On a recent podcast episode, Moshe chatted with Jalal Abuimweis, aka “The King of Miami Real Estate.” Jalal is a real estate mogul with expert strategies including making below market offers, getting ahead of interest rates, and diversifying your portfolio. In the interview he also shared his personal journey that took him from homelessness to entrepreneurship.
In this clip, Jalal offers his advice on making offers that benefit you.
When it comes to you doing business, you can’t just sit back and say, “Let the market get better.” Instead, you should say, “I am going to make disrespectful offers. I am going to get out there and make offers based on what makes sense now, not what makes sense to that realtor. I see that listing at five million, I’ll make an offer at 2.5. If it’s 10 million, I’ll make an offer at five.”
He adds: If they’re willing to respond and they’re willing to work with you on the numbers, then you can underwrite and make a proper better offer. So, my advice would be to make good offers that serve you and your party.
Here are some additional strategies to think about when it comes to crafting below-market real estate offers.
Thorough Market Examination: Prior to initiating an offer, it’s crucial to do comprehensive research of the prevailing market conditions. This encompasses scrutinizing recent property sales in the vicinity, assessing property valuations, and comprehending the dynamics of supply and demand. A robust understanding of real estate market trends enables you to gauge how far below the market value you can reasonably propose.
Property Appraisal: Diligently evaluate the property’s overall condition. Are there any issues or repairs that demand attention? A property in need of substantial refurbishment may warrant a lower offer, especially if you can substantiate your proposal with repair cost estimates. An accurate property appraisal is critical.
Seller’s Motivation: Gaining insight into the reasons behind the seller’s decision to list the property can offer valuable perspective. If the seller is motivated to expedite the sale, they may be more amenable to entertaining an offer below market value. Common motivators include career relocations, financial constraints, or a desire to downsize.
Mastery in Negotiation: The cornerstone of success in making below market offers is skillful negotiation. Approach negotiations with professionalism and courtesy. Support your offer with sound rationale and be equipped to furnish corroborating data.
Utilize Comparable Sales: Present the seller with recent comparable sales (comps) that buttress your offered price. This data serves to rationalize your below market proposal and demonstrates your diligence in researching the property’s value.
Cash Incentives: Whenever feasible, contemplate extending a cash offer. Cash can be a compelling incentive for a seller as it alleviates the apprehension of financing complications.
Temporal Flexibility: Extend an offer to expedite the property’s closing or propose a timeline that accommodates the seller’s convenience. Such flexibility can enhance the appeal of your offer, particularly when the seller desires a prompt transaction.
Concise Contingencies: Look to minimize contingencies within your offer. Although inspections and appraisals are indispensable, reducing superfluous contingencies can render your proposal more alluring.
Personalized Engagement: Occasionally, fostering a personal connection with the seller can work to your advantage. A heartfelt letter expounding on your affinity for the property or articulating how it aligns perfectly with your family’s needs can resonate with the seller emotionally.
Escalation Clause Consideration: Ponder the inclusion of an escalation clause in your offer, which will automatically elevate your bid by a specified increment in the presence of competing offers. This serves to underscore your seriousness while safeguarding against overpayment.
Consult Real Estate Professionals: Collaborating with seasoned real estate agents can be immensely beneficial. They possess an intimate knowledge of the local market, adept negotiation acumen, and can provide expert guidance throughout the offer formulation process.
Exhibit Patience: Be prepared for rejection or counteroffers. Refrain from rushing the process and remain open to awaiting the opportune moment to arise.
Adherence to Legal and Ethical Standards: While crafting below market offers is a commonplace strategy, it is of paramount importance to stay within the bounds of legal and ethical propriety. Unreasonable or inequitable offers can tarnish your reputation and potentially expose you to legal repercussions.
To sum it all up, formulating below market real estate offers is a tactical approach that can facilitate the attainment of a property at a favorable price. Nonetheless, it necessitates a fusion of market acumen, negotiation expertise, and a profound comprehension of the property and the motivations driving the seller. By meticulously contemplating these factors and approaching the process with professionalism, you can augment your prospects of triumph within the real estate arena.