First Deal with a Counter Offer

First Deal with a Counter Offer

Member since 2018 · 43 posts · 13 votes

We have been looking at properties to invest in and have made some offers on the very low side. We have not had any of our offers accepted or countered. Today our offer was countered. I like the price we started at and know that we could go higher. The counter was 10K lower than I expected them to counter at. We offered $129,900 on a 2 family fix and flip or potential BRRR that was on the market for $159,900. It had just been lowered to $159,900 from $189,900 so I was not expecting any counter but certainly not for the owners to come back with $139,900. The property is not in a war zone. It is in a high rental town. My question is, should I come back with another counter of $134,900 for example or just take the $139,900. The numbers work for a profit at $139,900 or even a bit higher. I am just looking for some reassurance and experienced minds to chime in. I am excited to get started with the rehab portion of this business and want a reality check from those that know better than I. Thank you in advance for your advise.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y

Dont step over dollars to pick up pennies.

See this reply in the discussion

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  • Member since 2018 · 2k+ posts · 1k+ votes
    6y

    @Faith Kirk are you willing to lose it for 5k. I made an offer they countered. I verbally agreed and before I signed the counter another investor came and bought it. They asked if I wanted to increase my offer and I declined. Only you can make the decision.

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Tim Herman That is a good point. No I am not willing to loose it for 5K. Thank you 

  • Phoenix, AZ · Member since 2017 · 135 posts · 294 votes
    6y

    Opinions will obviously vary on this, but if the numbers work then the numbers work.  Don't lose a deal because you want to try to squeeze an extra few k out of it.

    If you counter again you may come off as being cheap and difficult to work with.  If it's a deal at 139 I would accept, and then possibly try to negotiate lower based on the inspection report.

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Bob Daniels Thank you. That is good advise regarding the inspection as well. Being new, I want to tread with caution and take advise from those who have been there done that. 

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Dont step over dollars to pick up pennies.

  • Merced, CA · Member since 2019 · 13 posts · 3 votes
    6y
    Originally posted by @Faith Kirk:

    @Bob Daniels Thank you. That is good advise regarding the inspection as well. Being new, I want to tread with caution and take advise from those who have been there done that. 

    Both Tim and Bob gave great  advice.  My two cents is go beyond the home inspection and consider an HVAC inspection and/or Sewer Plumbing inspection, especially if the home is pre-1975. Once you start Escrow, do your due diligence and take advantage of the time you have to look over the property more closely.  There is potential for wiggle room in lowering the cost but you need to have good grounds for it.

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Karina Turner Thank you again this is great information I am taking not of and will utilize.

  • Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    6y

    You have the opportunity to get the deal now at $139,900. Do you like it that price? Does it still make sense? If you counter you never know what other offer may come in and you lose the deal. Really up to you but the search can end right now. 

  • Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    If they had come back with $149,000 and you countered $139,000 you would be pretty excited about that most likely. So if you can make that price work, put it under contract.

  • Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    @Faith Kirk if the deal is a home run at $139,900 get it under contract.

  • Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    @Faith Kirk The last thing you want is for someone else to enter the mix and snatch the property when you are fussing over $5k on a deal where the counter makes sense for you. 

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Russell Brazil Thank you That is a wise statement. 

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Frank Wong Thank you for your feed back. I do like the price and in my opinion it does make sense and I have I will be doing an inspection to confirm an possible issues that I may have missed in my look at the property. 

  • Member since 2018 · 43 posts · 13 votes
    6y

    @John Teachout Thank you. You are correct with your scenario. 

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Michael Noto Thank you for your feedback. You are correct. I do not want someone else in the mix here. 

  • Real Estate Agent · Sacramento, CA · Member since 2019 · 77 posts · 61 votes
    6y

    Lots of great advice in here that makes great sense. I'll throw in that if you are on the fringe and do want to consider the counter (which it sounds like you don't, but this applies for future situations too), I'd strongly suggest a conversation over the phone with the seller or their agent. You can get a lot accomplished through a conversation to find out if your counter will fly, or they're willing to do it with some concession from you (faster closing, renting back after close, etc.), or if they'll reject it flat out and kill the deal.  

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Dan Sundberg Thank you. Since I am new to this, any an all information is always helpful. I appreciate the information. 

  • Flipper/Rehabber · Albuquerque, NM · Member since 2019 · 61 posts · 64 votes
    6y

    @Faith Kirk

    I have made this very mistake more than once! Whatever you decide, make sure you are willing to accept the possibility of losing out unless you accept their counter.

    Best of luck!

  • Real Estate Broker · Lexington, KY · Member since 2017 · 131 posts · 129 votes
    6y

    Just make sure the numbers really do work. On my first deal I thought I knew how to calculate rehab costs and I was about 35% over budget.

  • Member since 2019 · 43 posts · 20 votes
    6y

    @Faith Kirk

    If you like the price, as other have said, don’t lose it for a few thousand dollars. Make sure you have contingencies in the contract though, inspections, loan, etc. if you’re using a re agent, they should know. If not, make sure you understand contingencies. FYI each counter offer is like a brand new offer. They can back out at any time if you counter back.

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Robert Nelson Yes we do like the price and I wanted and needed some reassurance and advice from the forum. Your advise on the contingencies of the inspection is wise. I had that in the original offer. Thank you 

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Timothy VanWingerden Oh My!!! I have gone over my numbers a lot. I know there is always a possibility of error which I hope when I make the errors they are not to terrible and we can work with them. Thank you for your words

  • Member since 2018 · 43 posts · 13 votes
    6y

    So everyone that was kind enough to respond and give me some advice, I wanted to let you know we decided to accept the counter at the $139,900 with the caveat that nothing comes up in the home inspection that we may have missed when we looked at the property. Paperwork to be completed today. I am so excited for this adventure and the feedback from this group is needed and welcome. Thank you so much. 

  • Member since 2018 · 43 posts · 13 votes
    6y

    @Timothy VanWingerden When you learned that you were 35% over budget where you able to recover from that error? We had our home inspection today and it came to light that there is more work needed than what is on the face. We can back out of the deal as it was contingent on a satisfactory inspection to us. I am frustrated that I missed things I should have seen and now we do have an out or we can negotiate a lower price due to the inspection contingency. Little frustrated at this point. 

  • Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y
    If you can, negotiate it lower so it still works. Just use the new data to come up with a new price that works. If the seller can meet it, fine. If not, walk and keep looking.
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