Now that you have your narrowed down your list of investment properties to bid on, it is time to submit your bid. Now, I just want to go over some quick strategies here, and provide you with some resource links. Bidding the properties usually is not a hard thing to do, but starting the closing process can be difficult at times.
For the Beginner, Start with Using a Realtor or Investor Friend
This is the easiest way to get started. This person will have all the required forms etc. to submit your offer to the seller. This is where having a good friend in your backend network can really help you. You see, you can use this friend to guide through a real live deal, and the next time it will get easier for you. If it is an investor, ask them to send you the forms they use to submit bids. You have to be careful with a realtor though, as they will probably not be able to give you blank copies of the forms they use, as they are promulgated forms that are backed by state real estate commissions or other groups that are for realtor only use.
But ask them questions about it, and get copies of the forms they use, if possible. I would get a face to face meeting with them, and just go through the contract from start to finish. This will give you a real good idea of what these contracts should like, and they can help you to know how to protect yourself in the contract.
Download a Set of Real Estate Forms
There are of course, several paid and non paid forms available online. Be careful before you use these forms, and make sure you consult with a real estate professional or other investor before using them. You definitely don’t want a law suit on your hands with your first deal. Here are some links:
Now, understand that I am a realtor myself. So I do not use any of the forms that I just posted above. I will be talking more later about why you should consider becoming a realtor yourself, and this is one of those reasons. I wanted to have everything I needed to be able to move in out of deals with lightning speed. But, if you don’t have the time or money currently to get your realtor’s license, start with these resources, check them with an experienced friend in the industry, and move forward.
Some Key Contractual Points to Consider before Sending Your Offer
Make sure that you include in the contract an option (or for commercial, its called a feasibility) period in the contract. What this guarantees is that you have a few days (I would set it to somewhere between 7 and 15 days for a small residential contract) to get out of the deal for absolutely no reason, while only risking $50 or $100. This concept is kind of like earnest money on earnest money. You get a few days to do inspections etc., while not being at risk for the contract.
Make sure that you have an expiration date on the contract that is in the very near future. I wouldn’t give the seller more than a day or two to think it over. Many times, you can give them until the end of the day. The point is, you don’t want to give them a bunch of time to consider everything, talk it over with 18 friends and family, and decide that you aren’t giving them a fair deal. Make it a quick expiration, and hold them to it.
And finally, make sure that you offer something that is well below your predetermined high number. This will give you room to negotiate up, and you might end up with the property for less! Negotiate, negotiate. We will cover negotiation in more detail very soon.
Once you have these key things in place, and your professional friend says it is good to go, send the offer and wait for the response. In our next post, we discuss some negotiating tactics you can use to win a great deal.