Contract / Price strategy

[Jay Helms]

hello BPers! I'm working with my team to find the next right opportunity and curious about y'alls purchasing strategy. My initial offers are typically low ball, but those low ball offers make the math work to help us achieve our RE goals. Doing this I've lost a couple of properties in a multi-offer situation, so my question is this:

Is your initial offer always a low ball offer to make the math work or is your initial offer always full ask and then you utilize the home inspection to negotiate to your target price?

What are pros/cons of each strategy?

#AskBP

[Roy N.]

@Jay Helms

It is more difficult to negotiate down an accepted offer, than to simply offer a number which works in the first place.  

Intentionally offering more than what works with the intention of shutting out competition only to turn around and try to beat the seller down is not going to fly as a long term strategy.  It is one thing if you have a building inspection which uncovers something major and return to negotiate a remedy, it is quite another to put pressure to lower the price simply because you offered an amount over your comfort threshold.  In a competitive market, the vendor is just going to wave you off and move on to one of her backup offers.