I specifically discussed that the key to success in the real estate business is writing offers. Most newbie investors are paralyzed by numerous fears, including but not limited to, losing money, improper contracting, bleeding to death on a property that can't be sold, unable to sell, lien and code issues, and the most fatal one - not having enough knowledge to do a deal.

In actuality, these are not groundless fears, but they do not rise to the level of stopping an investor from making offers and doing deals. Making offers is the only way an investor will ever get over the tipping point of actually getting started and stop being a perpetual student. Make offers, be rejected, re-offer, get the deal or go onto the next one - a simple equation that has made uncountable millionaires. You can practice all the guru-niche techniques you have learned forever, but if you don't take action and start making offers, your career will be over before it starts. If you are not failing in your offers you are not any closer to getting deals and becoming successful.

If you hear that an investor gets 50% or more of the offers he makes, there are simple reasons. First, he is over-paying for the property, or secondly, he has pre-qualified the seller so much that they are begging him to take the property off their hands. Over-paying is not good and the initial listing of an REO on the MLS is an example of investors getting in to a bidding frenzy against one another. A solution is to only bid on REOs that have had 2 - 3 price reductions, just make sure your bid makes sense. Some REO Asset Managers will start the offering price so high that it will take ten price reductions to make sense to an investor.

Pre-qualifying the prospect is very good and the key question that needs to be answered is "Why are you selling?" The answer will tell you if the seller wants to sell or actually is so motivated that they have to sell. The difference is at least 30% of the purchase price of the property. Never be afraid to ask this in your telephone interview as it will save you the drive and get rid of unmotivated sellers.
Why then have I said the key to success is failure? The reason is simple, the more offers you make the more deals you will do and the more times you will fail if your offers are done properly. You may have heard someone say they accepted his first offer, that's good except he paid more than he had to. Your first offer should always be rejected or you have offered too much!

You can protect yourself from making too high an offer by using longer inspection periods to get out of a bad contract and by developing a strong buyers list before you have a deal to sell. As you will find, the longer you are in the business, the most powerful investors have the largest buyers list and are always failing in their offers to sellers - at least initially in the course of the negotiation for the property. REOs are a different breed as far as making initial offers. These offers should be so disgustingly low that the real estate agent is offended. The deals you will get this way will be profitable but you are going to have to get used to failing and keep making offers again and again.