At Goliath Sourcing Academy, we love a good process and when you find a winning formula then you know you have the right process in place. Having a process in place also means that everything is clear for all parties and nothing gets missed out.
When it comes to securing deals, we follow a fail-safe process that has been very fruitful for us. So we are going to share our secret on securing property deals.
Building a good relationship with the seller is key. You need to get them to trust you, so the offer you make to them should be one that they see as a good deal. Make sure that they see you as someone who is trying to do right by them instead of just trying to make a quick profit. If you establish a good rapport, when another property sourcing agent approaches them with a slightly better offer they are more likely to stay with you, the one they trust.
There are not many people out there who enjoy the paperwork side of things but good processes involve paperwork. This will also show your professionalism and will further enhance their trust in you and your process. You can make the paperwork easier to complete through the use of electronic signatures using a website such as HelloSign. You will be amazed at how much time this can save in comparison to the lengthy process of signing and posting documents. Also, once they sign the heads of terms, they will feel like you have both committed to that deal.
Securing property deals with estate agents can be challenging, as they will be pushing to get a higher price. The key to overcoming the problem of other property sourcers gazumping you with a better offer is to get a lockout agreement in place. The seller will sign the lockout agreement once a price has been agreed. It generally lasts between 14-21 days, so effectively, you can’t be gazumped during that period. It isn’t always easy to get them to agree to sign but if you have that good relationship then they usually will.
In the direct to seller scenario there is a different process. Once the offer has been accepted we send an offer letter and put together an option to purchase agreement. You can keep this fairly short at about two or three pages and it includes purchase price, any T&Cs and length of time you have the option to purchase. The length of time is usually 90 days, so like the lockout agreement, you have exclusivity to the deal.
Once an offer has been accepted in the rent to rent scenario, we issue a heads of terms for guaranteed rent. So it includes fixed rental income and landlord responsibilities and those of the buyer for the contract. It also includes limits on maintenance and renewals of licenses.
When the heads of terms is signed and returned, we draw up a management agreement depending on the type e.g. common law tenancies, commercial leases, company lets etc. Once that paperwork is signed, the deal is secured.
Again, this scenario is different because there is a need for legal representation on both sides with lease options. We go again with the offer letter and then the heads of terms. We also issue a key facts illustration, explaining the details of a lease option. A memorandum of understanding may be required as well, for example if the lease option is a portfolio. The solicitors are then instructed to draw up the option contracts and to be legal representatives.
This process framework has worked for us for years and we fully recommend that you use this and secure property deals. Now if that all sounds like a lot of paperwork to draw up, don’t worry because we have all of these documents available for you in the free Securing The Deal Flow Chart content upgrade that you can download from the link below.