Real Estate Investing Guide: How to Make an Offer on a Property
Purchasing a property is a big decision that is drastically going to change the course of your financial journey. While everyone dreams of taking those big steps down the real estate path, doing so requires a lot of planning and learning along the way.
In today’s article, I’m going to cover one of the most important topics when it comes to purchasing a property - making an offer. It is important to understand the process of making an offer in order to get the best deal possible.
How to Make an Offer
Here are a couple of tips on how to make an offer to ensure you get a good deal on the purchase:
#1 Understand the Conditions of Sale
Once you find the property you’re interested to invest in, look into the conditions of sale prior to making an offer. You can purchase the property either with or without conditions attached to it. In most cases, it is the buyer who attaches the conditions to an offer, although the seller can do so as well. Generally, an offer with less conditions is considered more attractive. Besides, the less conditions you include, the more room you’re going to have for negotiations.
#2 Estimate the Market Value of the Property
It is not uncommon for sales agents to list properties at a price higher than the actual market value. That is why you have to do your due diligence and research the value of the property before making an offer. The best way to do so is to conduct your own comparable sales analysis. Look at properties sold in your area for the last six months and make sure they match the property you’re interested in (in age, quality, and amenities). If you do your own research, you will be far less likely to overpay for a property.
#3 Understand the Seller’s Motivation
The best way to find a good deal is to look for a highly motivated seller who wants to get the property off their hands as soon as possible. That way, you will be able to complete the transaction as soon as possible and land a cheaper price as well. A motivated seller and a distressed property are a good combination to look for if you’re searching for spot-on deals. Sellers who are in a difficult financial situation or coming out of a divorce are more likely to accept a lower offer in return for a quick sale, which is a win-win situation for you.
#4 Put Your Offer in Writing
Once you’re sure that everything is in order and you decide on your initial offer and conditions of sale, it is time to put your offer in writing and submit it to the seller. Before you submit an offer, make sure to consult with a lawyer to ensure it’s all good to go. Have them check the agreement thoroughly before signing.
#5 Be Patient
Once you put in the offer, don’t expect to close the deal right off the bat. It is important to remain patient and wait for the agent or seller to get back to you without calling them over and over again. When investing in real estate, it is important not to rush the process.
Get Ready for the Next Steps
As always, keep in mind that you need to organize your documents before submitting an offer. Also, make sure you get pre-approved for financing the property before putting the offer in writing, just to save your time in case there are issues with the bank. Get ready to work with your mortgage broker to work out the details of the financial aspects of the purchase.
If you want to learn more about purchasing a property, from finding the right one to submitting an offer and negotiating the right deal, schedule a quick call with me to discuss potential mentorship opportunities.