Do any of you all have rules regarding offer price? Like 85% of asking or anything? I realize its depending on location and need. I also know about the 1 to 2% rule but was really looking at offer prices on what I am planning on living in and not necessarily investment property.
@Charles Kiser if you're planning on it to be your residence, or really, even an investment property, you want to pay what it's worth. That may sound obvious, but the asking price has nothing to do with its value. And what it's worth as an investment is not the same as what it's worth as a primary residence.
If I were buying a property to live in, I would want to look at it in the eyes of a flipper. How much equity can I add with renovations? I'd want to find something that has instant equity.
Regardless of whether it’s an investment or not, a good price is based on the comps in the area. While a small percentage of investors out there are looking to screw the other guy, most deals work when it’s in the best interest of both parties.
* seller is looking for a quick close and the buyer has cash and can close in 5-10 days. Price might be lower, but seller gets out quick.
* Buyer doesn’t have cash and can’t qualify for a conventional mortgage for whatever reason. Seller is willing to carry the loan. Might be a little higher rate so the seller makes some extra money with cash flow, and buyer gets the property.
I don’t think you’ll get many good deals by always going in at 85% asking price. You need to look at the house, seller, neighborhood, and figure out what makes sense for both of you.