Looking at a fix and flip in the Dayton Ohio market, it went to MLS for $39,500 then price dropped to $34,500. I figured 30k in rehab on the property. It sold for $18,100 in Feb 2019 so i offered $24,000 cash deal with 7 day closing in hopes to get it for $28k-30k they would be happy with $5k-10k profit and not touching the house, almost a whole sale deal for them. ARV at max is 100k making the MPP @ $32,700. Instead of a real counter they pulled this:

"Thank you for your offer of $24,000 cash on the above property. Per our terms buyer assumes all closing and deed costs. Property sold in its AS-IS, WHERE-IS'' condition. Seller does not prorate taxes. Buyer pays all closing costs including, but not limited to any and all transfer taxes, title, legal, and recording fees. With our recent price drop, we did receive many offers and are above asking price. We will be taking highest and best offer by Monday. Please reply to this email only, with your buyer’s final offer, full name, current address and proof of funds. If you have any further questions please feel free to contact me. Thanks again!"

1.) They are being honest and have multiple offers and want to squeeze everyone for more cash, but i hesitate only because they didn’t say what that offer amount is.... Also if they had an acceptable offer why wouldn’t they have just accepted it other than to induce a bidding war?

2.) They have no other offers and my numbers were too low, they are trying to get me to bid against myself.

How would you all move forward? What profit numbers would you find acceptable on lower priced homes like this? Would you follow the 70% rule or have a min profit number and offer based on that? Do you think the owner is Full of BS or actually has other offers?

Dave-

@David Roe I would just stick to your numbers. If the deal works with a little higher price tag, then raise the offer some. If not, don't.

Here is what i came up with for my counter offer.  I am setting a max price i am willing to pay up to.  And offering 1k over their highest offer as long as it is under my max purchase price. If my offer is accepted i am requiring proof of the highest offer they had other than my own.  So example... if they actually have a $35,000 offer I am willing to pay $36,000 as long as they submit a copy of the $35,000 offer to me at or before closing.  This insures trust on both ends and they get the maximum price for their listing.  The date of acceptable offers prevents them from using a fake offer to write up after receiving mine.  

"Thank you for your reply on our cash offer of $24,000 our final offer is as follows. We are willing to purchase the said property up to $1,000 more than your highest submitted offer as of receiving this offer (date) up to a max purchase price of $37,153 cash with a 7 day closing, contingent with proof of "said" submitted highest offer via a copy of "said offer".  this offer is void for any offer excepted after this offer(on this date). 

Thank you. "

I've seen people stick with their original offer and get it. However, if you do this, be prepared to lose the property.

They are either lying or telling the truth. You have to decide what the house is worth to you, and offer that amount.

It burns me just a touch when I make an offer on a property that sat for a long time, only to hear this. I just lost a property because I didn't raise my offer when told a similar thing as you. 

Originally posted by @David Roe :

Here is what i came up with for my counter offer.  I am setting a max price i am willing to pay up to.  And offering 1k over their highest offer as long as it is under my max purchase price. If my offer is accepted i am requiring proof of the highest offer they had other than my own.  So example... if they actually have a $35,000 offer I am willing to pay $36,000 as long as they submit a copy of the $35,000 offer to me at or before closing.  This insures trust on both ends and they get the maximum price for their listing.  The date of acceptable offers prevents them from using a fake offer to write up after receiving mine.  

"Thank you for your reply on our cash offer of $24,000 our final offer is as follows. We are willing to purchase the said property up to $1,000 more than your highest submitted offer as of receiving this offer (date) up to a max purchase price of $37,153 cash with a 7 day closing, contingent with proof of "said" submitted highest offer via a copy of "said offer".  this offer is void for any offer excepted after this offer(on this date). 

Thank you. "

we call this an escalation clause  it works very good in areas were most investors have never hear of it.. and you dont leave a ton on the table.  however extremely common on the west coast.. only things are not as hot so dont see it as much..

I've never been a fan of escalation clauses in my offers but I've used them plenty of times. I'm always a proponent of understanding your metrics and what works for you and just making the right offer according to that. If you know you can pay 35K and you think you might lose it at less than that, then you need to be ok if you offer 32K and don't get it. 

I have lost on deals when I put in an escalation clause because they assumed it was a way for me to simply pay less and it was viewed as "screwing" with them. That perspective is rare, and usually from inexperienced agents, but it does exist also. 

Originally posted by @Mindy Jensen :

I've seen people stick with their original offer and get it. However, if you do this, be prepared to lose the property.

They are either lying or telling the truth. You have to decide what the house is worth to you, and offer that amount.

It burns me just a touch when I make an offer on a property that sat for a long time, only to hear this. I just lost a property because I didn't raise my offer when told a similar thing as you. 

100% yup. Seen this game played so many times I don’t even play it anymore. I swear it must be in some 101 real estate book somewhere. 

Offer what your willing to offer, and call it a day. They are almost always bluffing, if not let someone else lose their shirt.

Keep an eye on that as-is tax clause, you could be in position to be in heavy tax debt.

LOL, the bank came back and said they dont allow escalation clauses.  LOL so i gave them a little above my previous offer but not much.  I'll let you all know if they accept it.  I am betting they have no other offers or else they would have just taken it instead of playing email tag with me.