Make Plenty of offers
Ranjan Bhattacharya
Having written the Build Your Property Empire home study course and being a regular public speaker on property investment topics, I receive several emails on the subject of making offers. Many of these emails go something like this:
Dear Ranjan,
I seen 25 properties in my area and after much consideration, I made offers on 2 of them. However, in each case the estate agent just laughed at me! I don’t seem to be getting any offers accepted and I'm becoming very discouraged. I don't think that we have deals like you do where I live. Can you help me? It just seems like most properties in my area sell for the full asking price or more.
Regards.
Discouraged Newbie
Discouraged Newbie is making one or possibly two mistakes common to new investors. They aren't targeting motivated sellers and/or they aren't making enough offers.
Targeting Motivated Sellers
The only difference between me and Discouraged Newbie is that I concentrate on the sellers who are motivated to sell at something less than full price.
Not convinced! Well the first step is to actually believe that some properties in your area actually do sell for much less than market value and here is how you can prove this to yourself.
Drive around your area keeping a lookout for skips in the road outside properties which you believe to have been bought by a developer. Then look on the land registry entry to see how much was actually paid for the property. This will give you proof of how much experienced developers are buying property for in your target area. Most newbies don't actually believe that it is possible to buy property for much less then it's worth. When you can see for yourself that others are doing it in your target area, then surely you can do it too?
Handling Rejection
If I make 30 offers, chances are that between 27 and 29 of the sellers will say "No," or someone else is going to offer more. Even as an experienced property investor, only a tiny percentage of offers I make are actually accepted. But I'm not concerned about all of the, "No's." I accept them as part of the process and forge ahead, knowing that if I make enough offers someone is eventually going to say "Yes," particularly if my offers are targeted toward sellers who have some degree of motivation.
Making Lots of Offers to Keep Your Funnel Full
It is extremely important that you always keep your pipeline full, and the way to do that is to constantly make offers. Many people come and tell me that they look at properties all the time but never buy anything. They say they find motivated sellers but none of their deals ever goes through. My next question to them is, "How many times have you put an offer on paper?" They are usually able to counter their answer on one hand.
In order to buy properties, you must make offers. Sounds simple, right? Yet it's surprising how many new investors have trouble overcoming this hurdle. Personally, I average over 30 offers per month, sometimes more. However if I have a month where I have just made 4 or 5 offers I invariably end up not buying anything!
When I look at 20 properties I try to make 20 offers. If I'm targeting the right properties (i.e., those with sellers who may be motivated), odds are that there will be several sellers out of 20 with enough motivation to seriously consider my offer. What I don't try to do is select who those 2 or 3 sellers might be. The chances of me picking the right ones are very slim. And why should I? My low offers will fish out the sellers motivated enough to respond and thereby tell me where I should invest my time. Too many investors try to pick the motivated sellers from a group by themselves when making offers is the easiest way to find out.
I make offers on every single home that interests me where I think the seller might be motivated. Some are priced ridiculously high; others are priced ridiculously low. Some are in great areas; some are in bad areas. Regardless of location, condition or price, there is a number that works for every property and that is what I offer. Sure, most of these offers are rejected just like most of my other offers. In general, though, some of my offers are accepted, and those are the only ones that count.
I hope that this will inspire some of you to get out there and start making more offers. If you make it your goal to make an offer a day, then you will start to buy properties. Do your homework, get your questions answered, and overcome your fears. Then make it your goal to average an offer a day because, "Making an offer a day, really does pay!"
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