how low can my offer amount be

Question

I am new to the CRE market. I saw a property (It is in the NJ/Phili. area) that interests me, with a list price of 2.25M. I cant find any guidance as to how much is the least I can offer and still be taken seriously. Meaning, lets say I feel I would buy it for 2.1M. but of course I would rather pay less, the least possible, obviously. If I offer 85% of asking (1.9M), am I being to greedy and risk turning the seller off? or is that still within the "normal" negotiating range? as they say "how low can I go"?

Thank you in advance,

Russell Brazil · Answer

There is no magic number. You need to learn how to value the property independently of the list price.  That means, value it, not decide what number you want to pay for it.  That value could be way under the list price, or it could be way over. Once you know the value of the property, then you must determine if getting it at that price is possible...and if it is possible, creating a strategy to get to that number.

Kenneth Garrett · Answer

@Abe Woods

There is no magic formula.  I would provide a justification as to the reason for the low  offer.  The asking price is irrelevant.  It only matters what you are willing to pay for a property.  If the seller is offended not much you can do about that.  It’s just business.

Good Luck.

Philip Williams · Answer

The asking price on a multi family we have under contract was 1.2 million which was the appraised value. They wanted a fast close by the end of the year so we offered them 670k and ended up settling on 700k which was definitely a steal. Don't be afraid to offer as low as you think makes sense for your business. After all when the market turns, or the neighborhood turns or whatever you are going to be the sole person responsible for the deal. Offer low enough that you can fire sale if need be, offer low enough that you have enough cash reserves to cover it. Offer them a dollar if you want don't ever be afraid to offer low and upset the seller.

Mary M. · Answer

A lot also depends on the market  when we sold  our commercial buildings, we got offers way ABOVE what we expected. So you need to know the market, and know if the price is too high, too low or on target.

Mary M. · Answer

Find a commercial agent to work with - they can help you with pricing

Just to clarify - commerical REI is not the same as SFH. They process is different as is how things are priced.  Best to get broker help. They do bring a lot of value

Sam Shueh · Answer

Commercial can be tricky. Often the asking price is a wishful number what the seller thinks how much it is worth. You need to look at your numbers see what makes sense to you.  Also how long it has been on the market matters. I will do my own comps and get a commercial realtor to represent it. I do not believe 85% is an insult so long you allow them to counter back.

Abe Woods · Answer

thank you Matt. any common examples how to do that?

Matt K. · Answer

Also look for ways to add value you offer without increasing price...

Abe Woods · Answer

Thank you all very much for the great advice!!!

Abe Woods · Answer

Thank you all for the helpful advice. can anyone give an example or 2 of an actual deal(s) that worked? what the asking price was, what you offered, and what the end, agreed upon price was? It would help me (and other beginners) get a feel for what its really like

how low can my offer amount be

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