Stupid Low ball offers

29 Replies

How do you guys feel about stupid low ball offers?

Is it something you do every single time, if so, Do you find it works or is it a waste of time?   if it does work what is your strategy with it?

On one of the recent podcasts a guy had a strategy of putting in an offer at 70% of the market value for homes as they hit the mls.  His strategy was basically to see if he could get a counter and then he would use the 2 day response time to check out the property more.  Idea seemed like a good one to me.

I have a problem with "STUPID" Low ball offers.  

and you are talking to an agent  that is ok with offering 100 offer, and get them all rejected.

but it's not efficient.

The problem with working with investors that does these 2 a day offer, low ball offer, 

THEY DON'T REALLY DO THEIR HOMEWORK.   and when we DO GET THE OFFER, they freak out and try to bail.  They spend so much time analysing deals to offer they forget to stay updated on their financing.... and don't get me started on multiple offers accepted scenario  

This is why I vent my investors.

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I suggest we go and put in your best offer. if it's low, so be it, if you lose it by $1 you are ok, and we move on.

But maybe figuring out BEST offer is just too much work for some investor.

In our experience a "stupid" low ball offer has only been the case when we are making an offer against a "stupid" asking price.

Like the above poster said, we typically offer 70% of the market value and and then subtract any repairs that might be visible from pictures and description. Sometimes this ends up being half of the asking when we're dealing with FSBO.

Fire off too many low balls and your going to create a reputation for yourself in the real estate community, and so when you put up a good offer it won't then be taken seriously.

Low ball or not why put in a stupid offer. Put in smart offers. 

if you want to put in low ball offers, don't spam them out. Put in low offers where there is some indication they may have a reason to accept. Long days on market for example

Love the responses, but to some cases it's hard getting a deal for a low offer when the owner has lived there for 35 years and take pride in their property they are offering.

I wanted to add, the times I successfully get low offer accepted for myself or my clients:

1. Have an open dialog with the listing agent. And if we have worked together before the better.

you cant just throw low offer in an email and hope the listing agent bites on the other end.

If you do that, you will get an response "WE ARE NOT ACCEPTING INVESTOR OFFERS"

2. Understand the sellers motives, and needs.  You have to ask the right questions if you can.  Sometimes it's the agent's motivation. maybe they had the listing too long, and they are motivated to sell, and will talk to the seller.

3. Our offers comes with a comprehensive cost and repairs that are urgent and realistic.    This works better on foreclosure than homeowners.  

just my 2 cents

"Low Balling" is something you do at garage sales and used car lots. When making an offer on real estate you should have numbers to back that offer. If your numbers make sense one can explain them to the seller and actually get a negoiation going. You won't win them all but you will get some offers accepted. This also doesn't make the seller feel like they have been taken for a ride, and helps them understand or see how much work that their property needs.

I personally only submit offers that work for the numbers I run @Par Attaran . If a house is listed for 100k and my numbers calculate my offer price to be 60k then I will submit it. My partner and I submit between 30-40 offers a week on listed properties in our market. It's a numbers game. 

We tend to close on 2-3 properties with the above strategy. If you have a good reputation of closing on low ball offers than that is very beneficial. If you don't close then that can lead to sellers and realtors not taking you seriously. 

@Par Attaran low offers are essential to the negotiating process.  The first offer is really a throw away but it will give some insight into what a seller may be willing to sell for.  I'd say continue with the low ball offers.

I will say 2 things here:

-- If you're putting in hundreds of offers (which is probably what you're doing if you're putting in "stupid" offers), you're just wasting your own time and everyone else's.  If you're putting that many offers in, there is no way you have time to do proper due diligence unless you have a team doing all your research (almost no one here has that).  If you get a "yes" it's probably not a property you want anyway.
-- You *will* sully your reputation.  People have said on here that the worst thing that can happen is that they say no to your offer.  That's just not true.  You become the investor that cried wolf and no one will want to work with you.

Let me offer up an alternative. Put in offers that your numbers say will work. Your "numbers" may be different depending on what you're trying to do (buy and hold, flip, etc). Also, be realistic in what you want to get. If buy and hold and you want to make $500/month on a $70k SFR and you want to put 0% down, your offers are going to be "stupid". Be smart with your offers. Time is the most valuable resource you have. Don't waste it putting in offers that will almost never be accepted. To give some perspective, I've put in ~30 offers and have bought 14 properties (18 units).

I have a policy that I won't write on a property I have not been in myself. It limits the amount of stupid offers I am asked to write.

I also recommend to any of my retail sellers, if one comes in and the buyer or their agent has not been in the house to consider it junk mail. Someone who is just throwing stuff at a wall is going to walk away or nail you even harder at inspection. If they want to consider it I highly recommend a high EMD.

@Mike Cumbie great point about earnest money deposit; a high deposit means the buyer is somewhat serious (especially with no inspection or appraisal contingencies).

I just offered $90k cash, no contingencies on this gut job (feel free to bid). The seller declined to counter, but the seller agent encouraged me to counter myself.

https://www.redfin.com/MD/Brandywine/19315-Aquasco-Rd-20613/home/10678797

I'm about to offer $120k on this shoddy renovation. My buyer agent wants at least a pre-offer inspection, but at this price, it's not as relevant.

https://www.redfin.com/MD/Capitol-Heights/5406-Bye-St-20743/home/10995968

I'm always willing to give a healthy deposit, $2000 on the $100k range.

@Par Attaran

I think there is a huge difference between making low ball offers and making any offer that you know you can't close on, that is just a "stupid offer", a genuine waste of everyone's time

I say make as many low balls as you want, just be ready to close if one comes through. Your an investor, one of your main objectives to "buy right". The trick is finding agents that go along with that plan. Many are concerned about insulting buyers or other agents. I think everyone's reputation will be just fine if you close on accepted offers.

A good reason for investors to get their licence.

Interesting points made!

I personally would always come from a point of integrity. I want to offer the seller a fair price that also works as a fair return for my group of investors. Hire a great management company at a fair price etc.

I think too many people get butt hurt these days. If you want to lose money, sure, submit your "best offer" and over pay. There are so many deals to be had on the market, why would you EVER worry what somebody is going to think about you if you make a lower offer. Get over yourself.

House was listed for $65k, we offered $25 and signed the purchase agreement within 24 hours of our original offer at $40. But go ahead and submit your "best offer" then try and negotiate down from there, ha.

I agree with Christos, too many people are concerned on what somebody will say or that they will ruin their reputation. I am a Loan officer and I had this Realtor that I was feeding him deals that I had from my own marketing avenues. A few of my clients started complaining to me saying that they wanted to make an offer and the realtor would not submit the offer because he thought it would not get accepted. Some of my buyers were actually paying list price plus closing costs.  I think the job of the Realtor is to justify the offer to where it makes sense to the buyer and the seller and not to make the offer on what he or she ( realtor ) thinks.

Just saying I am not using that Realtor.

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