So you’ve put in some legwork, generated leads, the phones are ringing and you have motivated sellers interested in selling their properties–now what do you do?
Find an investor buyer!
Motivated Seller Signs
For starters, one of the simplest things you can do to start getting the phone ringing is to place a sign in front of the house you’re trying to sell.
You may think this would never work in a million years, but just two weeks ago, we actually sold 2 properties to a brand new buyer who simply called us off of a sign we had posted in the front yard. They called, and we told him about our property website, they saw another that they really liked, and boom -they bought two!
All we put on the sign is the following:
“Motivated Seller!
Asking $24,900
317.555.5244”
Craigslist & Facebook Groups (*This was written before Facebook became a hot REI resource)
Another great (and free) way to generate leads for cash buyers is by posting all of your inventory on Craigslist at least 3 times a week (the more the better).
We’ve sold so many properties off of Craigslist, that it’s not even funny!
Now the key to working these leads, is to make sure you have a lockbox on your properties so that you can simply provide them a code, and they can go and check out the property themselves.
Then you write down their name and number and follow up with them every other day, until they either say they want to move forward on the property, or that they’re not interested.
If they’re not interested, you then ask them what their buying criteria is, and then send them properties to check out that match that specified criteria.
Local Real Estate Networking Organizations
If you join (and utilize) your local Real Estate Investors Association (REIA), it’s been our experience, that you’ll find a ton of buyers this way!
I think the key is having a great REIA; our’s in Indianapolis is proven to be one of the best!
We get involved in speaking events, through them as well as post our inventory on their website, and you wouldn’t believe the connections we’ve made.
Again just a few weeks ago, we had a brand new buyer call us up from the Central Indiana Real Estate Investor’s Association(CIREA) and bought 2 properties at once!
Pretty awesome if you ask me!
The next step is proceed with closing the property
In most states, you either have a title company or attorney complete the closings. Here in Indiana, we have title companies who do most of the work.
It’s extremely critical that you understand the relationship between the title company and purchase agreements and have organizational skills to coordinate schedules.We do all of our closings every Tuesday and Friday, and go to our the title companies each week on those specific days.
As soon as an individual agrees to purchase my property, they sign a 1-page purchase agreement which is basically a commitment that includes the cost and the terms and conditions.
Here’s an example of our typical terms:
The buyer pays all closing costs, including title insurance as well as assumes responsibility for property taxes due May 2018 (this is weird in Indiana because we pay taxes in the rears). We try to limit the inspection period to 5 days or less, so that we avoid back outs. We also encourage our potential buyers to do all due diligence before signing a purchase agreement and because we close quickly, shooting to close Tuesday or Friday of the following week, we typically waive the need for earnest money.
Now if the investor has backed out before with or if the close date is two weeks out, then we require earnest money which adds value to the purchase agreement and goes towards the purchase the price.
We use what’s called DocuSign which is allows the buyer to sign everything via email. Once we receive the signed 1-page purchase agreement from the investor, we then load the document into our internal software and notify our transaction coordinator, who then processes it with our title company.
Our title company then conducts a title search to ensure there aren’t any liens, no back taxes or judgments on the property.
I would also recommend acquiring “title insurance” which will protect you against any liens so if there is a lien on the property slipped through the cracks, you can file a claim with your title insurance company and they will take over and cover the lien.
If the title is free and clear, then you’re free to proceed with closing.
Now, as I mentioned earlier, there are three ways to close.
The first method is by assigning the contract where you take the purchase agreement and sell (or assign) it to someone else for a fee. The challenge with this method is that your buyer will see how much you made on the property.
The second method is the double close where you simultaneously buy and sell the property within in minutes. At closing, you first sign the documents with the motivated seller, and then a few minutes later, you meet with the investor buyer and sign the closing documents with them.
The great thing about this strategy is that your buyer doesn’t know how much you made from the property and if you find an investor friendly title company, you can use your investor buyer’s funds to fund your transaction.
Then there’s the Simple Close, where you use your money or someone else’s private money to purchase the property. You then own the property and free to do whatever you want with the property.
Once you have selected which strategy you are going to use to close the deal, all the money is sent to the title company. Once all of the paperwork is signed on both sides, the title company will pay the motivated seller their money and record of the documents and then it’s closed out.
Got paid…now what? Read up next week for some follow up resources and the complete PDF download of the Simple Guide to Getting Started!
