Anchoring to Negotiate a Better Deal

[Juan Cristales]

Houston suburbs are experiencing some phenomenal growth even into 2025. This house would make a nice little rental or a fix and flip but the seller and I were on opposites sides of the spectrum. They anchored at $200K on $235K ARV. I anchored low on an $80K purchase. House will need ALL the systems updated: Roof, Structural, AC, Electric, Plumbing (septic)... new kitchen, new baths... everything. Follow up is the game we play, until it sells!

If I decide to move up on my offer, I will do so, in a small incremental amount... so in this scenario, I'll go up another $5K reluctantly. 

What are some immediate RED FLAGS for you when walking a house?

Juan-

[Andy Sabisch]

You need to determine what the repair costs will be and what the ARV will be (not what the seller tells you it is). If the ARV less the repairs (plus at least 10% for contingencies) less your desired profit less the closing / sales costs are more than where you can meet, simply walk away. Investing has to be a numbers game and emotion has to stay out of it. We have seen cute houses that would have worked for us to flip but the seller wanted prime money and we walked.

Looking at the photos, you have some major repairs.  Depending on the ft2 of the house, the need for permits and unknown expenses, you need to be in the range you are at . . . over $100K and you will likely be underwater.