Advise on this deal....where did I go wrong?

Question

I had a seller contact me who owed 189K on a SFH.  Tax value had the home at 364K and comps in the area came in at 330K.  Its a great neighborhood so I took the 330K as the ARV and 65% of the ARV brings me to 214,500.  I took out 5K for paint and carpet (home is in great condition) and 5K for my fee since I was going to wholesale the property.  I made the offer at 205K.  They asked if I would pay closing costs and I said I would split them.  Today I found out that they have had other offers that according to the seller are significantly higher.  I am open to any advice as to where I may have gone wrong.  Thanks!

Account Closed · Answer

You just simply can not get every property you make an offer on.

Remember, investors aren't the only ones buying. To a homeowner, if they can get a property worth $330 for 10% off, they are thrilled to save $33k. You can't pay that much. They don't have to make a profit; you do.

If the seller is capable of doing any marketing at all, they are probably not going to work out for you.

My suggestion is to go back to her and tell her that you have made your best offer. Then, if she is bluffing about the higher offers, you still might get the property. If you can find some little inexpensive way to sweeten your offer, to give a little concession, then do that. But you still must be able to buy at wholesale in order to come out ahead.

If this deal won't come together for you, kepp searching. You won't survive too long if you pay too much, just so you can finally make a purchase.

A Miller · Answer

Thank you for your replies. This was my first offer so I wanted to make sure that I identified any areas where I can improve.

Michael Rossi · Answer

You didn't go wrong!  In fact, you did very well.  You made a reasonable offer on the property and were probably outbid by some ignorant wannabe who will lose their butt on the deal.  You exhibited the mark of a successful investor - not chasing the price or getting into a bidding war.

There will be another deal tomorrow.  Move on!

Good Luck,

Mike

Jason Hanson · Answer

When you first spoke to this woman you needed to assure her that you were a professional and that you would take care of her. Then you needed to tell her to be careful of other "fly by night" companies that would probably offer her more up front, then when closing time came would not honor their word and would try and give her less money.

Also, you needed to set up a visit ASAP and get the property under contract. You can also use a memorandum, which you can record at the courthouse so she can't go behind your back.

Basically, when you have a deal, get is under contract as fast as you can.....however, remember this woman could be bluffing and just trying to get you to raise your price.