Learning how to make offers

[Bassma Mancilla]

Hi all, 

So, prior to learning about real estate investing, I had never purchased a house (still haven't). I've been making offers, and of the say, 50 deals I've analyzed, I've made like 10 offers thus far. Only one has gone under contract and that one fell through because of foundation issues. I usually offer 5-10k below purchase price for on market deals and ask for seller credits to cover closing costs. However, my agent has been sending me off market deals and says there isn't much room for price negotiations since the price given is what the seller wants to net. How should I go about making offers in this case? Ask for seller credits but offer asking? Any tips?

[Randall Alan]

@Bassma Mancilla

We have purchased about 30 properties, and currently have 37 units within 25 properties that we self-manage.  One thing I had to learn was to recognize when the deal was already good enough.  If you are always trying to bid down your offer... what you are really becoming is a secondary buyer to anyone willing to pay full price.  No seller wants to do the things you are asking them to do.  The only reason they would do it, is if they didn't have a better offer.  So if the numbers work at full price, and you want the property, your best bet is to go in with a full price offer.  You are WAY more likely to actually get the property, versus being a runner up to the other full price offers.  If the property is sub-prime, it makes sense to bid it down... but if it is 'good to go' and the value asked is appropriate for the condition and such... a full price offer is the most likely way you are going to actually be the winning offer. 

There was one time when the price of the house was so low, and we started to try to bid down the offer.  Real quick, we said, "What are we thinking... why wouldn't we take it at asking?"  In the time we were debating the situation, another buyer came along and offered full price.  Somehow we still managed to get it because of some confusion between the two partners who were accepting offers... but we just about totally blew getting the deal when it was already great.  So I would challenge you to think outside your "must always be a better deal" thought process if the numbers make sense as they are.

All the best!

Randy