What do you say when people know what you paid for your flip? Feeling defeated!

14 Replies

Ugh. Just showed my first property today and was caught a little off guard by the fact that the guy had checked public record and knew what I paid. I'm selling a 2bed 2bath mobile home on 2.66 acres for $25,000. He was asking how much money i had into it, etc. etc. KILLING ME> I told him" Look. I checked other similar properties with less land and they are listed for $50K.  He offered me $15K for it (bc he can see that I paid $10,250). I just said " I have that into it" .. But ANYWAY, what do you tell people? How do you justify the high markup when you've negotiated a good deal? How do you get around this? 

I don't think most people will ask you that. This guy just did his homework. Most people don't even think to look up the public records.

Besides, no one knows how much you put into it. Just hold steady, you will get your buyer and get what you are asking. You don't have to take the first offer - unless you are in dire need of the money. Make sure to advertise your property. Are you on Craigs list?

If you ever need a get out of jail free card, you can pretend you have a partner and say you have to discuss it with them, or your partner would never let it go for that....

Say "you didn't see what it looked like when I bought it; I had to sink a bunch of money into it just to get it to this condition."

A picture says 1,000 words ... I like having a file of before and after pics, along with comps showing the current value.  I also keep a folder with all receipts. Not for people like that, but for banks who ask those kinds of questions too. 

What you paid is not relevant. What if you overpaid? Would he be willing to pay a little more than you if you paid double what it's worth?

Own it if they ask, yes that is what I paid.  Don't justify what you put into it or get into discussions on that point.  Say it was a mess , I did a lot of work,   this is what it is worth and these are the comps.    You don't have to list out the work or defend every dollar you spent. You can say this is new that is new but don't get into what you spent on what,  focus on what it is worth.

This guy did his homework and you were on the spot but maybe not the next one. Next one you have some experience.  Don't think of it as markup, think of it as value.  

If the property is worth what you are asking you will find a buyer.  I probably wouldn't accept an offer from a guy like this.  I would expect that he would play games and expect big discounts after the inspection finds dozens of deficiencies.  It is not worth the grief.

By the way.  If you have ever purchased a stock or mutual fund did you care what the previous buyer paid?  It is irrelevant.  There is no difference here.

The supposed buyer is using this to get inside your head.  Don't let him.

You should tell the truth and leave most of the money on the table for the investor so they will come back and buy from you again.  A 150% markup is a little steep if you ask me, even if it is still a good deal.  

Originally posted by @John Skaggs:

You should tell the truth and leave most of the money on the table for the investor so they will come back and buy from you again.  A 150% markup is a little steep if you ask me, even if it is still a good deal.  

 There's a difference between a flip and a wholesale.  He seems to be implying that he put some money into fixing it up (although probably not more than a few thousand).  If it's a flip and he's adding value then it's not markup. 

What someone paid for something has no bearing on it's value, if you paid $100k rather than $10k that wouldn't change what you could sell it for.   If they want to bring up what you paid for it then focus on the comps and any improvements you made. 

You could answer honestly, especially in this case since the buyer is working you:  Public records show that I paid $10K and now my asking price is $25K.

Don't justify asking prices to buyers like that.  Tell them to make an offer that works for them, and that you won't be offended.  And then let them lowball based on your purchase price and say no thank you.  If they want it they'll come back.

You do not have to justify your asking price to someone like that. Thank the buyer for his offer and tell him you'll keep in mind if you don't get the offers you are looking for.  If you priced it wrong the market will let you know. 

What you paid for it, or what you put into the property does not matter.  All that matters is what the home is worth now.  If the market dropped and you were under water on the property, would anyone care? NO!  You do not need to justify to anyone what you are selling it for as long as the market supports your price.

@Summer Segeleon

In California you can tell your title company that you don't want the price you paid to show up in public records. The title company does things a little bit differently and you sign one extra form. After that no one knows what you paid for it! It works beautifully for flips or wholesales! You might look into it and see if your people can do something similar for you on the next one.

Originally posted by @Mark Freeman:

@Summer Segeleon

In California you can tell your title company that you don't want the price you paid to show up in public records. The title company does things a little bit differently and you sign one extra form. After that no one knows what you paid for it! It works beautifully for flips or wholesales! You might look into it and see if your people can do something similar for you on the next one.

This is a bit of misinformation.  Transfer tax is public information in CA, regardless of its inclusion on the face of the deed. In spite of legal efforts to prevent transfer tax from being public, the county recorders are still required to provide the public with transfer tax information for all transactions.

In CA, you can make a request to have the transfer tax not shown on the deed.  That information is still of public record.  The transfer tax that is not on the face of the deed is behind the desk in a file at every county recorder and is public information for anyone asking for it.  Additionally, most online data services use this data, they just have to have someone get it manually.  I still always keep it off of most deeds when buying, but the purchase price still shows up in many title plant property profiles.  Consider yourself warned.:)

There's this strange phrase called, "none of your business"....i usually phrase it as "i can 't go into specifics"....the answer to any other question is " if youre interested make an offer"....if you dont like the offer, reject it. If you do like it, take it. If u dont get an offer, you over priced the house...more than likely

There are some great answers here but then some I don't like. What you paid for it is completely irrelevant and as many have stated all that matters is what its value currently is. What I don't like is saying things like "I had to do all this work" when you really didn't.  Maybe no one would ever know but it is simply a matter of integrity, don't go down the road of "sugar coating" things just to make things easier.   If your comps are correct you should have no problem selling it. 

Thank you all so much for your wonderful advice ~ You're right. All that matters is whether or not the price is worth it to him for the purpose that he wants to use the property. I have negotiated with sellers before knowing what they had paid for the property, but never have i implied to them that I knew, asked them exactly how much money they had into it, etc. I wish that I had been a little more prepared for those questions, but I'm learning! And for that I am always thankful, even if its the hard way!!

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