At the center of every real estate deal is the offer. In fact, it is at the center of every business activity. It is to what all your gathering of leads, researching property, communicating with sellers/potential sellers, and scratch paper analysis leads. From it comes the negotiation, the agreement, the closing, and the rehab. It is the greatest single determiner of your profit or your loss in real estate.
The Craft of the Investor
As a real estate investor, making and negotiating offers is, essentially, your craft. It is at what you should to be really good. Mastering the art of the offer takes study, deliberation and, most importantly, practice. The more offers you make the more you home your craft. In our essential Rule of 56 we teach that every investor should be making at least four offers a week to be successful.
“I’m gonna make him an offer he can’t refuse.”
― Mario Puzo, The Godfather
The strategy I have found most successful is the Three-Tiered Offer. This approach is, essentially, putting three offers into one, giving the seller three alternatives in selling you’re the property.
As you structure your offer, include the following three parts:
- A Low-Ball Cash Offer
- A Small Down Payment with a Seller Carried Second
- 100% Seller Financing
Low-Ball Cash Offer
This offer will be all cash. It will be the lowest of the 3 offers. If done correctly, this amount will offend the seller. That is ok. Remember there are two other offers to come. This offer is admittedly a low-ball offer that sets the subsequent two offers up as being better, and more worthy of consideration.
A Small Down Payment with a Seller Carry
This offer mixes cash and seller carry. Because you will include terms that are advantageous, you are able to offer more than cash alone. This offer should be structured to appeal to the seller who expressed a need for some cash up front but does not need all the cash at once.
All Seller Financing
This option requires the least out of pocket from the investor. Coupled with advantageous terms, this option will allow you to make the highest offer. This is the ultimate win–win option. The investor controls a new property with no money out of pocket, the seller gets his/her house sold and will receive a monthly income.
How do you Master the Offer?
Mastering the Three-Tiered Offer is going to take more than a blog post. Because of that, we recorded a two-day, intensive, offer-writing workshop and packaged it with all the bonus resources you need to make successful offers (including the Real Estate Investors Workshop Contract Creator.) Because you need this to start writing this week’s four offers, I am temporarily making it available to you at very low price point (for Cogo Blog subscribers and CEO Fireside webinar attendees only.) Click below while this Building the Offer opportunity is still available.
Lee Arnold is an Internationally recognized speaker and a 30-year veteran in the real estate industry. He’s been featured in articles in Forbes, the Boston Globe, Market Watch, Reuters, and Business Week. As CEO of Cogo Capital, Lee has guided the company from a one-man operation to a multi million dollar company that connects investors with private lending opportunities and alternative investments in real estate.
