offering 30 to 40 grand under the asking price. Working for u?

Question

After using the brrrr and rental calculators. Most of the time the asking price and the numbers(coc, roi) doesnt work. Even 10-20 thousand the numbers dont work. Only when i put in 30-40k under the asking price do the numbers start to look good. Ex $150-200 per unit, 12-15% cash on cash.

My question is, how often do you get deals from offering waaay under the asking price? Do they get insulted? Do they say "i dont wanna hear from this person again" etc. Thank you.

JD Martin · Answer

What Linda D. said. We do the same. Also, there's no blanket answer to this question. 40k under asking price of $400k is a 10% reduction, which is pretty normal. 40k under asking price of $100k is a 40% reduction, meaning you should either have rationale and cash for making such an offer.

Find the right deal and have the right resources in place and it's not really that uncommon. We recently paid $50k on a house listed at $110k. The listing price was too pie-in-the-sky and the house needed work. We paid what I consider a fair price. The sellers agree, because they signed the contract.

The only time I'm usually paying list or close to list is if it was already priced aggressively. Aggressive pricing usually means a foreclosure, HUD, tired landlord, estate sale, short sale, or basket case.

Dante Pirouz · Answer

Sometimes we get a blunt no and sometimes we get an eager yes. As an example, we just closed on a house that was listed at 29K, is worth 80K and we offered 15.5K and they took it (even our agent was shocked). It was a probate and the family was tired of waiting and the cosmetic work it needed (it was used as an office so it didn't have things like a tub or a stove) very few family buyers would know what to do with but for us it will make a fantastic rental with very few simple renovations. Make a lot of offers and always bid what you think makes sense for what you know about the property and for your business. You'll get lots of no's but some yes's and that's all you need to grow. The only thing I regret from past offers is not that we offered too little but that we didn't bid low enough (and in those cases we got the deal that we probably could have gotten for lower).

Russell Brazil · Answer

You need to ignore the list price and learn how to value the properties independent of the list price. Now that doesn't mean the return you are looking for will be there, but the list price might be right on or wildly off. I closed a transaction last year  $100k under list price, but thats because they overpriced it by $100k. Many of the deals I close are well over list price.

Linda S. · Answer

It depends on the condition of the house... we buy cash only, so it's houses that won't pass inspection, and normally offer 30-40% off MLS, and they work with us.. although we have gotten a subtle FU before.    All depends on how badly the person wants to sell the property, and what they think it's worth.

offering 30 to 40 grand under the asking price. Working for u?

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