Epic Real Estate Investing - How to Make Your Creative Offer Stronger | 1050

Episode Date: June 15, 2020

We can purchase properties in 2 ways, by our prices and the seller’s terms, or the seller’s price and our terms. As long as you can control one of them, you can always make a deal for yourself! Moreover, there are certain terms that you can negotiate to make your offer more appealing without giving too much more! Hence, in today’s episode, Matt shares 4 different terms to put into your negotiating to make your offer seams stronger but not necessarily stricter for you! Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-A's.com.

Here's Matt. Hey there, Epic Investor. It's Matt Terrio from Epic Real Estate, where we show people how to invest in real estate with an emphasis on retiring early. This is the Epic Real Estate Investing Show. And I do this show because I know that most people are living a life of financial sacrifice and betrayal. So what we've done is we've built a system that creates an opportunity for one's money to work harder for them than they did for it. saving them and their families from a lifetime of financial worry. And I know that real estate works, and I believe everyone deserves a chance. And that's why we're here.

So if this is your first time here, glad you found us. If you like what you hear, make sure you hit the subscribe button before you go. And if this is not your first time here, you know the drill. You know I'm very grateful. Welcome back. And thank you for sharing this with your friends and your family. You are the absolute best for doing that. Appreciate you.

Now, you've heard me say more than once here on the show, price or terms, right? We can purchase property in one of two ways. By our price in the seller's terms or the seller's price in our terms. As long as you can control one, repeat after me, you can always make a deal for yourself, right? So when it comes to creative offers like this, it's pretty much because the seller has chosen the price and they're standing fast there. They want their price and they're not going to buy it. budge. So in order for us to give that to the seller and meet that price, we need to structure the terms for ourselves in a way that the price works for us. And there are certain terms that

you can negotiate to make your offer more appealing without you really giving up too much more. So I want to talk about four different ways or four different terms that have come to mind that you can put into your negotiating to make your offer seem to. seem stronger, but not necessarily take too much away from you. This first one is a little bit of an exception, but maybe you'll catch on as I explain. And that's by just offering more cash. And that might sound a little bit contradictory now that I said it's not going to be too much more out of your pocket.

I'm saying give them more cash. Well, this is what I mean. To a seller, cash is king. And that's pretty much the only thing that they understand. You'll find some more sophisticated ones every once in a while out there that get it. but for the most part, they just understand price and they understand cash. And typically, the more that they get up front, the better. But how can you offer more cash up front without ruining the deal for yourself?

You know, a typical seller carryback financed offer might look like, you know, 10% down, 10 years of payments, and then a balloon payment at the end. Something like that. That's just real vanilla. And we'll say that the math works out that way. That math works out for you really nicely. But the seller wants 20% down. You've offered 10% they want 20% Or they're not going to do the deal

So obviously you could pay the 20% If you like the deal and if you had it Then you know, then that might be what you have to do Or if you really like the deal but don't have the money Maybe break the down payment up Like 10% down now like you're willing to pay And then maybe 10% more in six months So you're just breaking that down payment up into two payments

and that give you six months to try and find that extra 10%. Again, if you really like this deal and you want it, and you know it's a good deal, you just short on the money or need some time to get it. Maybe you wholesale a couple more houses in between those six months and then you make the extra down payment. Or maybe you do 5% at closing and then 5% more every 90 days. So if you're going to give them more, then I'll give you more,

but I'm going to give you a little bit less right at closing, and you can break that up. You know, as they say, time is money. And if they can get that extra 10%, the way that they want faster than having to wait for, say, the 10-year balloon in this example, and you can buy yourself an extra 90 days or six months or whatever it is to come up with that extra cash,

that could create a win-win. Remember, everything is negotiable. You are only limited by your own creativity. And the pro tip here is don't concede without getting a concession, right? If you're going to give the seller something, you need to get something in return. So to stay congruent or stay in alignment

with what we're talking about right now, if you're going to give the seller more money, then you might ask for a moratorium on the first payment based on the first payment of the balance to after that down payment is actually paid in full. And I'm doing a deal like that right now. I'm breaking up the down payment into three payments over the year. Every four months, they get an additional third.

And there are good chunks of money. But I don't have the normal monthly payments on the balance until after that first year when the down payment is paid in full. So I'm making these three large payments to make up for the down payment. But those little, you know, I think it was like a $350 payment each month, he doesn't really need, that's not going to make a big difference. He wants the big chunks for the down payment.

So I don't have to make any of those payments until after the first year. So I have these four big, or let's say, three big payments, but no, none of those small payments still for a whole year. So I'm paying these big chunks of cash, but I don't have the monthly payments. No one said you had to pay both of them simultaneously, right?

Everything is negotiable, and you're only limited by your own creativity. So that's number one, more cash. I think you like these others better if you didn't like that one. But consider if they want more money down, break it up. Break up the down payment. And if you're going to give them that, then ask for a moratorium or a delay on the actual

payments for that balance. So number two is give them more earnest money. You know, one of the bigger concerns of distressed sellers is just having a high level of certainty around the deal actually closing, particularly if they've dealt with the wholesaler or two before you got there and those wholesalers couldn't perform because they have to trust you to enter an agreement with you and they may like the price in terms that you came up with but they're not sure it's actually real you know here's another reality is many sellers have never seen or heard of anything like seller financing i mean if you say the word seller financing

sometimes you just get like a blank stare back and and they have no idea what you're you're even talking about. So if you propose something and they don't understand it, that might increase their uncertainty or increase their level of distrust in that fashion as well. So if you put into escrow a larger earnest money deposit, that could be the very thing that gives them that comfort to move forward. And it's no skin off your back either. That earnest money is completely refundable if you cancel within your contingency period.

and if you follow through with the deal, that earnest money is applied to the sale. So you're going to pay that money anyway. But just by putting a little bit more into escrow, that can give them some more confidence that you're actually going to follow through and that you're serious. And the seller feels that they won and you didn't lose. All right. So that's number two, increase the earnest money. Number three is you can shorten the inspection period or waive the contingency altogether

because in every purchase agreement you have this thing called a contingency. It's a condition statement. If this, then that. So if the property passes a physical inspection, then I'll proceed to move forward. If the property has clear title, then I'll proceed to move forward. If I get approved for my financing, then I'll move forward. Those are all different types of contingencies, condition statements. If this, then that.

So for very much of the same reason in increasing your earnest money deposit, another way to increase the seller's confidence in you is to shorten your inspection period. which gives the seller confirmation that you are indeed following through with the deal. Or if you really like the deal and you know you want it no matter what because, you know, you've got a great price. You've got a great price in terms on your hands with the seller. Maybe removing the contingency period altogether might be the thing to get your offer accepted. And what that means is any earnest money that you put into a deal is at risk when you move the contingency.

That's why the previous example, it's safe as long as you're within your contingency period. But if you shorten that contingency period or you remove it all together, now your earnest money is at risk. So if you shorten that, then if you just shorten the inspection period, you have to move fast, right? If you waived it all together, you don't want to give them any more earnest money than you're willing to lose. But sometimes you see a deal and you love the price, you love the property, and you know exactly how. how you're going to profit from it, that waiving the contingency altogether might not be that much of a risk at all. Each deal is a little bit different.

Each property is a little bit different. All the circumstances are always different. There's just so many variables at play. But that is one way you can do it is by shortening it or waiving it all together, the contingency period. Number four, offer to close quicker, right? The quicker you can close the stronger your offer is. And, I mean, everybody loves fast money.

and so offer to close quicker. But with that said, you can only close as quickly as your closing agent can confirm clear title and process the paperwork. And if you're using someone else's funds, whether that's a bank or it's hard money or it's private money, that may add some additional time to your closing as well. If you've got all cash, though, you could write in to close in 10 days or less. Or if you have a credit line at the ready, you know, you've got that available. you could do the same there. This is precisely what Epic Investors use Epic Fast Funding for to be ready to jump on the right deal when it comes along.

If you'd like, you can take a look to see if you qualify, just the name, email, and phone number to get an instant answer. No social security number is needed, and you don't even have to talk to anybody, which is kind of cool now. And you can do that at Epicfastfunding.com. But just, you know, arming yourself with the funds or a credit line to be ready to pull the trigger quickly and close quickly, if that's what the seller needs,

or if you're up against competition and you can close in half the time that they can close, that might be just what you need to push you over the top. Now, with all that said, that your typical fast closing will be 10 to 14 days at its fastest most of the time, because they've got to prepare the title work, they've got to prep the documents.

And so rather than committing to a time, I write closing as soon as or to close, close as soon as title is confirmed clear. And that way, I know I'm going to be safe and close as fast as I possibly can, but not before I can or not. I won't be forced to perform or close before I am covered. All right? So everything is negotiable, but not every term is created equal.

I mean, some terms have greater value to the seller than others while simultaneously having minimal impact to you. And many of these terms have to do with. the seller's immediate needs and the certainty and speed of clothes, which can be just enough to give them the peace of mind that they're looking for while carving out some additional equity that you're looking for. All righty? So if you found this episode valuable, who else do you know?

There's a good chance you know someone else who would as well. And when that person's name comes to mind, share it with them, ask them to click the subscribe button when they get here, and I'll take great care of them. All righty, that's it for today. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio, Living the Dream. Yeah, yeah, we got the cash flow.

Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know, home for it, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.