Do you feel bad sending low offers? How about receiving them?

Question

I'm just getting started and have a lot of prospective homes in mind that would likely do well, given a very specific set of numbers. Those numbers rely almost entirely on offering below asking, but I don't believe it's that far below fair market value as they've sat for quite some time. My question to everyone here is, Do you feel bad when you send out a low offer? Do you do it anyway? And on the flip side of that, how do you deal with receiving a low offer? Do you take it personally? Do you hold onto the names of those that send in those offers?

Thanks for the info,

Tyler

Thanks for the info,

Tyler

Dan Maciejewski · Answer

• a selling price for an item to which a buyer and seller can agree

@Frank Wong is right, Have your arguments for the price ready, and if possible with the offer (depending on how and with whom you're submitting it).  A well-reasoned offer shouldn't be offensive, and it's even better if you can link the offer to their reason for selling/motivation.  Then it's not just a random "low-ball" from another "investor just trying to get rich on the backs of other people's work".

And in my book, the definition of fair market value is when a price is found that a buyer and seller agree on a sale.  In fact, the google dictionary says: noun

• a selling price for an item to which a buyer and seller can agree

a selling price for an item to which a buyer and seller can agree

Nathan Gesner · Answer

A lot of people take it personally. You need to look at it as a business transaction, not a personal insult.

Your offer should be a fair price with room for a reasonable amount of profit. If you were running around lying and fooling people into thinking their home is worth much less than it is, then you have deserve to feel bad. If you are being honest and trying to create win-win opportunities, you should feel good about every transaction.

Thomas S. · Answer

Feeling bad is all about emotions. Feelings are a major handy cap when making business decisions. Business is always and only about number. If you want to be a successful investor you need to eliminate all emotions from business decisions, they will only hold you back. Money has no feelings and neither should you when investing it. A little excitement when you are successful is acceptable.

Always keep in mind the only right number is yours, every one else's number is irrelevant. If you are concerned about their number you will lose sight of the right number.

Jason Hirko · Answer

@Tyler Lough I never feel BAD about making a low offer - sometimes I don't think it is good strategy, but I never feel bad. Sometimes people take it personally. Oh well  - not trying to make friends. And I get low offers on my properties all the time... and I just say "Thanks but we're not accepting your offer" and move on. It's business!

Frank Wong · Answer

Hi Tyler,

It all depends if the low offer has any merit.  If the property has been sitting and the days on market, the condition of the house and comps all suggest a lower price.  Sending in a low offer should not be an issue.  I recently got an accepted offer for a client that was $80k off the list.  I had my list of arguments for the price ready.  Now if you are sending a low ball because you want to make your numbers work or that's what you want then it could be an issue.

Example of this. I can't cash flow because I am getting an FHA loan with a low down payment.  I need to buy the house at this price.  Well Duh!  Hard to cash flow when you put little money down. Just because you can't make it work for your numbers doesn't mean its worth what you think.

Real estate is not purely business there is a lot of emotions involved.  You have a seller that can be emotionally tied to the property or someone who can be offended on price.  I have seen it several times from sellers that will be offended by a low ball offer and won't work with that buyer.  It's a thin line to walk.   Gotta have a great agent to know how far to push.

Adam Gollatz · Answer

Who's to say what fair market value is? If its listed and not selling, Id be willing to bet its not at fair market value.  If a seller has no money tied into a property, the property is paying for itself, and the seller has no immediate need for the money, they might not budge on price. But if any of those conditions change, they have motivation to not wait and should welcome any reasonable (thoughtful) offer. Dont go around just offering x% under listing.

I make offers based on numbers, mainly rent and expenses, so I dont feel bad about my offers. I guarantee you that I spend more time coming up with a number, than they do saying no. I wouldnt take a low offer as an insult either. Being insulted would apply emotion is attached to the property, which is never good for business. I dont sell enough properties to recognize names of low ballers, but like anything, you can get a reputation in this business.

Joe Splitrock · Answer

@Tyler Lough there is no reason to feel bad, because if they don't like the offer, they can and will say no. Some sellers get offended, so you may get a rude response or they may just ignore you.

On the selling side when I get a low offer, I always counter. If the person making the offer seems completely unreasonable, I just ignore and move on. I wouldn't even hold on to their name.

I have had offers rejected, only to have the sellers come back a month later and ask if I am still willing to do the deal.

Chris Grenzig · Answer

@Tyler Lough we get low ball offers all the time, and don't take offense. If you don't submit you'll never get it for that price. You never know someones motivations and who knows, if you put in a low offer today, they might not get the price they want for the next several months and eventually sell to you if you stay in touch periodically.

Marc Winter · Answer

Do you feel bad when you get a 'no'?  If so, why?

If you do get negative feelings of rejection, it's because you are anticipating and hoping for/tied to a particular outcome.  This is a business, and you need to learn to not take rejection personally--do the process, and the outcome will take care of itself.

On the other hand, you can increase your potential of getting an offer accepted if you make two or three different offers to the same seller.  For example, 1.  all cash, low price, 2. higher price with terms (seller financing), 3. full price lease w option (low lease payments to meet your criteria.)

Give people an alternative of choices and open up new possibilities!

Good luck.

Do you feel bad sending low offers? How about receiving them?

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