Anchoring to Negotiate a Better Deal

Investor · Willis, TX · Member since 2014 · 245 posts · 124 votes

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-

1 Reply

39 views

3 Replies

Jump to latestLatest

Sort by

Andy SabischPro Member
Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
1y
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.
1 Reply
Juan Cristales
OP
Investor · Willis, TX · Member since 2014 · 245 posts · 124 votes
1y
Yeah man. House needs everything... people think $100K rehab on this is too much or overkill. $100K rehabs have sadly become commonplace in the Houston area.
Juan-
0 Reply
Greg Kasmer
Rental Property Investor · Philadelphia, PA · Member since 2021 · 778 posts · 504 votes
1y
@Juan Cristales - I always like to look at the foundation and basement walls to ensure there are no obvious structural issues. Also, not sure how the sewer lines are structure, but I also look for the main stack and whether it's cast iron or PVC - I usually get the sewer line videoed to make sure. Good Luck!
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.