It’s exciting, isn’t it? You acquired a property at a great price. Your contractor or handyman turned that dingy vacant house into a beautiful Hawaiian home just ready for a nice family to make their own. You’ve put it on the market, had an open house or two and are now watching the offers come in.
So how do you choose which offer to take? Highest price, right? Not necessarily. You’ll often people in the industry refer to a strong offer. What exactly makes an offer strong? Not only is it in the higher end of your total offers, but just as importantly the buyer has shown a clear intent and ability to close on the offer and terms in the purchase contract they submit. Some people will just throw out random offers but when push comes to shove, they will walk away. Or even worse, they never had the funds to begin with! What good is that??
Remember, you have holding costs. If you are wasting time chasing high but ultimately weak offers, it’s a drag on your bottom line. In the meantime while you’re being led on a wild good chase, your stronger buyers may have moved on to the house down the road.
So what’s a savvy Hawaii real estate investor to do? Ideally, you’ll have a list of cash buyers ready to go, waiting to hear that you have another property ready to go on the market. If you don’t have the house pre-sold in this fashion, then look for the offers that come with all or mostly all cash, can show proof of funds, are willing to put down a strong deposit and can close in 30 days or less. This may not lead you to the highest offer, but that’s okay!
Remember, there are always more real estate deals waiting, even in Hawaii. There are many more short sales, REOS and other attractive investment properties around the corner, so don’t worry if you didn’t get the ultimate price you were hoping for. Often times, it’s best to take your profits, congratulate yourself for a job well done and move on to the next flip.
And if you’re on the other side of the equation — as the potential real estate buyer — use the above tips to make your own offers strong to get into that next great deal!