In most real estate investing business models, motivated sellers remain the number one source of the most profitable deals. Successful real estate investing should therefore incorporate finding deals from motivated sellers and successfully closing them.
This article points out important areas you need to focus in your business.
The key sources of attracting motivated sellers are covered in a separate article. As soon as you identify a good deal, you must then secure and close the deal.
In my business, I get all my leads through my real estate investor website. Approximately half of them are submitted directly by the motivated sellers. The other half are entered by my virtual assistant who calls back motivated sellers who choose to use the phone, and she pre-screens them for me.
All the deals I receive are therefore pre-screened and pre-negotiated. I can therefore tell in a few minutes if I have a deal or not.
As soon as you identify a good deal, the next step is to make an appointment to go see the house. This is mainly because you must estimate repairs. A simple tour of 5 to 10 minutes is enough to estimate repairs.
You just need a rough estimate, you do not have to break it down to the nail.
You must make sure you sign the contract when you go to see the house – do not forget to take one with you.
You can always cancel the sale later if the numbers no longer look good.
If you like the deal, fax the contract to the title company so they can do title work for you. Always make sure you deliver or mail the earnest money to make the contract binding. Make sure that you deposit any earnest money with the title company, not with the seller.
The next steps in the process depend on your business model and what your exit strategy is:
1)Wholesale the deal If your exit strategy is to wholesale the deal to other real estate investors, this is when you market the deal to them. A good real estate investing website should also help you build a list of potential buyers automatically – then you just email your deal to them.
Once you identify the wholesale buyer, you then sign a contract with you as the seller if you plan to do a simultaneous closing. Alternatively, you can assign the contract for an assignment fee.
The title company will then do the closing and disburse all the money as agreed.
2)Lease option / Lease to own Your title company should conduct the closing if you plan to take over existing payments.
This is why it is important that you select a title company that works with real estate investors and understands various real estate investing business models.
3)Straight buy If you plan to buy fix and sell, or keep as a rental property, then this is a straight traditional transaction that any title company can close.
Other business models would follow similar steps; these 3 are just the main ones.
When all is said and done, your success in real estate investing, largely depends on the efficiency with which you pre-screen your leads, follow up with them to tie up the deal, and efficiently close the deal.²