Offering below asking price

Buying & Selling Real Estate
3yFollow

Offering below asking price

Katherine Roberts
Member since 2023 · 59 posts · 17 votes

I’m new to real estate and haven’t made an offer yet. I keep finding properties that don't make sense at the asking price, which I’m sure is common. For example, I found a pretty decent property but they’re asking way too much. They’re asking $385k but the only way I’d get a good deal is around $330-345k. Do I offer that or do I just walk away? 

They bought it 2 years ago at $305k, so they’d still make a profit.


Any advice?

0Reply
87 views

Most Popular Reply

JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
3y
Quote from @Katherine Roberts:

I’m new to real estate and haven’t made an offer yet. I keep finding properties that don't make sense at the asking price, which I’m sure is common. For example, I found a pretty decent property but they’re asking way too much. They’re asking $385k but the only way I’d get a good deal is around $330-345k. Do I offer that or do I just walk away? 

They bought it 2 years ago at $305k, so they’d still make a profit.


Any advice?


 If they bought it at $305 and sold it to you at $340 they're not making a profit. Their RE commission alone is going to be $20k. If it's not their primary there will be a capital gains tax as well, and perhaps depreciation recapture if it's a rental. That also doesn't account for the fact that $305k in 2021 dollars is $340k in 2023 dollars using 6% annual inflation as a figure. 

Irrespective of all of that, if you figure out what a property can be profitable to you at, that's going to be your offer. I would say that the market might not be able to support your idea of "a good deal" and you might just either have to settle for an "OK deal" or wait it out. 

Podcast Guest on Show #243
Skyline Properties
View Page
5Reply
See this reply in the discussion

34 Replies

Jump to latestLatest
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Terrell Garren:

     Please don't drive right now my friend. 

    🤣

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Katherine Roberts:
    Quote from @Jon Kelly:

    @Katherine Roberts don't be afraid to offer below asking. What's the worst they can say? No? 

    If they say no then you move on to the next property. 

    Someone once said if you aren't embarrassed by your offer then it's not low enough. 

    Of course, it's a more competitive market so lowball offers are becoming less common. But, if a property has been sitting don't be afraid to submit a low offer. 


     It has been sitting for awhile. We just went by the property and I think we’ll make the low offer. Thank you for your advice!


     send us the zip code so we could do some analytics, or send address of the neighbour.

    0Reply
  • Dan GandeeBusiness Member
    Investor · Eugene, OR · Member since 2021 · 90 posts · 117 votes
    3y

    I only write offers that make sense to ME. I don't care if it makes sense to the seller. Never split the difference, only buy deals that make sense to your investment criteria or you will suffer in the long term. 

    [email protected]458-209-0163
    The Operative Group | REAL5139 Reviews
    WebsiteView Page
    3Reply
  • Michael Palavra
    Investor · Yukon, OK · Member since 2021 · 4 posts · 1 vote
    3y
    Quote from @Nicholas L.:

    Pretty good responses especially from @Russell Brazil.

    I'll weigh in.

    If you want deeper discounts look off market. 

    More distress and higher risk.

    Potentially more value add.

    I’m with Nicholas here. Look at REOs, pre-foreclosures and any other similar off market scenarios. 

    Also, if your goal of your investment a fix/flip or buy and hold? If you’re looking at buy/hold taken into account what your CoC (cash flow on cash investment) is. I.e. if you’re getting into a property for sale $30,000, but (after expenses your annual cash flow is $3,000) then you’re CoC annually is 10%. 

    Like most people here said, run the numbers based on what your exit strategy is for that particular investment. Also, you funicular make an offer and they don’t accept, you always make another offer (if still enough margin left for you)



    0Reply
  • Katherine Roberts
    OP
    Member since 2023 · 59 posts · 17 votes
    3y
    Quote from @Bruce Woodruff:

    Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

    There’s no profit at the asking price. It would be about $700 in cash flow a month at $330k. I’m not sure that we’re going to move forward though. We looked at it yesterday and there’s a brand new storage unit being built right next door. If the new units have lower prices, over half our income would likely disappear. I’m not sure it’s worth the risk.
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Katherine Roberts:
    Quote from @Bruce Woodruff:

    Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

    There’s no profit at the asking price. It would be about $700 in cash flow a month at $330k. I’m not sure that we’re going to move forward though. We looked at it yesterday and there’s a brand new storage unit being built right next door. If the new units have lower prices, over half our income would likely disappear. I’m not sure it’s worth the risk.

     It is not worth any risk. You can find a better  opportunity....

    1Reply
  • Katherine Roberts
    OP
    Member since 2023 · 59 posts · 17 votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Katherine Roberts:
    Quote from @Bruce Woodruff:

    Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

    There’s no profit at the asking price. It would be about $700 in cash flow a month at $330k. I’m not sure that we’re going to move forward though. We looked at it yesterday and there’s a brand new storage unit being built right next door. If the new units have lower prices, over half our income would likely disappear. I’m not sure it’s worth the risk.

     It is not worth any risk. You can find a better  opportunity....


     Thank you so much, I truly appreciate the advice!

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    3y

    Do not look at what people paid in the past - this is irrelevant information.

    The asking price is just that - An asking price, you are eligible to make an offer to the seller for less than what they are asking.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free