King or Queen of Lowballing?

Buying & Selling Real Estate
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King or Queen of Lowballing?

Jack Fernandes
Attorney · San Diego, CA · Member since 2020 · 40 posts · 11 votes

Hey all, since many of us are cooped up in the house, and since I am new and want to engage with the community, I figured I'd ask this fun question:

Who would consider themselves to be the King or Queen of lowballing? 

I know that many consider lowballing to be a bad thing, but I come from the school of thought that a property is only "worth" what someone is willing and able to pay for it, at the time that it is being sold. With that said, I consider myself to be a coupon clipping, money-saving, value squeezing, bargain hunter and I get inspired by hearing stories of people who scooped up properties for great prices. I do the same in the stock market. 

Does anyone have fun or inspiring stories about offers they've had accepted, due to whatever reason, that came in super low from the ask or comparable sales? I'm talking like 25% or lower, like a property listed at $1m that someone closed at $750k without there being some kind of major structural damage found in the property.

Any tips for coming in super low that you all have found to work, or at least, keep the negotiation table open and hot?

Let's hear em', folks. King or Queen of successful lowballs!

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Robert Dobbs
Residential Real Estate Agent · Delray Beach, FL · Member since 2010 · 115 posts · 83 votes
6y

In November 2009, depressed, like many here, ...a victim of the "real estate bubble" and the horrible economy (the "the dark days of 2008"!).

I get an unsolicited email saying, ..."21 bank owned vacant Florida parcels". As a "real estate junkie", I guess I "couldn't help myself", so I "Googled, researched, did some due-diligence (I.e., Google "street views", etc. and more!). Most of these 21 acre lots were about 1/2 acre each and some were 1 acre. The 21 parcels, ...all looked "pretty cool"!

So I then called the listing agent who emailed me, introduced myself and asked was it possible to "make an offer", a "package deal" for all 21 vacant lots.

These 21 parcels were listed by the bank for $8,000 each. I made my offer: "I offered $1,200 each!" The listing broker (actually the listing broker's son), shouted, "that's crazy!", the bank is asking $8,000 each!" I told Preston (the Broker's son), ..."look we are both fellow agents (Realtors), so kindly submit my offer to the bank". Preston said, ...well, ok!

I "wrote-up" the deal, emailed my offer (contract) to the Broker. And guess what? I got a phone call the next morning from Preston (I.e., the Broker's son), ...Mr. Dobbs, "I just can't believe it!", if you can close by the end of the "bank year", they accepted your offer! 

"To make a long story short", this was the beginning of a "11-year relationship" with this bank. ------> "I purchased well over 500 vacant parcels" from this bank.

I was basically, "the bank's real estate REO enema" for small vacant parcels, for over 10 years"! Yikes!!!

This story didn't end with me buying bank-own parcels. Building a great relationship with the title agent (who did the closings for this bank), Amanda (the title agent), introduced me president of the local Habitat for Humanity. To make this "long-winded" story shorter, I bought hundreds of donated vacant parcels that people from "all over the country" that donated "real estate bubble" parcels to Habitat for Humanity. Over the years, my relationship grew with Habitat and now we do "land swaps" (I'm very, very proud to say, "well over 50 parcels of mine that I "land-swapped" with Habitat, now have a "Habitat home" on my lots. Wow!

I may not be the "King of Lowballing", but I have carved-out a "10-year chapter" in the "Book of Lowballing", LOL!

Over and over again, I keep hearing the "same olde line", ..."Mr. Dobbs, I can't believe they accepted your offer"!

Robert Dobbs,                                                                                                  Trustee Settlor of the Land Rescue League Trust and The Renaissance Trust
 

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  • Jordan Murrell
    Las Vegas, NV · Member since 2020 · 162 posts · 113 votes
    6y

    Happy Easter! I’m just getting started.

    I am thoroughly enjoying learning about these so called “low ball” offers.

    What are key indicators that sellers are willing to accept low ball offers?

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y

    I should have mentioned in my post: I would never make a low-ball offer without being able to explain the rationale behind my offer to my agent, the seller's agent, and/or the seller. To do otherwise wastes everyone's time, creates bad feelings and rarely gets a deal done. The rationale may be nothing more than "this is a risky market", but it at least shows there was some thought process put into the offer and that you are a serious buyer.

    I have a motto I've tried to follow most of my life: always make the other guy appear unreasonable. Meaning that most people have a pretty strong sense of "fairness" and you end up victorious far more than not by maintaining the reasonable stance. I think @Jay Hinrichs can attest to that, virtually every one of his posts reeks of even-handedness and fair play :) 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Kai Van Leuven:

    @Jack Fernandes

    I am not one to “kiss and tell” but why not...

    I used to have an old strategy called the "dogs of the MLS". I would look at a low price point and put in over 365 days on the market. These homes were the worst of the worst in the worst time to sell (09-12).

    Anyways, I was watching a house that was on and off the multiple for a few years. It started at 250k. Was actually a nice little place but had a foundation that was totally destroyed by anolid beetles. I kept watching it. The price was down to 185k, I put in an offer for 160k cash.

    They were definitely looking to unload it. I bought it from a super scammy HML. I had no problem negotiating super hard. There was tons of back and forth. I ended up getting it for 127k. I was pushing for 100k but I will take what I can get.

    The reno was like 20k with the foundation and cosmetic remodel. I did all the labor so that was pretty much my material cost. Last appraisal was around 350 or so, probably higher now.

    What I prided myself the most in was the stack of agent cards. I put them in a large ziplock bag and counted them after I listed the property for rent. 75+ agents had shown the property! 

    Over the years when I would go into a home I just bought at Trustee sale many times the old owner would have all the WE BUY houses letters left in a stack.. many times 100 plus letters.. :)

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @JD Martin:

    I should have mentioned in my post: I would never make a low-ball offer without being able to explain the rationale behind my offer to my agent, the seller's agent, and/or the seller. To do otherwise wastes everyone's time, creates bad feelings and rarely gets a deal done. The rationale may be nothing more than "this is a risky market", but it at least shows there was some thought process put into the offer and that you are a serious buyer.

    I have a motto I've tried to follow most of my life: always make the other guy appear unreasonable. Meaning that most people have a pretty strong sense of "fairness" and you end up victorious far more than not by maintaining the reasonable stance. I think @Jay Hinrichs can attest to that, virtually every one of his posts reeks of even-handedness and fair play :) 

    kind of depends on the setting so many of our deals are trustee / sherrif / tax  U just bid with everyone else.. other wise I think I am like most we run our numbers make sure it works and then we offer..  Like Grant Cardone I have gotten many 10X deals over the years especially in land..  one that comes to mind was in ATL in 2012..  bought 14  1/3 lots for 3k each from a bank.. sold them 24 months later for 30 to 40k each.. the best buys I EVER saw coming out of the GFC was the Pipe farms in and around ATL..  I tried to raise capital for those.. But the push back was .. YA BUT it does not cash flow  LOL.. so the builders came in and CLEANED house.. I mean I saw 100 lot sudivisions ready to go vertical that I would have bought for 100k to 150k.. it was insane.. I did buy 60 SFRs and we did well but NOTHING like if we would have bought the dirt.

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  • Jack Fernandes
    OP
    Attorney · San Diego, CA · Member since 2020 · 40 posts · 11 votes
    6y

    Thanks, all for these interesting stories. It’s fun going through and reading about some of your unorthodox approaches and all of these inspiring successes. I think we are entering a good market to make some low offers and still close- the tricky part will be weathering the storm with low cash flows!

    0Reply
  • Jean H.
    Rental Property Investor · Miami, FL · Member since 2016 · 173 posts · 206 votes
    6y

    @Jack Fernandes Not sure if this counts but it was my personal home. I watched this house on the MLS go from $1.8M to $1.6M to $1.4M in about 6 months, at which point I went to go look at it. This was in 2015 in Miami so the market was still going strong.

    When I told my agent I wanted to offer $1.1M, she scoffed and said the seller would never go for $300,000 off list price especially when he had started at $1.8M. I insisted so she submits the offer, and I get a counter of $1.25M which was actually my strike price but I thought he was a little eager so I countered with $1.225M. I still laugh when I remember the loooooong pause when I told her to not accept but to counter. Suffice it to say, the seller accepted my counter.

    I found out later that the seller had a lot of heat from the city for renting the property to 10 grad school students who liked to party.

    Code violations. Noise violations. Zoning violations. The works.

    I put in $500,000 to renovate the place (so all in around $1.75M) and it appraised last year for $3M when I took out a HELOC and pulled out all my money and then some.

    That HELOC is what I've been using to BRRRR rental properties and basically jump started my investor career.

    6Reply
  • Rita Medeiros
    Rental Property Investor · Pompano beach, FL · Member since 2017 · 478 posts · 194 votes
    6y

    @jean 

    @Jean H.Come to our Ft Lauderdale meetup once we can go out again.

    0Reply
  • Jack Fernandes
    OP
    Attorney · San Diego, CA · Member since 2020 · 40 posts · 11 votes
    6y

    @Jean H.

    Ladies and gentlemen, we may have found a Queen of the lowball! In my world, of alternative investments, that is an honor 👑 and a privilege.

    Good for you for having the stomach to put in that offer and for deciding to counter. Inspiring negotiation story! Thank you for sharing.

    0Reply
  • Marci Stein
    Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
    6y

    I’ve never bought a property for less 

    than 25% - 35% of asking price. period . 
    I always remember the saying “ profit 

    is made when you buy it , not sell “.

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    @Jack Fernandes having spent my career in marketing, I can tell you that asking price and market value are two different things. Too many people make the mistake of measuring negotiating success based on percentage off asking price. I purchased a house a couple years ago and paid $1000 over MLS asking price. That house today is worth $50K more than I paid for it. Simply put, the MLS price was too low. I knew there would be other offers and expected at least one to be full price.

    When people are getting 25% off of asking price, it generally just means the asking price was too high. All I am saying is measure your "deal" by market value, not asking price. Just like your offer should be based on market price.

    Great topic and thanks for the diversion from all the other doom and gloom threads. 

    3Reply
  • Diane G.
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Jack Fernandes

    In July 2019, I bought a 528 sq ft condo for $560K that was listed for $670K... this is in a prime San Francisco location where 2 houses down, at the time, was a listing for $13M....

    The seller was from LA, and did not understand SF rent law.....

    2Reply
  • David Goldsmith
    Real Estate Broker · New York, NY · Member since 2020 · 7 posts · 17 votes
    6y

    @ Jean H.

    I've been an investor since 1982, an Agent since 1986, and a Broker since 1990, as well as being qualified as "An Expert in the Practice of Real Estate" by the Bankruptcy Court of the United States, Southern District of New York. Never let an Agent/Broker dissuade you from submitting any offer. In most places it's actually both against state regulations and local broker's code of ethics to do so.

    1Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    @Jack Fernandes

    My primary residence was listed at $214,900. I offered $150,000. Settled at $187,500 and they paid $10k of my closing costs.

    0Reply
  • Mark Freeman
    Real Estate Investor · Clovis, CA · Member since 2014 · 195 posts · 194 votes
    6y

    I have gotten many properties for much less than LP and a lot of money off in escrow as well, but I think I would have a lot more money if I had bought ALL of the properties I missed out on by trying to get the best deal possible 😬.

    (I bought a house in December that was listed for $175k. We went into escrow at $125k and then got $25k off in escrow. Final purchase price was $100k. It’s a flip, and I just listed it for $339.9k 🤞)

    0Reply
  • Justin Karcher
    Real Estate Agent · Tonawanda, NY · Member since 2019 · 9 posts · 7 votes
    6y

    @Jack Fernandes. My wife and I had our eyes on a neighboring property for years. We toured the duplex when it was for sale at $60k. It finally went up for “absolute” auction as the owners were out of state. I cut the lawn on my other property on the street and went over to the auction. During the inspection before the auction, all these guys in suits were staring at the house not inspecting. I was already dirty so I inspected the crawl space and some other undesirables for myself. The house was sound! No one was bidding so I offered $1. Another neighbor bid then $3000 with no intention to buy. I managed to get this fully rented duplex for $3500. After some work, appraised at $95k.

    4Reply
  • Robert Dobbs
    Residential Real Estate Agent · Delray Beach, FL · Member since 2010 · 115 posts · 83 votes
    6y

    I want to take a moment to honor a real estate legend who passed away two months ago: CARLTON SHEETS

    Carlton sold over 3 million copies of his "no money down" real estate investing package (and "tons of other books and RE courses!). I'm guessing this was history's "all-time best seller"  in real estate investing and I'm confident many who are posting here, "picked-up" some great real estate "investor tips" and "investor strategies" from this great "investor icon", over the decades!

    "Rest in peace" Mr. Sheets. Many billions of dollars of real estate deals "found their roots" from you! Carlton Sheets described the definition of what a "motivated seller" was in plain terms, better than anyone I knew. 

    All of us "Kings and Queens of Lowballing" can "follow the lead" of someone like Carlton Sheets, to help us understand the "nuts and bolts" of a "motivated seller". Many times it is not about "property values", "assessed or just values", or supply and demand", or in "good times or bad times". It can be as simple of life events of the seller, making the seller "motivated to sell". And many times not about the "final selling price" (I.e, "LOWBALLING!").

    "Death, disability, loss of job, separation or divorce, probate, relocation, tax issues, legal problems", ...just to name a few "life events" that can lead to a so-called "lowball over and acceptance". It's not always about the money, many times a "motivated seller" just needs to sell period! And many times a "motivated seller" will be very pleased that they accepted your "lowball price" and will sincerely thank you for your help!

    And a listing agent for that "motivated seller" just might say to you, like has been said to me soooooooooooo many times, 

    "...Mr. Dobbs, I can't believe the Seller accepted your offer"! LOL!

    When I "write-up" my next "lowball deal" I will think of you Mr. Carlton Sheets!

    Sincerely, Bob Dobbs Trustee and Settlor of the Land Rescue League Trust

    0Reply
  • Kai Van Leuven
    Investor · USA · Member since 2015 · 325 posts · 447 votes
    6y

    @Mark Freeman

    I hope that works out for you on your flip.

    I say the same thing all the time. The “singles” and “doubles” that got away would have been nice. I am an ultra conservative investor and really only take the “once in a lifetime” deals. I skip over a lot of good stuff in the process.

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