YES! My Offer Was Accepted! Now What??

confusionA few months ago, I got an email from a reader who wasn’t sure what to do AFTER he had his initial phone call with a motivated seller.

The story was – he’d had a nice conversation with one of the property owners who responded to his direct mail campaign, and by the time he hung up the phone, they had verbally agreed on a sale price of somewhere around 15% of the property’s market value.

This was great news for my reader – but even so, he found himself feeling “stuck”, simply because he had never been through these motions before and wasn’t quite sure what to do next.

To expand on this a bit further, this was his situation:

“I just got done with my first mailing campaign – just under 300 postcards (your template, thanks!) and got 4 phone calls. I used your questionnaire, I got the information and now I’m a bit stuck on how to go through the due diligence.”

I actually thought his question was well-warranted because my own process has changed a bit over the years (which means there’s obviously more than one way to get the job done).

When I get to this point in my talks with a seller (where we’ve informally agreed on a sale price that works for both of us), it’s a great sign that I’m moving in the right direction, but unfortunately – I still don’t have a legally binding contract, which essentially means that nothing is set in stone.

It’s also worth noting that in this initial stage, I still don’t know enough to make any final decisions about the property (because I haven’t gotten up to my elbows in the due diligence process yet). As a general rule, I try not to spend an excessive amount of time on property research until I have a signed purchase agreement in my hands. Once I’ve gotten this far, I know I’m dealing with a property owner who is serious about selling at a price I can accept (and considering the prices I’m willing to accept, this quite the feat in and of itself). This alone is what allows me to justify investing even more of my valuable time into the property research process.

Once You’ve Got Your Motivated Seller…

When I’ve finally found my “diamond in the rough”, it’s time to channel my excitement into something productive. In doing this, I go through the following steps:

1. Verify the Value of the Property

As I’ve outlined in this article, it’s extremely important to get an educated opinion about the value of the property you’re working with.

Not the realtor’s opinion. Not the seller’s opinion. An educated, unbiased, data-driven opinion.

In some instances, nailing this number down can also be rather difficult (especially when dealing with vacant land, as I do). Nevertheless, it’s a job that’s got be done, and the rest of the process hinges greatly on this number, so my first order of business is to get this nailed down pronto.

2. Uncover the Good, Bad and Ugly

Any property on earth is going to come with a mixture of positives and negatives.

When I’m investing in a more common type of real estate like a single family home or duplex, I always start by ordering a home inspection report. These will usually cost anywhere from $300 – $500 (depending on the type of property and the complexity of their report). What I get in return is a fairly detailed report outlining all of the potential landmines that were observable to the home inspector. For an example of this due diligence process, check out this blog post.

When I’m investing in vacant land, I’m usually quite pleased to find that these properties are MUCH simpler than houses. On the same coin, there can also be some hidden issues that most people don’t think about until it’s too late. For starters, take a look at this blog post, where I’ve outlined all the most common issues that I’ve encountered in the land business (some of them are much more common than others, but they should all be investigated if the answers aren’t readily apparent). I also talk more about having a discerning eye in my contribution to this article.

3. Get the Paperwork In Order

Once I’ve gotten comfortable with the value of the property, and what I’ll be getting once I buy it – my next step is to make an official, written offer to purchase the property.

I make this offer in the form of a purchase contract, which I talk about in great detail in this blog post. Contrary to the assumptions of most new investors, putting together an official purchase agreement doesn’t have to be complicated. In fact, it’s one of the easier things I do in this business, especially now that I’ve got the right systems in place.

Once I’ve had the appropriate discussions with the seller and we’re both on the same page, I simply present my written offer to them in a simple-but-well-thought-out manner (i.e. – with a cover letter and contract). Depending on how they prefer to communicate, I can either send this to them in the mail, or via email, with both pages attached as a pdf document.

Assuming the seller doesn’t have second thoughts or overthink the transaction altogether, I usually receive the signed purchase contract back from the seller in 7 – 10 days (and if I don’t, I simply follow up with them until I get a response).

4. Move Towards Closing

This final step depends on whether I’m planning to close the transaction in-house or with a professional closing agent.

When I’m working with a relatively small deal (with a fair market value of $10k or less), I’ll close the deal and handle all of the paperwork myself, as I describe in this blog post. I’ll be honest – closing a deal in-house requires a lot more time, effort, mental energy and attention to detail. I don’t close many deals in-house anymore, because I’m intentionally targeting larger deals that justify hiring this job out. However, when I was just starting out and I didn’t have much money to spare, I relied heavily on this in-house method, which saved me a ton of money in the beginning.

When I’m working with a title company or closing attorney (which I typically recommend if it’s your first deal, or a big deal), I simply call up my title company or closing attorney of choice, fax/email them a copy of the signed purchase contract and ask them what their expected turnaround time is (i.e. – “Approximately when will we be able to wrap up this closing?”).

Closing with a title company or closing attorney is MUCH easier – in almost every circumstance. It also takes more time, involves more paperwork and is a bit more expensive. Nevertheless, I usually think it’s worth the extra cost , simply because it frees up my time to work ON my business rather than IN my business.

The vast majority of real estate transactions are handled through a professional closing agent, and quite frankly – they should be (because most people don’t know nearly enough to handle this level of detail on their own). Keep this in mind, because for many, many people, it’s just smarter to work with a professional on all closings, across the board.

Communication is Key

Regardless of which method I choose to close the deal, I am always staying in communication with the seller. I don’t necessarily call and email them every day, but at the bare minimum, I’m letting them know a few key things:

  1. That I received their signed contract.
  2. That I’ve contacted the closing agent (or I’m in the process of putting together the paperwork).
  3. That they can expect to hear from me and/or the closing agent by a specific date, so we can complete the final paperwork, close the deal and get their cash in their hands.

These key pieces of information give sellers great comfort in knowing that they’re dealing with someone who is professional, who cares, who knows what they’re doing and who can be trusted.

In a business like real estate, there are a lot of sleazebags out there. People get taken advantage of a lot. One of the best ways to build instant trust with people is to over-communicate. Let them know what’s going on and what the seller’s expectations should be.

It also helps to be honest and realistic about the timelines (i.e. – don’t over-promise on something you can control) and if you can’t meet their expectations for whatever reason, just admit it. You won’t be doing yourself any favors by setting yourself up for things that aren’t going to happen.

Want to Learn More About Land Investing?

I'll be completely honest with you. Land investing is without question, the most powerful strategy I've used to build my real estate investing career.

This is a massive opportunity that most investors aren't paying attention to – and for the few land investors who know how to pursue this business with the right acquisition strategy, it's an extremely lucrative way to build wealth from real estate.

If you want to get the inside scoop on how to start and run your own land investing business, come and check out the REtipster Club – where we have a full 12-module course, dozens of videos, bonuses, downloads, group coaching sessions and a members-only forum (where we spend time answering questions every week). There is no better place to learn this business from the inside out!

About the author

Seth Williams is a land investor and residential income property owner, with hundreds of closed transactions and nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of REtipster.com - a real estate investing blog that offers real world guidance for part-time real estate investors.

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  1. Dumbo says:

    Seth, this guide true article is very useful. Thanks for sharing this !

    1. Seth Williams says:

      No problem – thanks for checking it out!

  2. Jason says:

    Hi Seth, great post as usual. It’s quite timely for me as well, since I received my first accepted offer, verbally, last Friday. I mailed the purchase and sale agreements on two properties on Saturday.

    I’ve been using your general framework for the last two months and I’ve been getting what I consider very good response rates. I do have a question for you on the “Getting the Paperwork in Order” section though. With regards to my particular deal, the owners of record of the properties is a husband and wife but the husband is deceased. What does the county typically need to see to transfer ownership if one if the owners of record is deceased? Thanks!

    1. Seth Williams says:

      Thanks Jason, glad I came through at a good time for you!

      Regarding your paperwork question – in this situation, you would need to get a copy of the original death certificate of the husband. Depending on the specifics of how the property was titled to both individuals and how the laws work in your state, the most likely case is that once you have the original death certificate and get it recorded along with the signed & notarized deed, the full ownership will transfer to the surviving spouse, which will give her the clear title and full rights to sell the property to you (but you know the routine… talk to your local legal professional, blah blah blah). 🙂

  3. Ben H says:

    Seth, Another great blog post! It did make me think of a subject covered in your recent podcast with Steve Butala(podcast was great as well). Steve mentioned that, in his initial contact letter to prospective customers, he sends an actual $ amount offer on a Purchase and Sale Agreement and that some of these are signed and returned without a phone call or additional communication. I assume he’s sending the offers before doing any real due dilligence based on the number of mailings. So, what if he gets a signed offer back, then upon investigating the property, he discovers he doesn’t want to purchase – how does he get out of the offer. I know your model is different but you didn’t seemed surprised by his approach. Love to know your thoughts. Thank you, Ben

    1. Seth Williams says:

      Hi Ben, thanks! Thanks for checking out the podcast with Steve as well – that was a fun conversation with him.

      Regarding Steve’s approach, I’ve tried this method a small handful of times, but not enough to say definitively whether it works better or worse than my usual technique (like anything, it probably has its pros and cons). I would assume that Steve’s contract has some kind of “out” clause (just like mine does), to ensure he isn’t fully committed before he’s had a chance to do the proper due diligence… that’s really the only way to handle blind offers like that.

  4. Ben H. says:

    Seth,

    Makes sense. I purchased your Offer Letter and Contracts package so I’ll just look for the “out’ clause as you mentioned. Once I get rolling, I’ll probably test Steve’s approach (as you did), as I’m trying to limit phone calls as much as possible as I have a full-time day job (as you do). Thank you again, Ben

    1. Seth Williams says:

      Yeah man, I hear you. There is some real value to cutting back on phone calls and back-and-forth correspondence. I think “blind offer” approach leaves a lot of opportunities on the table, but if your goal is to waste less time, there is certainly something to be said for the value of your time as well.

  5. Justin says:

    Nice summary article Seth. I like how you pull things together like this to make a mini-guide. I would be too chicken to try and close a transaction in-house at this point. Maybe after I get a few deals under my belt, I might give it a try. As always, thanks for a great article!

    1. Seth Williams says:

      Thanks Justin! There’s nothing wrong with relying on a professional to handle your closings. It’s definitely easier – and there’s a lot to be said for the value of ease in this business. Keep up the good work!

  6. Stateland says:

    Yes, definitely communication is key. This is to understand better about the matter and clear things out before doing anything to it.

    1. Seth Williams says:

      You got it Stateland!

  7. Andy says:

    I love all of your posts. Each post presented is well thought out and packed with useful information.

    When you first speak to a potential seller (after they contact you from a received postcard), do you explain how they could lose the property and receive nothing if the county forcloses? Many of the sellers I speak to, I don’t believe know the situation they are in, and how it will play out if they don’t pay their taxes.

    Just looking for a short answer of what you usually discuss on the initial call when a seller responds to a postcard.

    Thanks for all your time and effort,
    Andy

    1. Seth Williams says:

      Hi Andy, thanks! Sometimes I explain this to the seller (if I’m getting the feeling that they don’t understand the situation), but I think you’ll find that most people are very well aware of what’s going on.

      When I am handing this conversation on the phone, the initial discussion usually follows this format: https://retipster.com/when-seller-calls-ask-right-questions-prospects

      1. Andy says:

        Thanks Seth!!

  8. Shelley says:

    Hello Seth,
    Regarding the offer you make to your motivated seller. Is the purchase contract between you and the seller? If they are in dire times, wouldn’t they want to sell the property and get out free and clear? Or are you assuming the mortgage?

    Thank you,
    Shelley Myer

    1. Seth Williams says:

      Hi Shelley – 99.99% of the offers I make are to people who own their properties free and clear, so there are no mortgages in the picture. It might sound strange to most “normal” people, but there is a small segment of sellers out there who just don’t care about their property (and these are the people I target). You can read more about it here.

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