Ep 063 Pt. 2 Right and Wrong Ways of Deal Structuring

On this episode Jeff and I talk about the right and wrong ways of deal structuring by comparing offers made by one of Jeff's former apprentices. He reached out to Jeff and asked for help, Jeff had him create some offers and send them to him, then Jeff created some offers on the same properties and they compared notes. These episodes really illustrates the way Jeff stacks his offers and the way he presents them. This may be hard to follow without having visual representation but the key take-aways are this:

#1-  Always send multiple offers in a simple to read Letter of Intent.

By sending multiple offers, the perceived effect on a Seller is that they have to pick one, which lowers their threshold to negotiate. Also by keeping it simple you won't confuse them with jargon and/or information overload. 

#2- Stack your offers from highest to lowest.

Typically highest purchase price with longest term, and lowest downpayment will be your first offer, then lower the purchase price with each succeeding offer to your short term financing offer, then to your last and lowest offer which should be your cash offer on your letter of intent.

#3- Differentiate your offers enough so that you give a certain benefit to your seller to pick one offer over the other.

i.e. such as a higher purchase price, a higher down payment, a higher interest rate, or a shorter term. If all of your offers are netting the Seller the same amount of money especially if it's over a shorter period,  they have no incentive to take a longer term offer or one with less money down.

#4- Spell out the benefits with each offer.

i.e. show the Seller what they are netting or grossing total over a longer term offer or highlight the higher down payment or higher interest rate, or shorter term etc.. Make the benefit of each offer clear so that the Seller has a compelling reason to pick one offer over another.

#5- High light the additional benefits a Seller will get by choosing a term offer.

i.e. Seller will continue to receive tax benefits of the property (Depreciation) if your offer is a Lease Option. Buyer will be responsible for taxes and insurance (which will increase Seller's cash flow) if title is being transferred. And always mention that the Buyer will be responsible for All maintenance and repairs because that is a huge relief for most Sellers willing to consider terms.