Need Advide on Giving the Seller Multiple Offers to Choose From

14 Replies

I am planning on making an offer(s) on a SFH that has great curb appeal, in a great area. The owner had a recent appraisal of $115,000. (seemed high to me based on the asking price of nearby homes) ARV 130's. Asking price $105,000. Needs about $17,000 to modernize it and to give it the "WOW" factor. House is sitting empty as siblings inherited it. Sibs live about an hour away.

My plan is to give the sellers 3 offers:

1) Cash offer of around $82,000

2) $90-ish with $5,000 down and the rest a seller carry back/owner financing at 5% interest. (About $455/month P&I, $672 or so with PITI)

3) Full asking price of $105 with $20,000 down and the remaining $85,000 in equally divided payment over 240 months. (which would be principle only payments of about $355/month)

These amounts and interest rates are flexible. My strategy if they accept the first (cash) will be fix and flip with buy and hold as a secondary option. For strategies 2 and 3, I plan to buy and hold, Rental rate should be about $1000 or more for this area.

I would love other suggestions about structuring multiple offers and how to get sellers to accept one of your offers. Thanks for the help.

Sorry, I obviously did not read over and proof read prior to posting.

I haven't found many folks interested in long term note holding through my direct mail campaign. I've structured a deal I'm just about to go under contract with as a $40K down, $43.5K note with 4% interest, due in one year. House needs some work so I get to keep $35K relative to my cash offer for rehab while getting it up to snuff prior to refinancing with credit union. Seller likes the fact it is more money than the cash offer and can tolerate the short term loan. Bank has indicated no issues with refinancing. Admittedly, this will be my first deal like this so let's hope the bank and appraisal on refi don't wreak havoc!

Mike

Which offer do you want them to take?

Way to complicated for a seller to understand. Keep is simple, 8th grade simple. Offer asking price cash, easy to understand.

My goal is to get an offer accepted and property off the market, then go though the property, check permit records, professional inspection. Then after I know everything about the property and exactly what the rehab will cost. I'd go back to the seller and negotiate a final deal

Maybe this is not the case, but I have read in multiple other sources that sometimes by making 3 offers to the sellers you have a better chance to get at least one of the offers accepted. Sometimes it does not occur to the seller that there is a 4th offer: None of the above.

I would be happy with the cash offer or the owner financed with principal only payments. Not as thrilled with offer number 2.

I'd build rapport and find out what the seller wants and go from there. 3 offers likely to overwhelm. Stay clear of artificial high offer full well knowing you will beat the seller up for a reduction post inspection.

Originally posted by @David Driscoll:

My goal is to get an offer accepted and property off the market, then go though the property, check permit records, professional inspection. Then after I know everything about the property and exactly what the rehab will cost. I'd go back to the seller and negotiate a final deal

And that's why sellers are more likely to accept a cash offer with no contingencies. Contingencies mean the buyer can come back and ask for reductions in price, leaving them between a rock and hard place. And personally I consider it a bit unethical to offer KNOWING you are going to beat them up over whatever an inspector finds. Just my opinion. I offer a firm, no contingency price. Granted not everybody knows what to look for, but many things are glaringly obvious. So why offer more than you know you will pay?

Originally posted by @Sandy Uhlmann :
Maybe this is not the case, but I have read in multiple other sources that sometimes by making 3 offers to the sellers you have a better chance to get at least one of the offers accepted. Sometimes it does not occur to the seller that there is a 4th offer: None of the above.

I would be happy with the cash offer or the owner financed with principal only payments. Not as thrilled with offer number 2.

I have made two offers when I was lowballing the cash offer due to minimal funds. Trying to give them something they could live with. But I agree that 3 is going to just confuse the issue. My thoughts:

Offer #1: cash, big EM, short closing.

Offer #2 should be the best deal you can give them and make it work, using seller financing.

Do you have anything in writing from a GC it will take $17,000 to fix the home and show the seller. All buyers think appraisal is wrong when they are buying. $82,000 look like a low ball offer.

Joe Gore

Originally posted by @Joe Gore:

All buyers think appraisal is wrong when they are buying.

Joe Gore

True. And sellers think it is too, just in the opposite direction.

It's not the obvious that concerns me. It's hidden things that cause me pain. My prices here in CA are a bit higher than in FL and it's very competitive. I just bought a property built in 69 a trust sale for $435K. The owners both passed on. They laid a wood floor over asbestos tile. The heating vents were wrapped in asbestos as well. Ask for and got a $15K reduction.

I never give up an inspection contingency. They cost $150, money well spent.

Another one I bought had a bad main sewer line, needed a complete, house to street, line 110 ft 6ft deep. If I'd given up the inspection I'd would have paid

Heirs to money want it fast. They don't trust seller financing. Cash offer, quick close and leave the inspection contingency in, 10 days, close in 30

Originally posted by @David Driscoll:
It's not the obvious that concerns me. It's hidden things that cause me pain. My prices here in CA are a bit higher than in FL and it's very competitive. I just bought a property built in 69 a trust sale for $435K. The owners both passed on. They laid a wood floor over asbestos tile. The heating vents were wrapped in asbestos as well. Ask for and got a $15K reduction.

I never give up an inspection contingency. They cost $150, money well spent.

Another one I bought had a bad main sewer line, needed a complete, house to street, line 110 ft 6ft deep. If I'd given up the inspection I'd would have paid

That part makes sense. Sorry, guess I misunderstood the intent of the original comment. Unknowns can eat profits very quickly, even when you know what to look for. Sometimes the skeletons are buried deep and only found when most inconvenient. I go without contingencies because my brother and I have done so many rehabs and know what to look for, not something I suggest everyone do. But it does provide a big advantage. A slightly lower price with no contingencies is an absolute for the seller, not a maybe.

Good conversation, thank you

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