How much discount can you usually get?

Question

Rick Stein · Answer

Are you buying to flip or to buy and hold. If your intent is to flip, you must figure in the ARV (after repaired value), your costs and desired profit. That will determine your offering price. It sound slike he wants full retails\ If this is the case, walk away. If on the other hand, you intend to buy and hold, the most important factor is the terms. Will he hold paper at an attractive interest rate? I have purchased several properties at market value because I got great terms either from the seller or a private lender. My main concern is cash flow and terms determine cash flow.

Good luck

Ryan Murdock · Answer

I always tell my buyers that there's no sense in overpaying for anything but if you start with lowball offers your only real risk is someone else swooping in and buying the property out from under you. If you can live with yourself if that happens, go for it. If it's a great deal and you'll be absolutely crushed if someone else buys it then don't mess around and come in with a higher initial offer.

I think every situation is different (market conditions, seller motivation, buyer motivation...) so you'll have to determine what best fits your scenario. You'll usually get a sense in a real hurry how much the seller is willing to deal. If you offer on the low side and he drops his price quite a bit in a counter offer that's a good sign. If he sticks right at or close to his asking price it's likely you won't squeeze much out of him, at least initially, and you may have to work on him awhile if you're even able to do anything at all. Figure out what the property is worth to you and base your offer on that.