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Updated almost 10 years ago on . Most recent reply
![Matt Ransom's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/191207/1621432147-avatar-mransom.jpg?twic=v1/output=image/crop=960x960@255x0/cover=128x128&v=2)
Today's plan: make an offer
Today's the day...
While the deal may be small, this is a big day for me. I have been reading REI for years and studying the local market. After getting in a more stable financial position (and with bank pre-approval in hand), I am ready to make an offer on a zero-lot line attached.
Ask: 59,900
Assessed Value: 49,500
I am planning on offering 25,000 and see where it goes.
I have the cash to put 20% down.
Nervous- Excited.
Any advice/ encouragement is appreciated!
Thank you,
Matt
Most Popular Reply
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Originally posted by @David Oldenburg:
@Matt Ransom Never be embarrassed to offer low, and never care about hurting someone's feelings or offending someone. I have been in the RE and mortgage industry for many years and have closed thousands of transactions. I have seen sellers take ridiculously low offers, even saw a home sold in a garage sale one time!
Here is how I do it. I don't just offer low. I arrive at a price based on a specific profit I want to make, usually 20% on my total money invested, which includes cost of the home + rehab. I also add in the cost to carry my money at a decent rate of return for the time I anticipate it will take to complete and sell. My offer might appear low, but I sound like an expert when they ask me to justify my low offer. I walk them through what I believe the property will be worth, I explain that I am an investor and need a 20% return to offset risk etc... I talk about cost to rehab etc... They may not want to take the offer, but I come off as a highly educated and experienced rehabber, and a lot of times they call me back when the home does not sell.
I like the way you worked that. I have not tried that approach. I started with what my wife and I have budgeted that we can lose and be okay with. But I will certainly work the numbers using your approach and see if there is any overlap.