Offers Getting Rejected Left n Right

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Offers Getting Rejected Left n Right

Michael Lee
Columbia, SC · Member since 2015 · 88 posts · 55 votes

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?

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Paul Bowers
Real Estate Investor · Macedon, NY · Member since 2016 · 251 posts · 290 votes
8y

@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.

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  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    @Andrew Ware Thanks for the advice. I tend to be self-deprecating but mostly in jest ;)

    Just looked up the Kolbe A Index and it sounds interesting. Will let you know how it goes

    0Reply
  • Scott Hodgdon
    Flipper · Charlotte, NC · Member since 2017 · 6 posts · 4 votes
    8y
    If your in Columbia SC it is my guess your not putting offers good enough to be bought . In Rock Hill and Charlotte area under 250,00 you better bring close to sales price . It is currently a sellers market in that price range . I would be closer to the sales price . Scott Hodgdon
    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    @Scott Hodgdon You think so? It sure does seem like it at times. I worked in Rock Hill/Fort Mill awhile back and that area is blowing up lately. Thanks for your response!

    0Reply
  • Robert Naini
    Crestview, FL · Member since 2017 · 25 posts · 13 votes
    8y
    Michael Lee most sellers want what they want for their reasons, (right, wrong or indifferent) Typically we are looking for the motivated seller that needs/wants our offer, most sellers do not and because home ownership and selling can be emotional, “lowball” offers can affect their feelings Remember sellers that will accept your investor offers are a small subset of the group of all sellers Keep it up, don’t get discouraged!!!
    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    @Robert Naini All great points...well said. Thanks!

    0Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Michael Lee:

    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 be resilient, its a numbers game literally both financially and attempts - you have to stay disciplined, put together a system and stick to your guns, its just money not love  - its a business transaction, just keep with it, something will pop. Times and situations change constantly. I can personally say I am an offer machine, all day, every day, non-stop, as many as we can physically place offers on, I know I may be at this point a different type of buyer, but the point I am making, is that I've been there, and if I would have stopped due to a few offers not being accepted, I would not be here. Disciplined, you can only pay as much as your strategy allows, that's the bottom line. 

    2Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    8y

    You show 2 offers and say you're frustrated. If you made 200 offers and had them all rejected, then you could say that. When I has buying a lot of SF's, I would easily make 50 offers to get 1 deal accepted and now the market is even more competitive. Step up the amount of offers you are making if you want to get that 2nd deal. 

    1Reply
  • Mary B.
    Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    8y
    Originally posted by @Michael Lee:

    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?

    Make 10 to 20 offers per week. that's the norm for the serious investor. It's said by those who have crossed the seven figure mark in REI profits: the money is in the follow-up.

    Kudos,

    Mary

    1Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    8y

    For those who submit large numbers of offers, approximately how many do you submit per month and do you look at each of the properties before submitting the offers?

    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    @Steven Gesis, @Todd Dexheimer, @Mary B. Thanks for your responses...very helpful

    I should point out that I'm limiting myself to a specific geographic area as well as the types of properties that fit into my niche (student rentals). So somewhat of a limited pool; which is why every offer I make FEELS more important than it should since there won't be that many shots at ones that I like. As I continue to invest, hopefully this will expand. But overall point has been taken.

    0Reply
  • Curt Smith
    Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    8y
    make sure your offer is strong you include proof of funds for the down payment you include not a pre-qualification but a pre-approval letter from A lender or proof of funds for a hundred percent cash. when I walk a property before I offer that's my inspection then my offer says no inspection. I don't recommend that for new folks but if you're confident in your ability to find problems battle cause a higher-cost rehab the net is a very strong way to offer. another thing I do here in the hot Atlanta area cuz I signed and less competitive area for the past two years I've been buying in smaller towns 30 minutes commute to good jobs up and down the freeways see a paper I've linked in my profile the first paragraph in my profile called how to buy a bulletproof portfolio of rentals. move to a lower competitive area but still must have good jobs best growing jobs.
    2Reply
  • Jim Costello
    Fayetteville, OH · Member since 2017 · 3 posts · 1 vote
    8y

    Everyone is having trouble with MLS offers. Not just you.

    In fact in some places even offers at full price are getting out bid by thousands, 96% is an average for retail sales – look it up.

    Sign of the times, competition is up and housing stock is clearly low. In fact the money is moving as the stock market run up has provided plenty of funds for those invested even 2 years back.

    You’re clearly out of touch - lowball offers are good for no-one and your agent will likely get tired of you. The seller’s agent likely has a personal relationship with the seller and has a fiduciary responsibility – don’t matter if YOU think that’s all its worth (After your profit from it). How’s your inspection/construction experience? Is your work crew ready to go to work when the offer is accepted and did they evaluate the numbers correctly? Do you even have one or was your next step the get an inspection? Offering 70% of list on 2 offers with a random agent and no organization to back you while hoping to profit heavily from someone else’s property – sounds like you haven’t a clue. As mentioned, you definitely are going to get more rejected offers and at some point you will get an accepted one – then watch out. 

    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    @Jim Costello Thanks for your response!

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    8y

    Didn't read it all just your first post in the topic.

    Basically markets can be over heated in some cases right now. So what you need is to try and find off market properties or those only lightly marketed so there are less eyeballs on them.

    If you find the easily found properties then of course the sellers are going to want to get the most they can it's human nature.

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    2Reply
  • Account Closed
    Contractor · Los Angeles, CA · Member since 2015 · 887 posts · 323 votes
    8y
    Michael Lee I think you answered your question in the last paragraph. Keep going buddy! All the best... Jorge
    1Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    8y

    Deal flow is imperative in this market and those who have it are making a killing and those who don't are frustrated.  Figure out how to generate deal flow (a lot of it) or invest with someone who has it.  It's a professionals market...professional is not the right word...anyone willing or able to spend the time on deal flow (brokers, direct mail, cold calling, etc.).

    I just sold a rental in one day above asking price in Greenville for $190 sqft and the property is due for a new roof, wiring, HVAC, kitchen, and bathroom...and they were countering their own offers to make sure they got it (in a multiple offer situation).

    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    @Joel Owens Definitely...good advice thanks!

    @Account Closed Yep, I think you're right. Thanks man!

    @Mike Dymski Awesome point re: deal flow. I think about this 'positive momentum' all the time and ultimately, having it be consistent is what I'm looking for as I continue to invest. Thank you for your response!

    1Reply
  • Judith Sullivan
    Property Manager · Lenoir, NC · Member since 2017 · 38 posts · 38 votes
    8y

    Hi Michael,

     Courtney's idea is easiest--work with wholesalers. If you buy from them, they will love you and bring you deals. Win-win for everybody. 

    Alternatively, you can find your own. 

    It seems crazy, but just because there isn't a sign in the yard doesn't mean that that the owner doesn't want to sell a house. Drive around, find properties that look a little off (overgrown, in disrepair, vacant, dusty yardcar with flat tires etc). Then get on the county or city GIS, find the owner's address, and send them a note. 

    --Don't type it

    --Don't include a resume or explain your position

    --Don't suggest an offer

    Hand write: 

    Hi, my name is Michael Lee. I want to buy your property at "ADDRESS". 

    Please call me. "PHONE NUMBER"

    Thank you, 

    "Your signature"

    Response rate on handwritten yellow letters is about 10% and up to 30% in markets that don't have a strong investor community.

    Some people will call back because they are curious and they'll ask "What's your offer?" Don't offer. Ask if it needs repairs and when they want to sell. Many will be motivated sellers who consider the house a problem and just want a quick solution. Not everybody will want to sell for what you want to buy, so move on if it's not a good deal. And don't forget to ask if they'd be willing to take a payment. Many are willing to offer seller financing. 

    Good mentors for this method are Ron Legrand (https://www.youtube.com/user/ronlegrand) and Michael Quarles (http://michaelquarles.com/)

    I purchased 10 properties last year, and 8 of them came from hand written yellow letters. It's a solid method and eliminates the competition of the MLS .

    Last tip--don't involve an agent. Sellers want to deal directly with you, so be real, be on time, and be honest. 

    Happy investing! 

    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    Great advice @Judith Sullivan and thanks for the specificity. I'm going to try this and will keep you posted. 8 properties is awesome too btw!

    0Reply
  • Tim Jones
    Flipper/Rehabber · Merced, CA · Member since 2016 · 221 posts · 115 votes
    8y
    For offer #2: Be sure to ask the listing agent if they have any inspections on file when the house comes back on the market. Find out why the house fell out of escrow. I've received a few free pest / home inspections this way. It allows you great info in order to make an appropriate offer. Best of luck to you!
    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    Will do @Tim Jones thanks for your response!

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y
    Originally posted by @Michael Lee:

    @Joe Splitrock I just re-read your response and wanted to ask a follow-up. I had to leave out certain details in my original post but for Property 2, the 20k repair estimate were for things that I knew needed to be done just from what I could see, i.e. new roof, hvac, painting, etc.  But the house has old termite damage, potential flooring issues, and other things that will likely need to be addressed. So how do you factor in this additional risk or cushion for the 'unknown'? I thought I was doing that by offering 92k and was willing to come up a bit but just did not feel comfortable with 115. Thanks

    The sellers do not see all the problems that you do or it would be priced lower. Sometimes it just takes time for the seller to start moving down on price. Watch the properties that you have rejected offers on. Wait a month or two and resubmit the same offer. 

    2Reply
  • Russ Scheider
    Flipper/Rehabber · Mount Pleasant, SC · Member since 2013 · 547 posts · 235 votes
    8y

    Based on our experience and that of Other investors I know well, It takes 40-60 offers on off-market properties to make a purchase at "investor pricing" and 100 offers or more to buy from the MLS. We only target MLS properties that are listed at least 20% below market value, indicating motivation.

    1Reply
  • Michael Lee
    OP
    Columbia, SC · Member since 2015 · 88 posts · 55 votes
    8y

    Thanks for the insight @Russ Scheider. Had no idea it was this tough for everyone out there. I think the way I lucked into my first one made me lose sight of what's going on in the market.  See you soon!

    0Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    8y
    Originally posted by @Joe Splitrock:
    Originally posted by @Michael Lee:

    @Joe Splitrock I just re-read your response and wanted to ask a follow-up. I had to leave out certain details in my original post but for Property 2, the 20k repair estimate were for things that I knew needed to be done just from what I could see, i.e. new roof, hvac, painting, etc.  But the house has old termite damage, potential flooring issues, and other things that will likely need to be addressed. So how do you factor in this additional risk or cushion for the 'unknown'? I thought I was doing that by offering 92k and was willing to come up a bit but just did not feel comfortable with 115. Thanks

    The sellers do not see all the problems that you do or it would be priced lower. Sometimes it just takes time for the seller to start moving down on price. Watch the properties that you have rejected offers on. Wait a month or two and resubmit the same offer. 

     Or submit an offer even lower than before.

    1Reply
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