Making offers on multi-units— asking or above?

Question

How hot is the Denver multi-unit market? Is it most common to offer above asking? Also, what percentage of them would you say are cash offers?

Mike McCarthy · Answer

@Leah Brooke I have no idea about the Denver market, but never consider the list price as your starting price. You need to look at the comps compared to the property you’re buying and start there.

Remember, The list price is only what the person selling it THINKS it’s worth.

Steve K. · Answer

@Leah Brooke Generally speaking the Denver market has been pretty hot for MF properties over the past few years, although it has been cooling off slightly just in the past few months. Whether or not properties sell for above ask or to cash buyers or not really depends on the specifics of the property, most importantly location. Denver is a big city with dozens of sub markets that vary dramatically. For example many properties in trendy areas like RiNo and Highlands are selling above ask to cash buyers (if there priced right to begin with) while buildings in less desirable areas will have less competition. So there answer is it depends but generally speaking yes there has been a lot of competition for MF properties in Denver over the last few years so it is not uncommon for properties to sell for over asking price and cash purchases are also not uncommon. I’ve managed to find a few good deals over the past few years though, it’s not impossible especially if one is willing to do some value-ad.

Chris Lopez · Answer

@Leah Brooke AS others have stated, the Denver MF market is hot, but cooling off ever so slightly. I'm curious to see what the drop in rates do to it, as it should increase demand since money is getting cheap again.

With multi's you really have to dig into the actual numbers vs the pro forma. Many owners and listing agents have very optimistic pro forma numbers! That's where you often get negotiating power.

So far this year, I've purchased 5 multis (1 for me, and 4 for clients.) Two were on the MLS and three were from my network. I've found networking for multis pays off way more than for single-family homes. That also may be due to my focus on rentals, not flipping.

The two MLS properties were below list price. We negotiated the price down because of deferred maintenance and their pro forma numbers.  The other three properties' prices were agreed upon on over a handshake

Matt M. · Answer

It depends on the property, DOM, etc. I always call the listing agent to get a feel for the activity of the property prior to sending an offer. Your broker should be doing the same thing and advising you on how to play it.

Making offers on multi-units— asking or above?

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