The first offer I've ever made

24 Replies

I'm 25 years old and just made my first offer on a property! I am looking to house hack a MFR. I found a duplex, analyzed the deal, set my standards for what I'd pay for the property and they countered back. I did not accept their counteroffer and am now analyzing other deals searching for another! How often does a seller revisit someone's offer if they have had no other offers on their property? Just curious and excited!

How far off was your offer and their counter? Most sellers are not going to come down more than a few per cent, unless the house has issues. As a matter of fact, if they do come down low, it might be indicative of an issue.

Make sure you have your contingencies in order in case they do accept.

What does your realtor say?

Hey Addison,

Congrats on making your first offer! I would say in this market not too often are they going to come back to your offer but, as @Bruce Woodruff stated above, if your offer was close they very well could come back if the other buyer wants a lot of concessions. 

One thing to keep in mind as a real estate investor, you'll make a lot of offers with very few accepted. So don't get discouraged if your first offer isn't accepted - it's just part of the process. 

Best of luck!

Originally posted by @Bruce Woodruff :

How far off was your offer and their counter? Most sellers are not going to come down more than a few per cent, unless the house has issues. As a matter of fact, if they do come down low, it might be indicative of an issue.

Make sure you have your contingencies in order in case they do accept.

What does your realtor say?

They originally were asking $290k, after 25 days they dropped to $275k on their own. After 30 days on the market I offered $239k and they came down to $255k "as-is". 

Something to consider. The property has all new mechanicals and roof, but was built in 1910 and the air conditioners along the back of the house are actually across the property line on a vacant lot. I'd most likely have to pay cash for that land so I would not need to move the AC units. I am looking to house hack so my cash will be VERY limited if I purchased the home with a 3.5% FHA loan.

I think you're pretty close. Either stick with your price or if you really think it's the deal, then come up a bit. Sometimes a seller will feel all different if you offer a little extra......

What made you not want to counter back? Have you run the numbers in the calculators here with accurate ARV and renovation costs? If it's a great deal, it could have been worth trying to work it out by countering instead of just saying no unless you decided it was not what you wanted after all. I know many real estate agents who will not go back even if it was the only offer because you already said no. It's all agent dependent. Are you working with an agent? If you like it and the numbers work, it could be worth going back with a new offer. As others said, expect most offers to be rejected, don't get discouraged!

Originally posted by @Nicholas L. :

@Addison Robertson what are the projected rents and expenses?

Projected gross rent is $2250 and projected expenses is $2280. That is in the properties current condition. PITI is $1430 and capex, vacancy, repairs, and PM make up the remaining $850 difference.

@Jamie Derasmo I have not countered their counter because it would stretch my cash reserves to a point where I wouldn't be able to fix any miscellaneous issues that may pop up with a property built in 1910

Difference in PITI is about $80 from $239k to $255k.

something I have not touched on. There are new builds ALL around this property. The neighborhood is being flooded with investor money. Would this negatively effect the property in the long run with it being built in 1910?

@Addison Robertson As far as property value or rent that should only help. If you were to sell or refi equity out and the only comps within a quarter mile are new builds, that should help your value a lot. Every area and appraiser is a little different, and they'll try to adjust the comps to compensate, but it'll still likely work in your favor. This is based on being a real estate agent in Kansas City.

I'd buy it for house hacking. $80 is a small jump. If the area is hot most likely it'll be worth more than 255K shortly

That property seems odd enough that many investors will pass on it. I haven't heard of major mechanicals being located on a separate parcel before and that either triggering a purchase of that parcel or relocating of the mechanicals. I'd at least look into the cost of moving them before making another offer. You're actually exercising admirable restraint. Sometimes people are so anxious to do a deal they either overlook big issues like this or give in just to do a deal then regret it later. Wait another week or two and resubmit your offer. They may have had a change of heart.

Originally posted by @Addison Robertson :

They originally were asking $290k, after 25 days they dropped to $275k on their own. After 30 days on the market I offered $239k and they came down to $255k "as-is". 

Something to consider. The property has all new mechanicals and roof, but was built in 1910 and the air conditioners along the back of the house are actually across the property line on a vacant lot. I'd most likely have to pay cash for that land so I would not need to move the AC units. I am looking to house hack so my cash will be VERY limited if I purchased the home with a 3.5% FHA loan.

Do you already have a price to purchase that vacant lot?  Would you be able to move the property line to include your HVAC units and resell the vacant lot for a profit?  That MAY help you hit your numbers and achieve your objective.

I know it's tough when you work the numbers and decide there is a ceiling...though I never want to lose a deal for a couple grand. Emotions come into play, sellers want to feel like they are winning...let em feel that way and close. Totally different if its not a great property. If its all about hitting those numbers just write MANY offers and find an agent who is down for the journey. 

It being a 1910 is fine. I've got a 1912 craftsman duplex and its solid as a rock, will likely outlive some of my newer properties. You can get to the AC updates later. If you want the property, humbly restart the negotiation process. You will still get some leverage back once in contract.