Epic Real Estate Investing - How to Make an Offer on a House without a Realtor | 600

Episode Date: March 1, 2019

Have you ever missed a great deal because you did not know how to make an offer on a house without a realtor but you didn’t want to go through the hassle of calling him? We’ll make sure that never happens again by laying out 5 steps you need to follow to get an amazing deal by yourself! Learn why it is important to know your seller, how to avoid the common mistake people make when negotiating the purchase, and how to calculate and present your price. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, Matt Terrio here at Epic Real Estate. Have you ever driven by a property for sale by owner? Or maybe you saw one online? Or maybe you overheard someone talking about a property that they were thinking about selling? Or a conversation where they actually had a property for sale? I mean, the type of property that you would consider buying if the price was right. But you didn't really want to go through the hassle of calling a realtor.

Yet you are at a loss of how to make an offer yourself and be certain that you were going to get a good deal and you know that moment passed by it slipped by well i'm going to show you in five simple steps right now how to make an offer on a house without a realtor and get a good deal for yourself too on today's episode of financial freedom friday all right so by the time that this short video is complete you will be armed with the knowledge of how to make an offer on a house without a realtor so you can more likely than not get a great deal for yourself and quickly in case this is the first time that we've met first time we're crossing paths I've worked for four years as a licensed realtor where I represented buyers and sellers in more than 50

transactions where I received rookie of the year honors. And I currently work now as a full-time real estate investor. And I have been for the last 12 years where I've closed more than a thousand transactions. And I share that with you not to brag, but rather so that you know I have plenty of experience in making offers without a realtor. It's how I make my living. It's how I feed my family. All righty.

Now, anyone here watching this video that would be interested in how to make an offer on a house without a realtor suggests that they think they can do a better job than the realtors that they've done business with in the past. They think they're going to save some money on some commissions, and likely they think they're going to do a better job or get a better deal for themselves. And I think they're right. And I have even higher hopes for someone like that if they keep just a few things in mind while making their offer. And we're going to go over those in just a second. And something else probably worth mentioning. On the side, I've trained quite a few investors over the last decade inside of the EPP Academy and our RIAEAS program and how to get their lowball offers accepted by dealing

directly with sellers. And I think whether you're an investor looking for a deal or maybe you do something else during the day and you're simply just shopping for the next place that you're going to call home, what I'm going to share with you today will serve you in either situation. All right? So let's go over these three big picture. points real quickly and then I'm going to give you five small picture specific steps to follow once you're ready to actually make your offer okay so three points big

picture number one begin with the end in mind what I mean by that is are you looking for a comfortable home to live in or are you looking for an investment and this is really important as they are two different types of purchases that that have their own nuances so before making your offer decide which outcome is more important to you a comfortable safe place you're going to call home or a property where you put the where that that's going to pay you back more than you put into it. The previous, it's more of an emotional decision. When you're buying a house, it's more emotional. The latter is an investment, it's more of a

mathematical one. And what I've found is the two don't really mix very well, meaning if your goal is to buy the nicest home on the block for the lowest price on the block, the odds of it happening are so against you. It's probably just not going to happen. So begin with the end in mind, knowing what you'd like at the end to be, what you want the outcome to be. You want a nice home or do you want a money-making investment? Typically, you can't get both. So decide which one's more important. Point number two, know your seller and what's important to them.

Meaning, will you be making your offer to a listing agent representing the seller or to the seller directly? Because two scenarios here. The first is the seller has hired an agent to represent them in the sale of their property. The second, the seller has decided to represent themselves in the sale of their property. So if you're going to be presenting your offer through the seller's agent, know what's important to the agent. Agents, they want their commission and they want it quickly. So when presenting your offer, keeping the agent assured that they will get their commission for certain,

and as soon as possible, that can go a really long way in your negotiations. And actually a very common strategy a buyer will use to get their offer accepted and save a little bit of money is to ask the seller's agent to represent them as well. in addition to the seller and then ask the agent to kick back some of the buyer's agents commissions to them. So the agent will make a few more bucks. And because of this, the agent is typically a little bit more aggressive in getting that offer accepted. And both sides tend to win. All right.

So that is one way. But if you're presenting directly to a seller, there's no agent involved. More times than not, you're dealing with someone just like you, someone that either doesn't like realtors or thinks that they can do it better and or wouldn't mind saving some money too by avoiding those realtor fees. So regardless, whether there is a realtor involved or not, I recommend you fight for the right to present your offer in person with the seller, the decision maker present. Yes, even if they have a realtor, request that the realtor set up a meeting between you and the seller to present your offer in person. Unless you do, there's no way you're ever going to know what's important to the seller. And that's the foundation of getting

a real good deal for yourself. That's the foundation. And don't understand. underestimate the miracles that can happen when dealing face-to-face as opposed to, you know, faxing in your offer, emailing it, or FedExing it over. Because if you're going to take this on making an offer without a realtor, don't get lazy. I mean, you might as well just hire the realtor then. Offer in person. So point number three, align yourself with the seller. The biggest mistake I see people make when making an offer and or negotiating what the seller is, they take in an adversarial role, meaning it's buyer versus seller. They're out to win. and someone will and someone's going to lose.

Typically the person that is less willing to walk away is the one that loses. But what I've found is by searching for and creating a win-win scenario, you can frequently get more for yourself than if you took on the seller and just, you know, you're just focusing on the lowest price you could get. You know, everyone has their own opinion of real estate values. Understand this. Sellers think it's way up here. Buyers think it's down here.

And in the middle, you've got appraiser right about here. And then you've got realtors here. And then right here typically in the middle. that's where the market determines the value. So align yourself with the seller and make the market the bad guy or the adversary. When you do this, two things happen. First, the seller is going to like you. And being liked by the seller is going to go a long way and you're getting what you want.

As well, it's going to keep any competition at a disadvantage. The second thing, it's much easier to make the seller think that they won, even if you get everything you wanted out of the deal. That's going to become more clear as we go through these five steps to make an offer without a realtor. And let's do that now, okay? So step one, align yourself with the seller. I said that already, I know. But that was more of a mindset thing.

What I'm referring to right now is more of a practical, how do you make this happen thing? You see, when you first speak directly to the seller, and there's really so many ways that you can say this, but an example of aligning yourself with the seller, it might sound like this. Mrs. Seller, I really like your house, and I think I would like to buy it. nothing would make me happier than if we both get what we want out of this transaction. You get a fair price and I get a nice property. At the end of the day, but the only thing that could really get in the way is the market.

Because the market is really what determines the property's value. And I know you probably want to get as much as you possibly can. I would too if I were you. And all I want is just to make sure that I don't overpay and lose money. That's fair, isn't it? You see how you position the market as a bad guy? That's what's going to get in the way. But we're on the same side to win-win, right?

Cool. Step two. Set expectations. I like to end the initial conversation, as well as every conversation, really, with what I call a transition agreement. A transition agreement does very much as it states. It is to be used in every transition in your interaction with the seller to set expectations for what's next. Indirectly, it actually does something more important. It increases your likability as well as your trustability. So what's a transition agreement? What does that sound like? Okay, it sounds something like this. There's a lot of ways that you can say this too. Okay, Mrs. Seller, when I come over, I'd love for you to just show me around your property and point out anything that you feel impacts the property's value. What I'm going to do is I'm just going to take some notes. And when we're done, I should have everything I need to make an offer. Or not. You know, I won't know for sure until you're done showing me the property.

But what I can promise is if at any point I don't feel it's going to be something for me, I'm going to let you know right away so I don't waste your time. Is that fair? Great. And all I ask and return is that the same. If anything doesn't feel right to you, will you please let me know so that I don't waste my time? Okay. Now within there is what's called a release statement, meaning you're giving the seller a free and safe space to say no to you.

And you want to do that because if they feel comfortable telling you no, when you do get a yes, you'll know it's a true yes as opposed to being, you know, brushed off. All right. Step three. Do some preliminary research, not a bunch, just a little bit, but. before arriving at the property to view and make your offer, pull the comparable sales in the area. Take a drive around the neighborhood, look at what has sold, look at what else is for sale. And if you're going to make the market the bad guy, you know, you want to know what the market is really saying as it pertains to the property that you want to buy.

Right. And then when you arrive, you're going to do a little bit more research to when you arrive to meet the seller at the property, arrive a few minutes early, and then just do some more research. Take a brief outdoor tour of the property and take lots of notes. Take lots of notes. Your list of notes, it's going to be really valuable when making your offer. So, and we're getting to that. And then it's all going to come together for you in just a minute. All right.

So step four, start your tour. You know, when you knock on the door and the seller answers, and then you repeat the transition agreement because it's a transition, and then ask the seller to show you around. And while touring the property with a seller, ask about everything. You see, by asking about potential problems, you make the seller's idea, you make everything that the seller's idea is not yours. You want to flush out as much information as possible from the seller during your property

tour because that's going to help you significantly when making your offer. For example, when was the last time the roof was in place or replaced? What needs to be fixed? What's out of date? What could use some maintenance? Have you had any bids on any of these? Do you have any idea of how much it's going to cost to fix this or fix that or update that? You know, one of my favorite questions, especially if the salesman is,

seller is convinced their house is a perfect house that needs no repairs because you'll come across it is you know Mr. Seller or Mrs. Seller if you were to stay another 10 years what's the first three things that you would replace? This is not the time to insert your opinion you're just flushing it out you're just asking questions and making note of all the answers and the seller's answers to your to your existing notes and you're going to have this long list of notes and you're going to see why in just a second so step five make your offer so on your pad of paper where you were taking all of your notes you should already have an idea as to the property's value based on your preliminary research and after driving the neighborhood and

viewing the comparable sales. And what you do is just kind of take three to five of the comparable sales that you feel were most like the property that you'd want to buy and then just average them out. And that's going to be really close to the property's value. Start with that number and then refer to your giant list of notes, mostly all the stuff that the seller shared with you and just kind of back out what your estimate of the repair cost, everything that the seller mentioned during your tour. And then subtract just a little bit more for incidents.

And if this is going to be an investment property for you, this is where you'd want to subtract the profit that you want for yourself. All right. So it's market value, less repairs or incidentals, and or your profit, and then you'll have your offer number right there. Okay, so it's time to make your offer. But I like to refer to this offer as a soft pass to test the waters with your number. And it might sound something like this. Mrs. Seller, the current market conditions have your properties value right around $200,000. And based off what you shared with me about the property,

condition and then considering incidentals, what you're saying is we're right around $170,000. Is that right? And then just be quiet and wait. You see, what you've done in the soft passes, you've positioned to the market as the bad guy and subtracted everything that the seller shared with you about the property. And then you made the price, the seller's idea. This positions everything as the seller's idea. And if it's their idea, they'll be more inclined to accept.

as they feel like they won. It was their idea. They won. Remember, we're going for a win-win outcome. And through that specific phrasing, you indirectly gave the seller the win while creating the win for you too. And if they accept, you can follow up with something like, great, should we make it official, put it on paper? Again, be quiet and wait. If the seller doesn't like the number that you came up with, then just re-ask the question. Re-ask the question this way. Okay, so miss a seller, based off what the market is saying, the condition you shared with me about the house, and after considering incidentals, you know, the little unknowns that accompanies every house, what is the lowest price you would take?

Again, be quiet and wait. And here too, with this phrasing, the price is the seller's idea. Whatever comes out of their mouth is their idea. And whatever they respond with is a win for them. And if you find their response an acceptable win for you, your response would be something like, okay, if I agreed to that, would we have a deal? And if they agree, great. So should we make it official? Should I put it on paper? Or if you wanted, after they gave you their number, it never hurts to ask this.

Okay, so is that your bottom line? Again, whatever is said, it's the seller's idea, the seller wins. And if their answer is based off of the market's opinion of value and the condition of the property, it will be a fair price. It's going to be a win for you too. And always end with, is that your bottom line? You'll be amazed how many times that simple question gets you an additional reduction in price. All righty? So that's the basic approach that I use when making an offer to every seller these days.

And I'm more aggressive with my numbers considering I'm typically buying investment properties. But this approach, it works just as well when making an offer to purchase a new home without a realtor. So who do you know that would be interested in knowing how to make an offer on a house without a realtor? All righty. So I'll see you next week on another episode of Financial Freedom Friday. Take care. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.