Rehab is completed on a flip and has been on the market at the current list price for 6 days. Received a cash offer that will close in 2 weeks. List price is $625K and the offer is at $580K. Obviously a low ball because comps show $625K-650K. The cash offer is enticing and closing quickly would be great so I can move on to the next project, but it cuts my profit over 60%. Profit at $625K sale price would have been around $70K and at the current offer profit is about $26K.
I will still send a counter, but if I don't get it accepted would you consider accepting at the current offer price of $580K to move on? Last thing I want to do is reject this offer and then be stuck having to lower the price over the next few weeks and end up where I am currently, prolonging the inevitable...
Thanks in advance
What is the hurry? Wait til you have a couple more offers coming and decide. I will let go any offer accepted if someone tries to ask for a break after offer was accepted. I tell them up front.
Couple of thoughts. If you have a good realtor they should be able to get recon/feedback on where the buyer and where they are at.
For the 6 days it has been on the market, what has the activity been like? Have you or your realtor been getting feedback from the people looking?
What is the average days on market of your comps? Also look back at the comps from this time last year. What was the price and days on market? Time of year can be a killer in some markets.
With this info you should at least be able to make an educated decission.
Too soon to fold up and walk away. Your counter will test if they are serious or just throwing out trash.
At 6 days I would expect full price offer.
Thats one of the reasons I don't flip. There's no way of knowing whether you should take it or not. It really comes down to how fast you really think it will sell at that price for. If you're positive you can get 625k sometime in the next 3 months, then I would maybe counter at a number that associates some value for the quick close and walk if they don't budge. And whether you're right or not is literally a gamble.
26k doesn't seem like a very good return on a 500k+ total investment (based on what I think your numbers suggest). For that kind of risk, I'd want more of a return than 26k.
The risk you run is that you "wait" for other offers and this one disappears and then you still end up reducing the price down to the 580k AND being stuck with holding costs for 6 mos instead of 1.
I think your counter is going to dictate exactly how much your belief in that list price actually is. If you think you can get 625k all day long (3 mos or less anyway), then I would probably counter at 615k. If you're not really sure, I would probably counter at 605k.
My guess would be that they're probably willing to pay 600k. They offered 580k on a 625k list and most people tend to assume you would just split the difference down the middle to where it goes for 600k and then both people win.
It has been on the market at this price for 6 days. If this is the house on your web page, its been on the market since 10/26/17. You've dropped the price 5 times just in November. Why are you dropping the price so quickly and so often? Are you still getting showings?
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