I made my first embarrassingly low offer

8 Replies

So not to say that I haven't made and had some low offers accepted but this is the first one where the seller gave me an asking price and I went well under it. The home is a potential flip so I want to make sure there is wiggle room. We will see what she says! Special thanks goes to Jerry Puckett for the pep talk. Not sure why I'm nervous about this one!

Ryan Dossey, Real Estate Agent in IN (#RB15001099)

That's called Anchoring in negotiation... 

Good luck with your offer @Ryan Dossey  

Flavio

Good Luck! I have found that it is really hard to go out of one's comfort zone especially if that could mean rejection. So I totally understand what you mean! Good luck!

As an investor is better to offer too low and not get accepted, than to offer too high and end up overpaying.

On 1  podcast from BP, they said if you did not cringe when you made your offer, you did not offer low enough.

Bing Bowers, Real Estate Agent in CA (#1987193)

You guys are definitely right. Not to say that I haven't made some that I found low. 18k for a home with an arv of 120k. I think the nerves on this one go to the fact that it would be our first fix and flip. It is a great candidate for it as well. I don't think it is emotional attachment but more a matter of wanting the pieces to fall into place.  @Elizabeth Colegrove had it right. I am more worried she will just flat out reject vs counter/accept. 

Ryan Dossey, Real Estate Agent in IN (#RB15001099)

This is the way to go......you make money while buying!

@Ryan Dossey  stated, its called anchoring. Essentially, your first offer and the sellers first asking price set the stage for where the final price will be. You pretty much know that your first offer is going to be rejected because its main reason for existing is to set the stage. I saw in the other post where you were rejected, and to me this indicates that either the person's asking price is not negotiable and it may not be a deal for you, or they are just trying to force you to bring up your offer before they lower their asking price to set the stage in their favor.

One thing you can attempt to do is known as "reframing". basically you point out "some" of the reasons why your offer is reasonable. I say "some" because you need to save some of your reasons as ammunition for later in the negotiation so you can reframe again. Perhaps you could approach the seller with the following: "Well seller, I know you are asking $XXX for the property, but based upon the following repairs needed, local market, lack of appreciation in the coming years, etc... my offer is fair..." then let them think about it. they could always end the conversation the same way saying "No Thanks", but they could always throw out a different number to keep the negotiation going.

I hope this helps,

Jason

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.