New investors getting Stuck on list price

New investors getting Stuck on list price

Jordan RayBusiness Member
Real Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 331 votes

I wanted to create this post to help the newer investors in the forums. I work with tons of investors, both local and out of state and 1 very common problem I see that is holding new investors back from getting a deal is 1 simple thing... getting stuck on the list price. Remember that we make offers in real estate and if you want to buy a property but don't find that the numbers work at the list price. Don't pass on it right away. This is not Kroger where there is price tag to buy milk. You can't make an offer on Milk at Kroger (Unfortunately). Make an offer at numbers that make sense for your investment strategy. You never know what a seller is going to accept until you ask! 1 very common thing in Memphis is that almost ALL property is listed too high for numbers to make sense.. and if its listed at numbers that work, then it creates a multiple offer situation and investors end up paying more than they need to. Stop getting discouraged and changing markets. That where your agents boots on the ground expertise comes in to land you actual deals. I get excited when new investors finally figure this out because their first deal then becomes a matter of when. This is a numbers game. Make offers until you land a deal. Hope this helps and its time for all the new investors on the sidelines to get in your chosen market and start making offers!

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y

Good advice! You would think that this would be obvious, but it's not (for newbies)

And don't be afraid to p*ss off the seller....on the last house I bought, I offered $60k less, and the sellers got irritated/insulted and refused to even counter. Fast forward a few months and guess what I got the property for? Yep.... that exact same price.

So, yes, offer what your budget allows and if the seller says no, just move on. But you have to be somewhat reasonable, meaning don't offer $100k on a $500k house :-)

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    1y

    Good advice! You would think that this would be obvious, but it's not (for newbies)

    And don't be afraid to p*ss off the seller....on the last house I bought, I offered $60k less, and the sellers got irritated/insulted and refused to even counter. Fast forward a few months and guess what I got the property for? Yep.... that exact same price.

    So, yes, offer what your budget allows and if the seller says no, just move on. But you have to be somewhat reasonable, meaning don't offer $100k on a $500k house :-)

  • Jordan RayBusiness Member
    OP
    Real Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 331 votes
    1y
    Quote from @Bruce Woodruff:

    Good advice! You would think that this would be obvious, but it's not (for newbies)

    And don't be afraid to p*ss off the seller....on the last house I bought, I offered $60k less, and the sellers got irritated/insulted and refused to even counter. Fast forward a few months and guess what I got the property for? Yep.... that exact same price.

    So, yes, offer what your budget allows and if the seller says no, just move on. But you have to be somewhat reasonable, meaning don't offer $100k on a $500k house :-)


    Exactly! The main reason I made this post is because I find myself saying this to new clients multiple times a week. It's like a common reminder I am always verbalizing with new investors. Once they learn this 1 simple thing. They become "savvy investors" in my opinion. 

  • Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    1y

    I always tell clients it costs me zero $$ to send an offer and worst case they decline. I always try and get a feeler from the listing agent first. If there is good interest in showings and offers it's pointless to lowball. Good part about this market is buyers can negotiate and have leverage. Sellers are willing to work with you(within reason).

  • Robert BellBusiness Member
    Lender · 38119 · Member since 2021 · 70 posts · 71 votes
    1y

    @Bruce  - Great point! Be reasonable, but if the numbers don't work, just move on.  

    Avalon Capital, LLC580 Reviews
  • Real Estate Agent · Lakeland, TN · Member since 2015 · 214 posts · 105 votes
    1y

    Agree with all posters. I find new investors often struggle with keeping emotions out of the deal. Sometimes it may keep them on the sidelines all together and never get started. Once an investor understands that is a business transaction and is able to keep emotions out of the analysis, it is much easier to find, or more importantly, create deals. Finding some middle ground that is beneficial for both sides is so important and can make or break a deal. 

  • Jonathan BombaciBusiness Member
    Real Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    @Jordan Ray This is spot on and something we run into constantly in the New England markets, where prices have climbed significantly over the past five years. Whether it’s a multifamily in Boston, a value-add deal in Worcester, or an investment property in Lowell, the key takeaway is the same: the listing price is not the purchase price.

    Here’s an example I use with clients: If I sell a 3-family for $650,000 and list it at $599,900, suddenly, it looks like it sold for $50k over asking—“Wow, it must be a great deal!” But if I list it at $699,900 and it sells for $50k under asking, people think, “Wow, that property must have issues.” In reality, it sold for $650,000 because that’s what it was worth. The list price is just a data point used by the seller or listing agent to drive traffic. 

    The challenge newer investors face is that overpriced properties tend to sit on the market for 60+ days and they see them all the time. Underpriced properties get scooped up within the first week—often before the first open house. The solution I give them is to narrow their focus on a specific market, study it, and get to know what a good deal looks like. When one comes up, be ready to act quickly and decisively.

    And yes, sometimes that means paying over asking—but don’t get caught up in that comparison. At the end of the day, the numbers have to work for you.

  • Investor · West Palm Beach, FL · Member since 2024 · 90 posts · 47 votes
    1y

    Great advice! When I was acquiring, we made 25+ offers/week on the MLS to try to land one deal!

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y
    Quote from @Dean Harris:

    I love it when agents, clients and potential buyers listen to my podcast! This week I just released my episode on making offers in Memphis on investment properties. I fire off offers all day long for clients. The skill comes in sourcing deals that arent only on the MLS. That seperates me from other agents and property sources in our market!

    PM me and I am happy to send it to you!


    Part of the issue depends on what market your buyers are from and where they live.. And if your selling NON mls props its hard to run data.. Most MLS systems will allow you to run a report and see what % of list price are deals actually selling for.. My experience in the MS TN market is that MLS listings rarely sell for list price under less they were very aggressively priced to begin with. So thats kind of the standard operating procedures in those markets and nothing really sells for full list price.. Locals know it but OOS investors dont.

    And why is that.. which is the focus of the OP post.. Because out our way at least on the left coast 99% of all listings sell at list price .. Realtors here do a very good job of listing props for what they will really sell for.. And buyers unless its a big value add deal offer list price or a very small % under that.

    So i have to think the buyers your talking about are not locals who understand the local dynamics but coast buyers who dont understand that list price is just the starting point.. And keep in mind private sellers and wholesalers dont help either when they wont entertain offers below ask either.

    So this is up to the local Memphis agent to have this talk first off with clients before they even send them listings to look at.. Also the other thing I have seen in the years I have been working those markets  2002 until today.. Is NOTHING sells for a refi appraisal price  I  mean nothing that appraisal is always high.. so when folks say hey I got a refi and it appraised at this and I now have this much equity that is also not true and wishful thinking.. I know I have been on the butt end of those transactions.
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