Buyers will work you over if you’re not careful. Buyers will kill your deal if you’re not careful. Buyers will frustrate you to quitting if you’re not careful. Buyers will cost you a LOT of money if you’re not careful! Here’s how you avoid being worked over, getting your deal killed, getting frustrated, and most importantly, here’s how you get maximum profit from buyers! Make your contracts solid. Have the right contingency clauses in your contracts. Here’s my favorite (AND AN ABSOLUTLY CRITICAL CONTINGENCY CLAUSE!!!). “This contract is contingent on a short sale price acceptable to seller.” This clause will get you out of the deal if the bank decides to foreclose, or if the bank gets you an approval letter at a price higher than you expected. Without this clause, you will be required (legally) to bring money to the table if, for example, you’re approval letter is for a price of $189,000 and you’re end buyer is paying $179,000. You MUST use that clause or something similar with your end buyer. Let me say that again, because it is SO CRITICAL!!! YOU MUST USE THAT CLAUSE OR SOMETHING SIMILAR TO PROTECT YOURSELF!!! Other clauses you can include would be, “subject to passing clear title,” “subject to using sellers closing attorney and title company.” Something else to put into the contract would be “property sold as is-where is.” This will prevent the buyer from “nickel and diming” you on the way to the closing table. The contract is key, and it must be tight in order to save you from pain on the way to the closing table.
One more note about buyers. Do not tell them too much about what’s happening. They will get suspicious, scared, or think they can take you for a ride. Here’s why. In today’s real estate environment, people think they can buy real estate and get a steal on it. Well, here’s the deal. You’re the real estate investor spending time and money learning how to short sale the properties and get them at steep discounts. They buyer is not entitled to that discount. The buyer needs to purchase the property at whatever the market is selling properties for. The difference between that number and what you’re able to negotiate with the bank is your paycheck, not the buyers. If the buyer finds out that the property is a pre foreclosure and short sale, they will want a piece of the pie. They will want a part of that discount. Again, they are not entitled to it, you are. So don’t advertise it. Realize that you should absolutely have it in the contract “subject to short sale approval acceptable to seller,” but that’s it. If you advertise the property as “PRE FORECLOSURE SHORT SALE MUST SELL NOW BRING ALL OFFERS!!!!” You will attract a different kind of buyer than if you advertise the property like every other property out there. Ok, so how do you get yours to stand out? It depends. What is attractive about the property? Maybe you need to drop the price a little under market value. Now it’s a good deal, just not a smashing deal. The Real Estate Agent on your team is the person that can help you with this piece. Remember, all markets are different. What I’m going in Raleigh, North Carolina may not work for someone in Chicago. Test your market and see what works.
I hope this helps!
