offer via email using the Naked Investor Short Offer. After speaking with the seller on the phone and it seems like you may have a potential deal, do your comps and see which L/O technique the seller and their house can qualify. Then shoot over the short offer. This gives the seller a chance to review what you can do for them and ask any additional questions. If it is smooth sailing to this point, "then" go take a look at the house, sign the agreements and close the deal.

 

 

Steve,

Do you fix the terms over the phone and then send them the short offer letter with the terms discussed?

 

Or you just gather information over the phone and tell them you'll let them know. Then you do your analysis and then email them the short offer with the best numbers and strategy that the house can qualify.

 

Has the 2nd method given you more success with sellers? Probably, when the sellers receive the actual short offer document, it makes you look like a serious guy in their eyes, unlike the other investors who have just discussed things on phone.

 

What has been your experience?

 

thanks,

- Rahul

[Doug Pretorius (ON) 9]

I used to make offers but find that letting the seller name the numbers does two things:

 

1. I'm often surprised at how low their numbers are (especially the payments).

2. I'm in control. If I name the terms I want they can reject them. But when they name the terms I'm the one who does the accepting or rejecting.

 

It also saves you a ton of time. Instead of sending out a bunch of offers that get rejected you only have to ask the seller a couple of questions to qualify them then head over and sign them up.

[<Steve> 82]

I think Doug is correct in letting the seller say their numbers. How do I know what the numbers are or the market values with my first call? I am trying to get info. about the property and what the seller needs not wants. And then push more to see how much lower the seller can go in price and rent. But I will always respond as if what they tell me is way high and they can come down more in price and rent. And typically they do.

Or you just gather information over the phone and tell them you'll let them know. Then you do your analysis and then email them the short offer with the best numbers and strategy that the house can qualify.

Yes, this is pretty much how I do it. I try and keep an open mind because the seller and their property have the potential to fit one of Naked Investor lease option techniques. I get as much information about the seller and the property and also let them know what I do. I always shoot for SLOs first and then see if the seller is comfortable doing a CA. Nothing is in concrete at this point. Just ideas of what the seller is motivated to do. When I am ready to hang up, I tell the seller I need to organize all the information about their property and need to do comparable sales and rents. I tell them I will email our short offer for their review and if they have any additional questions. If the short offer looks good to the seller, then I can go out and take a look at the property and we can move forward.

 

The short offer is a negotiating tool. It actually seems to make sellers more comfortable because they do not need to make a decision on the spot and can review my offer, which really they made to me. It also gives me time to do comparable sales and rents to really see if I want to move forward with the deal.

 

I think the manual spells out the use of the short offer really well.

[zerggross 0]

sending over a short offer seems like a good idea.

 

 

and i understand that we are actually looking at sellers, not properties. The reason i want them to sign the paper work on the first meeting is not because i want the procedure to go fast. but because if they get nervous and have a lawyer look at the contracts, most likely they are going to have big objections afterwards, regarding the contract, and regarding the way the deal should be set up. that's what happened to my 2nd seller ------------ again!!

It was a pretty good deal until the lawyer stepped in and totally killed it!!!!! his lawyer send me an email with a list of changes that we should make to make the deal work!!

 

OMG SO UPSET!!! :angry: i even feel like sending over an email and tell him how dumb he is for listening to his lawyer but i realized it's my fault lol

[<Steve> 82]

have a lawyer look at the contracts, most likely they are going to have big objections afterwards, regarding the contract, and regarding the way the deal should be set up. that's what happened to my 2nd seller ------------ again!!

Again! So that is twice now. Lawyers are deal breakers. They are protecting themselves first. If they agree 100% to your agreement and later there is some issue, the seller will go back on the lawyer who has given the all clear. So you know the lawyer is going to change the agreement so it does not favor you.

 

If your sellers are nervous, this is another way a short offer can ease them into an L/O agreement with you. Answer as many questions and do all your negotiations before you ever see the house or meet with the sellers. Send your short offer. Then when you do meet for the first time your agreements will repeat what you have already worked out and the seller will be more comfortable. I have lost a couple deals because of lawyers but it is very rare.

 

Here is another example of how the short offer has resulted in a deal. This morning (today) I recieved an email from a seller who I spoke with a year and a half ago and is now ready to move forward with a L/O deal.

 

Steve:

Greetings and Happy New Year!

I wanted to make contact with to see what we could do to execute the Lease Option Agreement that was generated last summer.  My wife and I would like to hear from you via e-mail or cell phone __________.

Thanks and I await your reply.

Hi Patrick!  It has been a while since we last spoke.  It is good to hear from you!

Yes, we can move forward with the Lease Purchase of your house in ____________.  This is a good time, now that we are through the holidays.  I have your house information and will call you.

Talk with you soon!

This is an out of state seller. We went back and forth for a while and his wife was not comfortable and we never could close the deal. I sent him my short offer and left the door open that if his situation shoud change to keep me in mind. Well, here we are months later and he is ready to go. That short offer probably sat on his computer as a constant reminder.

[joshril 0]

have a lawyer look at the contracts, most likely they are going to have big objections afterwards, regarding the contract, and regarding the way the deal should be set up. that's what happened to my 2nd seller ------------ again!!

Again! So that is twice now. Lawyers are deal breakers. They are protecting themselves first. If they agree 100% to your agreement and later there is some issue, the seller will go back on the lawyer who has given the all clear. So you know the lawyer is going to change the agreement so it does not favor you.

 

If your sellers are nervous, this is another way a short offer can ease them into an L/O agreement with you. Answer as many questions and do all your negotiations before you ever see the house or meet with the sellers. Send your short offer. Then when you do meet for the first time your agreements will repeat what you have already worked out and the seller will be more comfortable. I have lost a couple deals because of lawyers but it is very rare.

 

Here is another example of how the short offer has resulted in a deal. This morning (today) I recieved an email from a seller who I spoke with a year and a half ago and is now ready to move forward with a L/O deal.

 

Steve:

Greetings and Happy New Year!

I wanted to make contact with to see what we could do to execute the Lease Option Agreement that was generated last summer.  My wife and I would like to hear from you via e-mail or cell phone __________.

Thanks and I await your reply.

Hi Patrick!  It has been a while since we last spoke.  It is good to hear from you!

Yes, we can move forward with the Lease Purchase of your house in ____________.  This is a good time, now that we are through the holidays.  I have your house information and will call you.

Talk with you soon!

This is an out of state seller. We went back and forth for a while and his wife was not comfortable and we never could close the deal. I sent him my short offer and left the door open that if his situation shoud change to keep me in mind. Well, here we are months later and he is ready to go. That short offer probably sat on his computer as a constant reminder.

 

With out of state sellers, do you just FedEX the paperwork with consideration money?

[<Steve> 82]

reinvestortx-

 

Yes, I email the agreements for signature first, as electronic signatures are valid to get the ball rolling; then follow up with hard copies and option considerations via snail mail.

[joshril 0]

reinvestortx-

 

Yes, I email the agreements for signature first, as electronic signatures are valid to get the ball rolling; then follow up with hard copies and option considerations via snail mail.

 

So do you just send them a certified check for $1? How does that play out? With the sigs, are you good to start marketing the property to tenant/buyers even if they don't have the hardcopies or consideration money?

[MichaelC 160]

reinvestortx-

 

Yes, I email the agreements for signature first, as electronic signatures are valid to get the ball rolling; then follow up with hard copies and option considerations via snail mail.

 

So do you just send them a certified check for $1? How does that play out? With the sigs, are you good to start marketing the property to tenant/buyers even if they don't have the hardcopies or consideration money?

No need to send a certified check for a buck or five. A personal check will do. And, yeah, get to work marketing immediately. Why lose a week or two waiting for the mail to go back and forth?