A lot can happen between an initial offer and closing day. Meet the counteroffer ...Buying a home is rarely as simple as making an offer and paying that offer out. Negotiations can go back and forth for weeks before the seller and buyer are both satisfied. The vehicle for this negotiation is the counteroffer — a vital and complex rejection and counter to an offer made by either party. Counteroffers are typically handled between real estate agents and are time sensitive. Selling or buying a home is more of a process than a transaction, so it’s important to understand counteroffers before you make your first offer. Why was I countered? As a home buyer, if you make an offer below list price, the seller may choose to reject, accept or simply let the offer expire. If there are multiple offers, the listing agent will lay out the options for their client and then notify all buyers’ agents of the choices. Sellers may also counter your proposed closing date. If they need to move out quickly, they may want to push it earlier. They may also ask to rent the property for a time after the settlement. Price and closing date negotiations are common from both parties, but there are even more reasons sellers can potentially get countered. The condition of the home is likely the biggest factor here. As home buyers conduct ongoing research into the home, any problems with the condition of the house can result in a counteroffer. If you’ve chosen to take appliances with you when you move, buyers may also look to negotiate for those. Appraisals are another reason for counteroffers. If an appraisal comes in below the agreed-upon sale price, it will affect the amount the mortgage company will lend to the buyer. Negotiation power When reviewing a counteroffer, it’s important to have an experienced real estate agent who can capitalize on your advantages in a negotiation. Both sellers and buyers can take steps to put themselves in an advantageous position through planning and smart counteroffers. Knowledge is power in negotiations, so try to glean as much information about the seller or buyer as you can. Your agent will also seek information from the other agent on your behalf. Sometimes sellers use the pending sale of their home to finance another, meaning they have a truncated timeline and could be more eager to make a deal. Similarly, buyers who have terminated a lease may be desperate for a place to live and more willing to negotiate. If you’re selling a home with known issues, anticipate how these problems may put you at a disadvantage during negotiations. A leaky roof may not be discovered until after buyers order a home inspection. Depending on the cost, they may ask the seller to either fix the roof or deduct the cost of a new roof from the sale price. These types of issues put sellers at a distinct disadvantage because they have to either pay for repairs, lower the selling price, or reject the counteroffer and hope the next buyer doesn’t notice or care about repairs. This is why it’s worth the money (around $500) to pay for an inspection before listing a house. Preparation can save you headaches and money down the road. Responding to a counteroffer If you’ve received a counteroffer as a buyer or a seller, carefully review every aspect. Real estate agents, apart from yours, are under no obligation to ensure you read the full contract. So make sure you read everything carefully before you sign. With each individual counteroffer, consider every aspect of the sale, including old and new information. If you made an offer above the list price, there is always the possibility for an appraisal to come in low. If you are responding to a counteroffer before an appraisal or inspection, keep those at the forefront of your mind. Prepare yourself for future counteroffers once they are completed. Whether you’re selling or buying a home, establish a baseline for when you will walk away from a sale. As a buyer, you don’t want to spend so much on a home that you move in with no cash for improvements and repairs. And as a seller, you should know how much you want to make off the sale. With a measured and informed approach, counteroffers can be your friend. Communicate often with your agent to let them know what you want from the sale, and never be afraid to walk away if things go south. On Point Homevestments
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Regardless of which stage of the real estate business you are in, there will be times when you feel overwhelmed. Most successful investors will have a good mix of new leads coming in with deals headed to closing. You may also have a rehab you are currently working on, as well as a few rental properties that can eat up some of your day. As much as it would be nice to be everywhere at once, you can’t replicate yourself and be in multiple places. The only thing you can do is to become a more productive real estate entrepreneur. If you maximize every minute you are working, you will find that you may just have all the time you need. The most successful people in real estate don’t just wake up in the morning and deal with issues as they come. This isn’t to say that there won’t be curveballs thrown at them throughout the day, but they start the day with a plan. This means taking a few minutes before they go to bed to write down what needs to be done the next day. A good list will give you something to revert back to when things get hectic. It will give you a battle plan of sorts: what needs to be done, when and who is going to do it. The more detailed you are with your list, the more efficient you will be. Simply jotting down five things that you sort of want to get accomplished is not enough. You should allocate time to when you are going to accomplish these tasks. Some people will only return emails or texts a few hours in the morning, and then again in the afternoon. Some will deal with sellers after dinner while others will visit their rehabs after lunch. How you arrange your day isn’t important. Sticking with your schedule is. There will always be days that you will have to deal with an unexpected emergency, but for every other day, you need to stay focused on your schedule. This will help you finish the task you are working on before you move on to the next one. Multitasking is great, but stopping and starting five different things at once isn’t multitasking. Do one thing to completion and then move on to the next. It is great to accomplish tasks off your list, but you should prioritize them with what is most important to your business. This may not necessarily mean working on deals closest to closing, but what is the most important task you want to accomplish for that day. Every list you make should revolve around getting it done. It is human nature to relax a bit when you accomplish something, but that should not be the highlight of your day. Once you handle one thing, you need to quickly move on to the next and keep things going. One of the mistakes investors make is thinking they need to work 100 hours a week to be successful. This is a recipe for disaster. You can work yourself into the ground in this business. Working 30 productive hours is far better than working 60 that you split looking on your phone or thinking about what you are going to do next. When you work during your day, make sure you are really working. Real estate investors, by nature, are control freaks and like to do everything themselves. There is a fine line between saving money on a do it yourself project and wasting time that is better spent elsewhere. Regardless of who you are, there will be times when you need to lean on your team or allocate tasks to others, even if it costs you money. Instead of focusing on how much it would cost to hire someone, think about how much you can gain by not having to spend the time to do this. Your realtor, attorney, mortgage broker and accountant all work with you towards the same goal. Everyone wants to close deals. If you have a question, you should feel comfortable enough to call or send an email and have a response back by the end of the day. If you can’t lean on your team when you need them, you should reconsider your relationship and think about finding someone else. Social media and technology are great, but they can also be a distraction if you are not careful. If you complain about not having enough time in a day, you can probably gain two to three hours just by waking up earlier, going to bed later, eliminating an hour of TV or cutting down on your technology use. If you want to get the most out of your day, you will have to make some sacrifices along the way. How you work is always more important than how long you work for. There is not much that separates an average investor from one that is very successful. Getting one or two more tasks accomplished or working on one extra deal every day can get you over that hump. There are only has 24 hours in a day. The best investors are the ones that know how to use them. On Point HomevestmentsWhat real estate wholesaling goals are appropriate for those investors that are just setting out on their entrepreneurial journey? Is it a good idea to shoot for the stars? Better yet, how can you set some realistic expectations for your first two months? Remember, creating business goals isn’t going to be easy, but it can make a huge difference. Only one thing is for certain: each of these questions can’t be answered with a simple yes or no. In fact, the answers will vary from investor to investor, as no two investors’ real estate wholesaling goals are exactly alike. What works for someone in California could be rendered moot by someone in the next state over. However, there are a few universal goals every investor should set; goals that will make the first two months of real estate wholesaling seem manageable. What more could you ask for? First, let me commend you for taking the initial step of wholesaling: developing the right mindset and moving forward. Real estate is a complicated industry riddled with confusing verbiage and complex strategies, but I digress. Real estate is only as complicated as you make it. It’s entirely possible to break down real estate wholesaling into manageable steps. Having said that, there are goals each investor should set for their first few months in the industry. They are as follows. The First Month Of Real Estate WholesalingThe first month of real estate wholesaling really has more to do with preparation than anything else. That said, those looking to land their first wholesale deal should mind due diligence and pay special consideration to the following goals within the first month of initiating a wholesaling campaign: 1. Conduct An In-Depth Market Analysis By the end of the first month, investors should strive to learn as much as they can about the particular market they intend to deal in. In order to do so, however, aspiring wholesalers will need identify said market first. The market you intend to work in may not be as obvious as you initially thought. Your first task as a wholesaler should be to identify at least three neighborhoods in which you may conduct business. Take note of what you hope to achieve, and find out for yourself which neighborhood offers the path of least resistance. 2. Start Building A Buyers List If you haven’t started already, compile a list of potential buyers that would be interested in any deals you come across. Otherwise known as a buyers list, the contacts you manage to accumulate should represent a contingent of people you would feel perfectly comfortable calling in the event you land a deal. It’s worth noting, however, that the list doesn’t need to be exhaustive, nor does it need to eclipse 100 names in the first month of its existence. Instead, I recommend starting off slow; there is nothing wrong with gathering five to 10 prospective buyers, so long as they are quality leads and contribute to your goals. In fact, I highly recommend focusing on quality over quantity in your first month of real estate wholesaling. 3. Get Your Logistics In Order It’s imperative for anyone looking to succeed in real estate wholesaling to treat it as a business. And while it’s entirely possible to succeed in wholesaling when you view it as a hobby, the benefits increase exponentially the more time you invest. That said, if you intend to make a career out of real estate wholesaling, you must treat it like the business it deserves to be treated as. Not unlike any other business, real estate wholesaling has become synonymous with its own compliment of logistics. You can’t expect to run a business without the proper logistics in your corner, can you? Not surprisingly, you will need a way for potential customers to contact you. Within the first month, I highly recommend establishing a committed telephone line (separate of your personal line) and drafting your first set of business cards. That way you will increase your odds of landing the deals that come your way. Remember, you can’t land a deal if nobody can get a hold of you. Mind due diligence and make logistics a priority in your first month of operations. The Second Month Of Real Estate WholesalingI want to make it abundantly clear: The first month should focus on learning your market, establishing logistics and lining up potential buyers. Notice how I neglected to include finding deals? There is a good reason: real estate wholesaling will be a lot easier with all the right pieces in place. Without a buyers list, a means of getting a hold of you, or even simple market knowledge, it’s safe to assume real estate wholesaling is down right hard. However, with everything in order, you will find that success is a lot easier to come by. Only once you have laid the foundation can I recommend moving forward with setting goals in the second month. Provided you have done everything I outlined above, consider taking the following steps in month two. 1. Market, Market & Market Some More The second month of any real estate wholesaling campaign should center around one thing and one thing only: marketing. Provided you took all the steps I mentioned in the first month, your funnel is ready to start receiving leads. I recommend initiating the following marketing strategies:
As with any real estate wholesaling marketing strategy, you must remain consistent. While you would ultimately love to hear responses from your first attempt, the chances of landing a hot lead improve over time. That said, it’s in your best interest to remain persistent. Don’t stop after you mail out one set of direct mail postcards or post a single wave of bandit signs. Studies have shown that most of your first attempts will either be ignored or disregarded, but that shouldn’t discourage you. Even though your first attempts at marketing don’t result in a phone call, you are increasing brand exposure. Soon enough, prospective sellers will start to recognize your name, and by the third or fourth marketing attempt, it’s reasonable to assume they will reach out if they need your assistance. The first two months of a real estate wholesaling campaign are pivotal in establishing momentum. Those who get off to a running start are more likely to realize long-term success. If that sounds like something you would like to experience, try setting a few goals for yourself. RESIDENTIAL REDEVELOPMENT COMPANYReal estate exit strategies have become synonymous with some of the most popular wealth-building vehicles used by today’s greatest entrepreneurs. Not only are they entirely capable of awarding savvy individuals with an impressive return on their investment, but you could argue that few other investing platforms offer a more diverse set of complimentary choices. Wholesaling, rehabbing and passive income opportunities are just the beginning; which one will you choose to pursue? The answer may be easier to come up with than you think. No other industry, as far as I am concerned, offers investors more ways to invest their capital than real estate, but I digress. The same freedom of choice most covet is not without its own caveat: with more choices comes more responsibility. With the entire real estate investing world at your fingertips, it’s easy to get in over your head. That’s why I recommend tailoring your real estate exit strategy to compliment your current level of experience. Not everyone is capable of successfully navigating all of the real estate exit strategies simultaneously, nor should they be expected to. And while there are those who can manage a rehab with one hand tied behind their back while simultaneously assigning multiple wholesale contracts, it’s not reasonable to expect a new investor to be able to do the same. The key is to know your own limitations and identify the exit strategy you are most comfortable with. Truth be told, there is a time and place to initiate a real estate exit strategy, and it’s not uncommon for your personal experience to dictate which real estate exit strategy you should execute next, or even first. And while experienced investors are free to choose whichever strategy meets their needs, those new to the industry should follow what I like to call the path of least resistance. There is a specific order I would recommend investors follow when exercising their freedom to invest in real estate exit strategies. I want to make it abundantly clear: the order in which you invest in real estate exit strategies isn’t set in stone. It’s entirely possible for a new investor to invest in a buy and hold property or a rehab as part of their first deal. It’s worth noting, however, that the growth of an investor is made easier by following a specific path; the one of least resistance I set out for you here. There is an inherent advantage of moving from wholesales to rehabs to rentals. The skills you learn in each strategy compound in the next, and are ultimately invaluable to your success as an investor. Real Estate Exit Strategies: Where Should You Begin?Whether you realize it or not, there is an order in which investors should get their feet wet in the world of real estate investing. And while what I am about to tell you is in no way written in stone, I am convinced that there is an order in which real estate investors need to commit to individual exit strategies: wholesales, rehabs and rentals. If for nothing else, undertaking real exit strategies in this exact order offers the smoothest transition from one strategy to the next. Wholesaling, for what it’s worth, represents the “easiest” gateway into the real estate investing world. Not only is it less of an undertaking than it’s rental and rehabbing counterparts, but wholesaling generally coincides with significantly less risk. As a wholesaler, your main priority is to go into contract with a respective seller, market the home to potential buyers, and assign your control of the contact over to the end buyer. More often than not, wholesalers never even need to assume ownership of the physical property; just the rights to purchase it. Once the seller has signed a contract saying you own the rights to buy the home, you can then turn around and sell your purchase rights to an interested buyer (usually a rehabber) for a minimal fee. Alternatively, wholesalers can also close on the property and immediately resell it to another investor in the form of a “double close.” It’s worth noting that certain regions have different laws regarding wholesaling, so be sure to check with the home’s local municipality before moving forward with a wholesale deal. As perhaps the most popular real estate exit strategy, rehabbing has become ubiquitous with the largest profit margins. And as the name suggests, rehabbing will have an investor buy a home, renovate said home and sell it for more than the initial investment (including repairs). The idea is to acquire a property for less than the market dictates and apply the necessary renovations that will make it comparable to similar homes on the market. It’s entirely possible, with the right improvements, to increase the property’s value beyond that of what you have already paid. Not surprisingly, rehabs coincide with considerably more work than traditional wholesales. As a result, rehabs expose investors to more risk and cost a lot more money. Having said that, rehabs are capable of making investors a lot more money on the back end of a deal. And with the right measures put in place, it’s entirely possible to mitigate risk. It’s also worth noting that the experience you gain from a wholesale can transition over into a rehab, and actually contribute to your efforts in a meaningful way. While some investors have found their niche in today’s wholesaling and rehabbing markets, there is a good chance they will want to graduate to our final stop on the path of least resistance: passive income. Otherwise known as a buy and hold strategy, passive income is essentially the result of a well-devised rental portfolio. And since the price of admission will have investors buy and hold on to a mortgage, this particular strategy requires more money up front. That said, most investors use rehabs as a stepping stone until they can finally transition to passive income properties. Buy and hold real estate exit strategies will have investors buy a property, and perhaps even conduct a few renovations. However, instead of selling the home, the idea is to rent it out. More often than not, investors will use this strategy when home prices are high to recoup any capital they expended acquiring the property. This is also a popular real estate exit strategy for those looking to build up equity in an asset. With property in hand, its entirely possible for any tenants you find to pay down the mortgage, making this a great strategy for those looking to not pick up a hammer. RESIDENTIAL REDEVELOPMENT COMPANYMany people are still wondering whether or not real estate is one of the best investment strategies for long-term wealth building. Is investing in homes still a smart investment for the average individual? Is a home still the best investment of a lifetime for most Americans? If so, why are some pessimists still questioning the rebound in the news? Behind the Headlines Real estate companies will always boast about the benefits of acquiring real estate because it is their job. That is, unless of course, they have gotten into the rental business and make their money by touting the benefits of renting instead. Let’s be honest; statistics can be found and twisted to support any point of view and argument. Entire years of real estate statistics have been revised in the past, new indexes have been created to restart the clock, and even the national GDP was revised. Most don’t even bother to tune into job and unemployment numbers anymore due to how skewed different data sets have become. Even though the most conservative figures show housing rebounding, especially in hot areas like San Diego, there continue to be doubters. However, it doesn’t take much more than a little common sense to figure out real estate is still the best investment for most of the population. This applies to affluent individuals with top 1% income, as well as those that need to pinch pennies. Stocks have continued to demonstrate extreme volatility and risk. While UT San Diego reports local real estate is still 50% undervalued. In the stock market, plenty of Americans have lost 6 figures, literally overnight. Direct investment in real estate isn’t that volatile, and nothing is ever lost until a property is sold. For example; some Southern California homeowners saw their home values rise and fall on paper during the last couple of decades, but if they don’t sell for a few more years when prices exceed their previous peak, they will come out handsomely. Invest in Real Estate, Even if You Can’t Afford Your Dream Home One of the top excuses for many not to buy a house is that they can afford their ideal dream homes yet. Of course, unless they invest in real estate in some way now, the odds are against them ever being able to afford that dream home. Incomes haven’t been going up, but rents and home prices have. Those wanting to buy a home should not invest any money in stocks or bonds, but should prefer cash. Of course, in reality, cash depreciates too. It can be at risk whether it is in the bank or under the mattress. Investing in real estate is the best way to build up more wealth and cash to buy that dream home. Can’t find a home you’d live in even for a few years? Then buy a rental property. Many Americans are sadly being seduced into the lifelong renter mindset without realizing the horrific consequences it could be dooming them to. Consider those paying 50% of income in rent right now. Rents have been going up 20% a year in many places. If rent goes up another 20%, many could be priced out of both buying a home and renting too! Then what? With Americans living longer, and with company retirement plans evaporating, they also need to consider where they will live for 40 years of retirement on limited income? Even legendary billionaire investor Warren Buffett, with all of his endeavors into energy, insurance companies and holding sizable stakes in companies like Coke and Wells Fargo, still calls his own home his best investment ever. On Point HomevestmentsWhat can you do to effectively groom the next generation of successful real estate pros? Whether you are a real estate investor, agent, owner, entrepreneur, or just wanting your heirs to do better at buying and selling homes; grooming the next generation of real estate pros is critical to the industry. Therefore, how can you contribute to the development of said individuals? The following tips will help to facilitate the talents of the next generation of real estate pros: 1. Education Invest in real estate education courses and pass the materials on. Gift them a course, whether they are 13 or 31. It will keep on giving when you can’t, and unless they have this knowledge, they won’t manage any portfolio you pass down very well. Similarly, turn them on to practical business and financial education so that they can not only make great incomes and continue to build wealth but handle it wisely too. 2. Develop Strategic Thinking Make developing strategic thinking fun with games like Monopoly, chess, Risk or even a healthy dose of Xbox. Empower them with the ability to think ahead, navigate challenges and constantly innovate. Using newly available innovations will help groom the next generation of real estate pros. It is never too soon to start teaching them the fundamentals of real estate. 3. Hands on Practice Drive neighborhoods together, tour homes and point out what makes a good deal or doesn’t. Discuss ways to structure deals, have them operate a virtual test portfolio to see how they would make out based upon their decisions, and perhaps most importantly, make sure that they are aware of how housing cycles work. If you aren’t an active real estate investor, agent or business owner yourself, find them summer internships with those that are. Homevestments |
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