I had a good friend call me the other day and tell me that she and her husband had found some land in the mountains they wanted to place an offer on. Knowing I work in real estate, she called me to ask for advice. I gave her the advice she was looking for and some she did not expect. But I think she was very happy with both.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Some Shocking Advice
As our conversation progressed I started asking about the land and the offer price. Where was it? How much is your offer? How long has it been on the market? Her answers made my real estate investor brain kick in.
She said the property was in a place where some of our other friends had a cabin. The price was $100,000 and it had been on the market for a few months. Something did not sound right. I know our other friends had built their cabin years ago and the property they were looking at was in the same subdivision. That told me that the property had been on the market a lot longer than a few months. Most likely it had been on the market for years.
I told my friend to offer half price, $50,000. “Good grief! I can’t do that. I don’t want to offend the seller!” I said do not worry about offending the seller. The seller is going to be happy that they have an offer since the property has been sitting for so long. They will most likely make a counter offer, which is what you want. I could not convince her to go down to $50,000. I did however feel pretty good when she said she would make an offer of $60,000.
Well, the offer of $60,000 was accepted without a counter offer (I know, she bid too much, but what more could I do?). My friend was very thankful that I had saved her so much money. I jokingly told her I would pick up my commission check later.
Don’t Be Afraid of Low Ball Offers
The fear of being offensive when making offers is something I see in many who are new to the real estate business. I also had this fear when I started out. “How can I offer so much below the asking price?” I would think to myself. This fear is a good thing. It means we are not jerks. But this fear is something that any good investor has got to get over.
Getting over this fear does not mean that we have become rude and pushy, far from it. It means that we have to make objective offers based upon our knowledge and experience. Yes, you may very well offend the seller, but just as often the seller will be very glad to have an offer.
The key is to always be courteous, respectful and professional. The seller may yell at you for making your offer. That is OK. Walk away and move on to the next deal. Sometimes those offended sellers will end up calling you back in a few months when no other offers have been made. Sometimes, because you were professional, they will call you back even if other, higher offers have been made (I have seen this happen).
So don’t be afraid to offend when making offers. But always be professional and courteous.
Photo: Alex Schweigert