The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE!
For real estate investors with a proven track record, if you know you’re qualified to do a deal, there’s nothing more annoying than when a broker asks you to fill out a buyer questionnaire.
Though it ostensibly helps the seller determine who they want to “award” a deal to when there are multiple competing offers, it’s hard not to feel like they’re a waste of your time–especially when you know you’re going to have no trouble closing the deal.
So, when you get asked to complete a buyer questionnaire, how do you make sure that your questionnaire is at the top of the pile?
In this episode, I’m going to talk about what you can do to stand out on those buyer questionnaires, how to qualify as a premier buyer, and convince a seller that you’ll have no trouble delivering the money when it comes time to close.
Key Takeaways with Josh Cantwell
- What exactly a buyer questionnaire is, why it exists, and why they’re so annoying.
- How to treat the buyer questionnaire like a brag book to help close deals.
- Focus on your credibility in the questionnaire by including numbers, pictures, and your dealmaking and investment philosophies.
- The value of putting up earnest money in the buying process.
- Why it’s a great idea to talk about challenges and roadblocks in previous deals, and how you overcame them in your buyer questionnaire.
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Josh Cantwell: In this episode, I’m going to talk to you about how to qualify as one of the premier buyers in a multifamily deal and when you have to fill out the buyer questionnaire.
Josh Cantwell: So, the buyer questionnaire, what is it? How does it work? Let me use an example. Right now, we are deep in the middle of buying a 296-unit in the Greater Cleveland area and we made the offer. There was a call for offers. They ran through the process, talked about that in other podcasts, and we were one of 13 offers on this building. Talk to the brokers, and they’re like, “Hey, you guys are definitely in one of the top groups. You’re one of the most qualified buyers. You’re one of the top offers. You guys obviously have a lot of horsepower, but we want you to fill out this buyer questionnaire.” And we’re going to give that to the seller. And the seller is going to be able to determine who they want to “award” the deal to.
So, I get mildly perturbed by this. I get mildly annoyed by these buyer questionnaires, and I also get mildly annoyed because the brokers know just how qualified we are. We’re so qualified that at the end of December, we closed a $14.65 million purchase on a 220-unit. We closed it in 40 days and we were given from the lender a million dollars short. They funded us a million dollars short the day of closing. So, I’m so annoyed by this buyer questionnaire because I know that I’m such a qualified buyer that I can literally fund a million dollars short on the day of closing. So, I know I’m really qualified.
So, the buyer questionnaire, what is it? So, the buyer questionnaire is essentially a brag book where you need to step up, fill it out, and brag about how many deals you’ve closed, how much money you’ve raised, the GP partnership, the different parts of your business, the different departments in your business, and why they should award the deal to you. And essentially, what the seller wants to know is how likely is it that you’re going to close? The seller doesn’t want to go through this whole process of running the process, all the marketing, all the tours, all the showings, all the LOIs, all the offers, the earnest money deposits, and then find out that the buyer that they select can’t close.
So, this is buyer questionnaire, it’s three or four pages, we fill it out with all the stuff. Yeah, we’ve done 18 syndications. Yes, we own 4,000 units. Yes, we just sold off 1,300 units. So, our active portfolio right now is 2,700 units. Yes, last year, we sold off 1,300 units and bought 1,400 new units. Yes, we own our own construction company. Yes, we’ve raised $80 million of private capital. So, those are all the things that I “brag” about in the buyer questionnaire. But then I talked to Tyler, my partner, and Tyler’s filling out the questionnaire for us. And I said, “Hey, T, listen, don’t forget that in the first paragraph of the buyer questionnaire, don’t forget to tell the seller that we closed a $14.65 million deal in 40 days when the lender shorted us $1 million at closing.” And then we were able to get the million bucks wired into the title company and still close on the last day of the calendar year, which was December 30th. Remember December 30th, I think it was a Thursday, and run Friday was New Year’s Eve. Yep, it was December 30th, and Friday was New Year’s Eve, December 31st. And guess what? All the title companies and the banks, everybody was closed on the 31st.
So, on the 30th was closing day, and we got notified on the 29th that the bank was going to short us a million bucks, so we were able to get the million bucks and get it closed. So, I said, “T, on the buyer questionnaire, make sure that the first thing that we say is how we bought this 220-unit for $14.65 million.” We were able to close in 40 days top to bottom, end to end, and we were able to do that million-dollar short and still going fund and still close by the end of the year because that seller, that other seller was adamant about closing by the end of the year because they wanted to lock in all their capital gains under the 2021 tax law.
We all heard that the Biden administration is going to try to increase taxes over the next three years, especially on the rich. They pay their fair share because the rich are not already paying 50% of all the taxes and they’re already paying more than their fair share. But that’s neither here or there. So, I said, “Look, the buyer questionnaire. So, when you make an offer,” this is now to all my audience, all my listeners, “when you make your LOI in a competitive situation like this, and there are 13 other offers like this, how do you stand out?” The first way you stand out, number one, is with your credibility packet, your credibility kit, pictures, numbers of all the previous deals that you’ve closed. Who are the general partners? What’s your philosophy? What markets do you focus on and be niched? Remember, niche is rich. So, be niched and talk about your market the way you do deals. So, the credibility kit, number one.
Number two, put up some hard-earnest money, 200 grand, 300 grand, usually somewhere between 1% to 2% of the deal in hard-as* earnest money. If you get the deal, it’s going to go through due diligence, but you’re going to risk that money because you’re so confident that you’re going to close. And then number three in the buyer questionnaire, make sure you point out very specific situations where you were pressed, you were challenged, you had a roadblock, you had a stumbling block. And how did you get through it? Think of it like an interview. It’s a job interview. It’s a job interview to get awarded a $15 million property. Look at the buyer questionnaire as the interview and then go ahead and brag about yourself. Talk about the challenges that you’ve overcome. How did you do it? How did it work? And make sure that that gives you every opportunity to win the deal. Guys, it’s not always about price. Certainly, price is the main factor, the majority factor, but experience, overcoming roadblocks, hard-earnest money, the buyer questionnaire are all super important to get awarded the deal.