is 90k a reasonable offer on a 120k property?

Question

the same seller has 2 duplexes for sale, each for 120k. I want to get one for around 90k, also will he be more likely to accept my offer if i offer to buy both for 180k total?

John Curtin · Answer

Like other have said it depends. A buyers motives are clear but finding out WHY a seller is selling can be very helpful. Also DOM and was there a recent price drop, these can be good clues for what to offer.

Andrew Syrios · Answer

The list price is in someways immaterial, the most important thing is what is the property worth? The proper offer price might be full price, or it might be $30,000. The list price is nothing sacred, so don't treat it as such.

Micah Copeland · Answer

@Brandon P. Why not offer 80k or 70k? How did you come up with 90k? That is going to be the first thing the seller will think... that or that they think you are crazy. When I make offers I have a whole back story and list of reasons lined up for the seller. If you can't educate them and make them see why you are offering what you are offering then you don't stand a chance.

If his 120k asking price is also the ARV then I would start out at about 80 (84k would be 70%) and explain to them that at as an investor my numbers do not make sense unless I get the house at this price and break down why which will depend on the specifics of the house. Also, I always use repairs needed to drive the price down a good amount more right before we sign the contract. At a quad I got under contract this month I was able to get them down a full 24k more right before we signed. That 24k is what I'm ending up making on the property.

Ned Carey · Answer

An offer only has to be reasonable to you.

Offer what makes sense to you. You have no control over how a person will react to your offer but you have 100% control over what you choose to offer.

Ryan Dossey · Answer

You can offer whatever you like. They say that you should feel a little embarrassed when making offers. However make sure you have a reason to back up your offer. Even if that reason is just with the projected cashflow that's all it makes sense for you to pay. I don't think offering to buy both at a discount is a bad approach at all. Seller may take your offer just so they don't have to deal with the hassle anymore.

Engelo Rumora · Answer

Hi Brandon,

I would go even lower.

I write a guide and blog on negotiating. Thick skin is a must in this industry.

Feel free to check it out -

http://www.biggerpockets.com/renewsblog/2014/07/05/getting-lowest-purchase-price-possible-skinny-real-estate-negotiation/

I hope your find it useful.

Thanks and have a great day.

David Epstein · Answer

yes, as above, an asking price is just that.  What is it worth TO YOU?  Target ROI?  Each property and each seller is different.  And remember: there is always another building.

Steve Vaughan · Answer

The numbers have to pencil out for you.  Smaller 2-family values are heavily weighed by comparable sales.  What do other similar props sell for?  Run a cash flow analysis and see if there is any cashflow.  A lot of these are over-priced. If it doesn't pencil out at $90k, offer what will, or get closer to their asking price with good terms.  Does the seller need all cash?  What are they going to do after the sale? Seller motivation is key. Cater your offer to what works for both of you and be ok with 'thanks, but no thanks'. Always be prepared to walk away.

David Avetisyan · Answer

Without providing specifics, it's hard to comment on your offer.

Objectively speaking, without real knowledge, you are asking for 1/4 discounted on the sellers price.

The question I pose:  Do you have a sound reason for offering below what the seller has asked for?

is 90k a reasonable offer on a 120k property?

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