Lowball offers on homes marketing to "investors" and " needs TLC"

[Jenn A.]

So I'm actively searching for our next deal....planning to BRRRR....my calculations are coming up with some seriously LOWBALL offers, like half what they are asking. For some reason it's a bit scary to submit such low offers but I've always read and heard on podcasts "don't be afraid to make that ridiculous offer". Does anyone have success stories or input for some needed encouragement? Is it easier to get an agent to call ahead and feel them out if it's even worth writing it up? Being able to buy cash and offer a quick close is a great incentive for some, right?

[Ryan Dossey]

I'm going to disagree with @Russell Brazil on this one. 

In order to successfully BRRRR you HAVE to be at 75-80% of the ARV all in. Now I completely agree with Russell that you need to have your area targeted. What you're looking for is most likely a C-Class area with semi-decent schools. You're probably dealing with 3/1 houses around about 1k sqft. That or you're pulling down some awesome houses to flip and holding them as rentals.

You're in Cali. This isn't right after the crash. You're probably not going to find good deals on your MLS. You're going to need to FIND deals. They're not going to come to you.

What I would keep in mind is that knowing how to intelligently express your offer (on off market properties) is going to be the difference between success and failing. 

Approach A) "Hey Mr. Smith. I know you said you were asking 150k. I'll pay 76k cash. Deal?"

Approach B) "Thanks for taking the time to meet with me. Now I've gone through the property, added up my scope of work, and I want to walk you through your options on this. Properties in your area in perfect condition are selling for about that 150k you mentioned earlier. However, they've got granite, SS appliances, a new roof, and Trane Hvac. Based off of the DISCOUNT pricing I get with my contractors I'm at a minimum of 35k in updates required to get into that condition. Are you able to spend that kind of money on updates? When you list on the MLS you're going to have to pay 6% in agent commissions, closings costs, deal with showings, fix items that come up during inspection, deal with appraisals, surveys, and mortgage companies. You told me that you need to sell because of ______________ right? (this is where your rapport is huge) When you're on the MLS nothing is guaranteed. You could list and have it sit for 6 months. If I were able to guarantee you a cash purchase within 2 weeks what do you think is fair?

^ I pulled down a 68% price reduction between asking price and what we bought the home for with this approach last week.