A few months ago, I received an email from a reader who was unsure what to do after his initial phone call with a motivated seller.

He'd had a nice conversation with a property owner 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 around 15% of the property's market value.

This was great news for him, but he felt “stuck” because he had never gone through these motions and wasn't sure what to do next.

“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 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 reach this point in my talks with a seller (where we've verbally agreed on a sale price that works for both of us), it's a great sign that I'm moving in the right direction. However, I still don't have a legally binding contract, which means nothing is set in stone.

At this initial stage, I also don't know enough to make any final decisions about the property because I haven't gotten deep into 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 is quite the feat in and of itself). This 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 finally find my “diamond in the rough,” it's time to focus this excitement on something productive, but going through the following steps:

1. Verify the Value of the Property

Getting an educated idea of the property's value is extremely important.

Not the Realtor's opinion or the seller's opinion but an educated, unbiased, data-driven opinion.

In some instances, nailing this number down can also be difficult, especially when dealing with vacant land. Nevertheless, it's got be done, and the rest of the process hinges on this number, so my first order of business is to get this nailed down.

2. Uncover the Good, Bad and Ugly

Any property on earth will 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, ths process is usually much simpler than houses. However, there can also be hidden issues that most people don't consider 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).

3. Get the Paperwork In Order

Once I'm comfortable with the property's value and what I'll be getting, I'll make a written offer to purchase it.

Putting together an official purchase agreement doesn't have to be complicated. In fact, with the right systems in place, it's pretty easy.

Once I've had the appropriate discussions with the seller and we're both on the same page, I 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'll typically send this to them with an e-signing service like PandaDoc.

Assuming the seller doesn't have second thoughts or overthink the transaction, I usually receive the signed purchase contract back from the seller pretty quickly, and if I don't, I follow up with them until I get a response).

4. Move Towards Closing

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

When I work 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 described in this blog post.

I'll be honest: closing a deal in-house requires much 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 starting and didn't have much money to spare, I relied heavily on this in-house method, initially saving me a ton of money.

Resources: Relay | PandaDoc | Rocket Lawyer | Loom

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 call up my title company or closing attorney of choice, 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. However, 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.

Most 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.

Communication is Key

Regardless of my method to close the deal, I always communicate 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. I received their signed contract.
2. I've contacted the closing agent (or I'm in the process of putting together the paperwork).
3. 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 they're dealing with someone professional, caring, knows what they're doing, and can be trusted.

Communication is one of the best ways to build instant trust with people, especially if you utilize tools like Loom to show them your face and let them hear your voice. 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 overpromise 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!