I made an offer on a multi family property; the asking price was $795K, however the tax appraisal is only about $480K. so I put in a offer at $550K. The property has been listed for almost 2 years
I don't have a RE agent, I went directly to the selling agent and made the offer. She came back today saying "the purchase price needs to be much closer to the asking price". No counter-offer was submitted.
I thought about waiting a couple days to reply (so as not to seem eager), I'm a little annoyed they didn't even counter. Now what?
Move on to something else. There are unrealistic people everywhere, and there are those that really don't want to sell but if someone offered them a dream price they'd move the property. Neither of those sellers are/should be your target.
One other thing: I have bought properties well after I made a good offer, the seller rejected and I walked into the sunset, only for them to track me down some months later and offer to sell at or below that price.
Assessed value for tax purposes is not usually indicative of market value at all. In my market, it's usually about 40 to 50% percent of market value.
For example, I literally just closed last week on a property that sold for $205k. The assessed value is $106k. (You can easily figure out how this shakes out in your market by looking at some recent home sales and comparing the sold price to the assessed value).
It is not unusual at all to have an offer rejected with no counter-offer if it is insultingly low.
And finally, for a multi-family property, the value will be driven by the NOI and cap rate more than anything else. I'd suggest doing some actual research on the property's NOI and cap rate, and how they compare to the current trends in your market. Then, if you present another offer, be prepared to explain how and why you arrived at your offer price (something more defensible than looking at the assessed value, which is meaningless).
Just run the numbers to see if at asking price is a decent deal
if yes, make another offer
If no, move on to find the next deal
Your annoyed they didn't counter when your offer was a quarter of a million dollars under asking? I personally would not have even responded to you to say no.
NO emotions. Just go by the numbers. Numbers don't lie.
As others have said do the numbers based on cap and cash flow. The ask and offer price are irrelevant, the only thing that matters is what it is worth to you as a cash flow investment property.
No counter is no big deal, they simply did not want to show any weakness because they believe the property is worth far more than you think it is worth.
Unfortunately you provided no information regarding support for your offer price so it is difficult to give advice. What is the gross rental income. Appraised value is irrelevant in assessing the actual value of a property..
Thanks everyone for the replies.
I did the numbers. Even at the asking price, it's a good investment. I came up 50 grand (to 600K). I am not trying to be the lowballer, but the property has been listed for 2 years and I need to get a good deal. Every penny I save will be invested back into the property in the form of improvements & repairs. I'll keep you guys updated!
If he hasn't sold in 2 years he is not interested in selling. When he rejects the $600 K walk away.
@Abraham Anderson If you are making offers based on the tax assessed value as you state I suggest you hire an agent that can educate you a little bit.
Not trying to be a jerk at all, so please don't take it that way.
I agree with the people above. Assessed value is usually worthless in mfr. In a single it might be close, if it sold recently and was reassessed. but even then... so what? In Ca... people are asking over what it is even appraised for, and then getting over offers on that... the tax value is nothing...
On the market for 2 years means the guy is just leaving it on to see if he can land a moron. If he was looking to sell, after two years, and was interested in dealing, someone would have worked a deal.
Michael, I appreciate the input. That's why I am on BP, to educate myself ;). I wasn't offering based on the tax appraisal. I mainly wanted to show that I am interested in buying the property & get discussions started.
Carson, this may be the case. I will keep you guys updated when I hear back from them. To my understanding, #1 the owners are older and retiring, #2 they have already moved several hours away, but apparently are still managing the property themselves, which (if accurate) must be annoying/tiring. So I am still hoping I can make a deal at a decent price. We will see!
Hi @Abraham Anderson ,
Just to throw a different piece of perspective. Any offer given has 4 options from the person to receive it (Accept/Deny/Counter/Ignore). Consider an offer like a piece of mail you receive offering you an amazing price on a new car this weekend only. You have 4 choices (Accept/Deny/Counter/Ignore), they really want to start a conversation. You don't really care that they are offering you retail price on a car you feel you can do so much better than.
When it comes to the offer even at the upgraded 600K you are still 200K off what they think it is worth. Just to put a thought there, how easy would you part with 200K? I can be quite annoyed and tired for 200K (or pay someone else 20K to be annoyed for me for 10 years). You are also not dealing with them, you are dealing with their agent, who's job is to protect them from people trying to take 200K from them.
I would suggest getting an agent in this case. She is legally required to act in their best interest. If she takes an offer that is 2/3rds the price and double dips on commission, it is possible she may have explaining to do at some point.
Just some thoughts and good luck!
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