Offering below asking price

[Katherine Roberts]

I’m new to real estate and haven’t made an offer yet. I keep finding properties that don't make sense at the asking price, which I’m sure is common. For example, I found a pretty decent property but they’re asking way too much. They’re asking $385k but the only way I’d get a good deal is around $330-345k. Do I offer that or do I just walk away? 

They bought it 2 years ago at $305k, so they’d still make a profit.

Any advice?

[Bruce Woodruff]

Quote from @Terrell Garren:

 Please don't drive right now my friend. 

🤣

[Bruce Woodruff]

Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

[Carlos Ptriawan]

Quote from @Katherine Roberts:

Quote from @Jon Kelly:

@Katherine Roberts don't be afraid to offer below asking. What's the worst they can say? No? 

If they say no then you move on to the next property. 

Someone once said if you aren't embarrassed by your offer then it's not low enough. 

Of course, it's a more competitive market so lowball offers are becoming less common. But, if a property has been sitting don't be afraid to submit a low offer. 

 It has been sitting for awhile. We just went by the property and I think we’ll make the low offer. Thank you for your advice!

 send us the zip code so we could do some analytics, or send address of the neighbour.

[Dan Gandee]

I only write offers that make sense to ME. I don't care if it makes sense to the seller. Never split the difference, only buy deals that make sense to your investment criteria or you will suffer in the long term. 

[Michael Palavra]

Quote from @Nicholas L.:

Pretty good responses especially from @Russell Brazil.

I'll weigh in.

If you want deeper discounts look off market. 

More distress and higher risk.

Potentially more value add.

I’m with Nicholas here. Look at REOs, pre-foreclosures and any other similar off market scenarios. 

Also, if your goal of your investment a fix/flip or buy and hold? If you’re looking at buy/hold taken into account what your CoC (cash flow on cash investment) is. I.e. if you’re getting into a property for sale $30,000, but (after expenses your annual cash flow is $3,000) then you’re CoC annually is 10%. 

Like most people here said, run the numbers based on what your exit strategy is for that particular investment. Also, you funicular make an offer and they don’t accept, you always make another offer (if still enough margin left for you)

[Katherine Roberts]

Quote from @Bruce Woodruff:

Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

There’s no profit at the asking price. It would be about $700 in cash flow a month at $330k. I’m not sure that we’re going to move forward though. We looked at it yesterday and there’s a brand new storage unit being built right next door. If the new units have lower prices, over half our income would likely disappear. I’m not sure it’s worth the risk.

[Bruce Woodruff]

Quote from @Katherine Roberts:

Quote from @Bruce Woodruff:

Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

There’s no profit at the asking price. It would be about $700 in cash flow a month at $330k. I’m not sure that we’re going to move forward though. We looked at it yesterday and there’s a brand new storage unit being built right next door. If the new units have lower prices, over half our income would likely disappear. I’m not sure it’s worth the risk.

 It is not worth any risk. You can find a better  opportunity....

[Katherine Roberts]

Quote from @Bruce Woodruff:

Quote from @Katherine Roberts:

Quote from @Bruce Woodruff:

Are you sure there is a profit in there? Seems tight. I assume you've done your spreadsheet and the numbers really work after you've figured in all of the expenses, including taxes (property and I'd figure income taxes as well?)

There’s no profit at the asking price. It would be about $700 in cash flow a month at $330k. I’m not sure that we’re going to move forward though. We looked at it yesterday and there’s a brand new storage unit being built right next door. If the new units have lower prices, over half our income would likely disappear. I’m not sure it’s worth the risk.

 It is not worth any risk. You can find a better  opportunity....

 Thank you so much, I truly appreciate the advice!

[Basit Siddiqi]

Do not look at what people paid in the past - this is irrelevant information.

The asking price is just that - An asking price, you are eligible to make an offer to the seller for less than what they are asking.