Best way to make a lowball offer?

Question

I have a solid lead and I went and walked through the property today and its in really good shape, not a typical flip house.  It still needs a few updates, but basically the seller is just really against paying commissions to a real estate agent which is why she is looking to sell to an investor.  I told her I would call tomorrow with an offer.  I already anchored her by telling her our offers are typically 100-150K below market prices.  And I am not sure we have a shot in hell of getting this anyways, but I am not a great salesman and I am not sure how others are able to close the deal.  Basically ARV is 508K, we can offer 420K.  Any help is appreciated! Thanks

John Teachout · Answer

How I would present an offer in this situation is to tell them, you would be better off to fix up the property to current expectations and market it with a realtor, however, we can offer $xxx in its present condition.

Then see what happens...

Nate Marshall · Answer

@Lexie Repp

Send it as a 3 tier offer. All on the same proposal. 1. Low Ball 2. Lease option with down payment and payments until a REFI or Balloon. 3. Seller Carry and payments until a REFI or Balloon.

All 3 options are favorable to you!

John Teachout · Answer

Unless you are personally skilled at inspecting houses, it may be worth to hire someone to go through the house looking for the proverbial skeletons. What if she's aware of something she doesn't want to put on a disclosure? Probably not, but what if? This inspection is something you could sell to her as a way for you to more accurately determine the value of the house. Cosmetic upgrades sometimes uncover issues that go much deeper. Just keep in mind that what appears to be a great deal on the surface could turn into a money pit. An inspection report may give you confidence to pay more or provide a reason to pay less.

Mike McCarthy · Answer

@Lexie Repp remember, it’s not a lowball offer. It’s a good offer with significant upsides. Though it might not be too dollar, they don’t have to deal with realtors, showings, cleaning the house every time someone wants to walk through, no nickel and diming on inspections, quick closing, etc etc. One of the main benefits of selling to an investor is an easy process (hopefully).

Focus on the benefits of selling to you.

If they want to work with a realtor and go through the 45-90+ day process, they of course can!

Bill Plymouth · Answer

Zestimates can be as much as 40% off.  Zillow is such a drag.  It gives people false expectations and it is infuriating.

2 things.  Gather up comps to send with your offer.  It will help show how you arrived at your number.

I think there is more to her wanting to sell to an investor than just avoiding commissions.  If you can find out exactly what problem she needs solved, she will be willing to work with your price.

Lexie D. · Answer

Thanks John and Christopher. I did walk the property and did our analysis and I told her I would call her with our offer.  When you submit your written offers, do you do it in person?  I also did tell her she would make more going with an agent even its present condition (as i said its in good condition, we would really just be doing some cosmetic upgrades).  But she really seems against an agent, possibly even if she doesn't make as much. However, zillow shows her zestimate as 550K and she mentioned that number to me in our initial convo, and even though that's way off I think she has that in her head now.  I appreciate your responses, I am just trying to get better and more confident in this part and any advice is welcome.

Christopher Phillips · Answer

@Lexie Repp

Offers should be in writing. Don't "throw" out hints or give verbal offers. View the property. Do you analysis. Submit a written offer that works for you.

You don't need to be a salesperson to buy a property. The price works for them and their situation or it doesn't. They are selling you the property, not the other way around.

Also, sellers base their decisions on current market value, not ARV.   $420K isn't $100-$150K below market value. It's $88k below ARV, which is meaningless to a seller. They want to know what their home is worth now, even if they know you're going to flip it.

Best way to make a lowball offer?

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