when sellers ask how much profit you get

Question

when a seller asks how much profit you are going to get when all is over, do you tell them?

Joe Villeneuve · Answer

not enough

Thomas Dionne · Answer

ive said both of these:

"not as much as youd think for what I deal with.... i mainly do this for the freedom so I can spend more time with my family. "

"eh about 25 grand"

Thomas Dionne · Answer

ive said all these:

"not as much as youd think for what I deal with.... i mainly do this for the freedom so I can spend more time with my family. "

"eh about 25 grand"

Joe Villeneuve · Answer

I'll stick with "not enough".

Zach Liu · Answer

@Joe Villeneuve

Hi, no of course you don't tell the seller how much you really think you will make. You tell them with my offer at $*****, I may make this deal work, so you are convincing the seller to sell you at a lower price. If they don't like it, of course they assume you make less. It is just a strategy. I would say it is much better say an answer "no, I can't tell you".

Joe Villeneuve · Answer

@Zach Liu

Seriously?  I would never tell my sellers what I was making. If my seller is another investor, they can figure it out...or would never ask in the first place.

If my seller is a homeowner, why in the world would I tell them?  Homeowners are notorious for thinking the buyer is getting too much when they eventually sell.

Whenever I'm asked (this is so rare I can't remember when the last time was) my answer is always the same..."not enough"...even though I know that if it wasn't enough, I wouldn't be making the deal in the first place.

Zach Liu · Answer

Yes and here is why.

It is part of  negotiation. Just like when you ask seller how much they made when they owned. You ask about their returns and they will usually tell you or at least they will provide some data so you can figure it out yourselves. They may also tell you how much you should earn if you buy by their price sometimes, like a pro forma estimate. But of course these numbers will be exaggerated to some extent.

So here comes what you should say. Make a similar calculation and provide the numbers you come up with, and of course you need to be conservative (and of course it is the right thing to do.) So you can tell the seller here is the price that will make the deal work for you. And of course the seller knows his estimate will never happen, so the difference in between will be the room of negotiation for both parties. Then if you can justify your numbers well, he can present for yourself well.

when sellers ask how much profit you get

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