Offers Getting Rejected Left n Right

109 Replies

Hello all,

It's been a frustrating couple weeks for me as I've been making offers to try and purchase a 2nd rental property so thought I'd ask for some feedback and/or tips on how to get better at this moving forward.  Any suggestions are welcome!

Offer #1: SFH in 'A' location for my market (Columbia, SC). List price, in my opinion, is about $20k too high based on comps and talking to other experienced RE professionals that know the market well. I think ARV is 135-137k max and it needs apprx 15k in repairs. So I offered 105k purchase price, As-is (I'll omit other relevant terms but fairly standard on those) while also sending a detailed chart of recent comps as analysis behind my offer (not in a pushy or know-it-all way). Well I feel like the other agent didn't do a great job explaining the context of the offer to the seller, and it was implied that they were very upset by the 'lowball' offer and countered back at virtually list price. I said that was fine and would circle back at a later time but when I asked the agent for details on how they got to their current valuation, I didn't really get a good/logical answer.

Offer #2: SFH in 'B+' location. This is a property that's been in a family for long time but two siblings now want to sell. Priced well for the area but does need about 20k in repairs/updates. Also, it went under contract almost immediately after listing (I'm assuming for full price) but recently came back on and based on context, I think it got ripped apart during inspection/termite report. ARV is about 145-150. I offered 92k purchase price, As-is, and was countered at 115k. No way I am comfortable paying anywhere near that with the risk involved so this one doesn't seem very promising at this point either.

Again, I realize I'm not exactly making full-price offers and most sellers would/should turn them down. But the fact that I'm getting shut down has been disheartening a bit. Do I just need to chalk it up to the game, move on, and keep swinging away or can I work on my approach to get some better results?

@Michael Lee ,

I am not sure what your area is doing in terms of list price vs sale price. I know my area is at 96% currently. So if a house is listed for 100K they are getting 96K on average (Sure some high and some low). From the sounds of it you are offering 70%ish of list. It is a strategy some people employ, but expect to put in 100 offers to get 1 accepted. Especially if they have not been on the market long. 

Good luck with your investing

@Mike Cumbie Gotcha -- our market is doing fairly well but def nowhere near 96%, at least not for the type of properties I'm talking about.  The first one was about 70% but again, I think this one is significantly overpriced (it's been on market for over a month and agent told me they haven't gotten much activity on it so far). So if it was more accurately priced, my offer would be about 77-80%...same for #2 as well.

@Michael Lee

Dont be discouraged that your offers are being turned down, that's the price of doing business the right way in real estate. As the saying goes, "you are going to make a 100 offers to just get one." In fact, if too many of your offers are being accepted you are most likely doing something wrong - i.e. making offers that are too high, miscalculating your numbers, or not taking into account the real costs of doing business.  

When I was buying my first investment property I also found myself a little discouraged when my offers were turned down. However, I quickly came to realize this feeling of discouragement was not really because I was discouraged about the business aspect of REI but more because of the emotional aspect I had developed during my "lengthy" due diligence of the property.

It sounds like you are doing the right things and more importantly you are sticking to your criteria. You have to find a property that fits the numbers, you need, to make yourself a good investment. These numbers vary for everyone, but it is paramount that you do not deviate from what works for you. If you continue working your system, and by that I mean your numbers, you are going to get more rejected offers but at some point you will get an accepted one. 

REI is all about the waiting game. And yet, you have to be willing to take swift action when the time comes. Sounds like you have the swift action part down, don't be afraid to wait for the right deal.

Best of luck. 

@Michael Lee have you only made 2 offers? I have had probably 20-30 offers rejected before landing one. Some houses I am WAY below the asking price (I had one I offered $45k on a $120k asking price, and I was the highest offer, however they rejected all of them). Other houses I am right at the asking price (multiple offers and they sell above asking) but still lose.

The number one thing, is run your numbers and stick to them. I'm not sure it matters sending along comps and letters to defend your offer. Most sellers don't care and simply want a certain amount for their house. I had one guy do similar, I was asking $280k, and he offered $245 or 250k and gave his reasons. I countered and never heard back. I ended up selling a couple weeks later for $270k... 

After 2 offers, you're not even close to the point where you should be concerned about needing help, or why your offers aren't sticking. After 15-20 offers is when I would start double checking my numbers.

@Brian Pulaski It's been 2 actual offers and a few more preliminary discussions on various properties but yes, you're right that it's not time to press the 'panic' button yet haha. This will be my 2nd rental but I do think the fact that my first one happened so easily/smoothly is making me expect that to be the norm...which it obviously is not. But great points thanks for the response

Originally posted by @Michael Lee :

@Brian Pulaski It's been 2 actual offers and a few more preliminary discussions on various properties but yes, you're right that it's not time to press the 'panic' button yet haha. This will be my 2nd rental but I do think the fact that my first one happened so easily/smoothly is making me expect that to be the norm...which it obviously is not. But great points thanks for the response

I moved to NY from CT. Back in CT I was able to land flip houses one after the other. I never had any down time, and actually had 3 going at one time (one under contract, one a longer term flip and one a new short term flip). I moved to NY, only 1.5 hours away and assumed I could just get here and keep up with what was working... NOPE. I have been here 5 months or so and just went under contract on my first house. I have looked at probably 50-75 houses and made offers on 20+ since then (as stated above). It can get frustrating, but I keep saying the same thing, I would rather wait 4-6 months and find the right deal, than buy a house, use the 4-6 months to fix and sell only to lose money... Hopefully my little "vent" here helps you see that a lot of us out here are experiencing what you are going through. Just stick to your numbers!

People need to remember the owner does not owe them a profit.  Listing a house does not mean the owners wants a buyer at any price.  It simply means the owner will take the price listed.

Real investors offer properties sometimes to test the market.

In many areas the offers being sent by the original poster would be considered low ball and even rude.  

He should expect to send dozens or even hundreds of offers before getting a house if his plan is to start at 77% of what he thinks the house should be listed at.

@Account Closed Absolutely fair points. I, myself, have never understood why a seller who lists a property for sale (esp if it's for 'testing' purposes) would get mad at an offer or consider one rude but it does seem to happy a lot. Thanks for the response

Thanks all. I should try to clarify that I'm not frustrated that my initial offers aren't being immediately, and gratefully, accepted but more so that it's been one shot and I'm done. Thought maybe there was something I could do to improve this or better my negotiating skills, but as far as making more offers = better chance of one getting accepted, absolutely agree

A few tips. Use a good agent to make your offers.  Having someone who is well  respected in the business making the case that the property is overpriced will go a lot further than some member of the general public.

That agent will probably have a conversation with the listing agent instead of submitting a written offer.  This is going to save the time of writing the offers, and will prevent the pissing everyone off with the lowball situation that all the lowballers find themselves in.

Instead of targeting overpriced properties, target properties that are appropriately priced.

Make sure you are appropriately valuing properties. Just because a property needs $20k in work doesnt mean it is worth $20k less than the comps.  You mention that one was in an A class neighborhood (Which I find that a bit hard to believe at the price point), but in A class neighborhoods many times properties do not vary on price point that much. If they are highly desirable people want them whether they are in good or bad condition just to get into the neighborhood.  

@Michael Lee , don't give up.  I'm just finishing my first flip.  The house was listed at $64,900 and I offered $28,500, first time they didn't even counter.  They lowered the price $5,000 about 30 days later, I made the same offer.  I made the same offer every 30 days for 6 months.  The came down approximately an additional $5,000 after each offer I made.  Month 7, I bought it for $30,000.  

The market will prove one of the two of you right.  Wait 30 days, resubmit your offer.  The seller may eventually decide you were right and sell it to you or the market may decide they were right and it will sell to someone else at a higher price.

you may want to start with listings that are 4 to 6 months old.. those might have more motivated sellers.

its hard to low ball a property that has been on the market only 30 days.

and remember sellers many times are not experienced.  and when the first contract comes in within days of listing they think they listed TOO CHEAP.. when in fact first offer many times is the best they will ever get.

@Jay Hinrichs Very true...I think that's one self-critique I'd have as well in that I prob don't spend enough time thinking about things from the other party's perspective (see impatience above) or trying to figure out what is most valuable to them.  Thanks for the response

@Michael Lee do the math, make an offer based on your numbers, if it isn't accepted make an offer on something else. If you make enough offers, you will eventually get a yes. This is a fact. Your offer is not just the price. The terms and closing date are also part of the offer. If the property is "beat up" and you are planning to do rehab anyway, make your offer "as is" with no contingencies. Make it easy on the seller say yes. Just an example.