Extreme anchors, how extreme is extreme?

5 Replies

When choosing an extreme anchor and making an offer, how extreme is extreme or is this a bad strategy for purchasing residential real estate. People can get quite ticked off. For example on a 250k house you want to rent out, do you just pay the 250k or do you try to negotiate a much lower price if you need to get to your 1% rule or as close as you can?

@Jo Kinal depends on where it is in the inland empire for example if you are at or below about $20-$25k below list price the conversation is over, but at $15k-$17k on lets say a $500k home you are still negotiating.  It is a fine balance and varies by location as well as individual seller.  If they see their house as turn key and/ or upgraded they are much less likely to negotiate than if it clearly needed work.

@Jo Kinal Depends on various factors such as... Condition of house, time on market, sell prices around the target house, motivation of the seller, etc. Find these answers out and then you back into your offer number based on what you need to make the deal work. Don't look at the asking price but at the price you need to make the numbers work.

@Jo Kinal - The key to pulling off an extreme anchor is to have sound reasoning for why you're making the offer.  Whether it's extreme rehab, quick closing/cash offer because seller needs it gone, or risk due to area/permitting/market timing