This is in terms of buy and hold, or BRRRR....But when submitting an offer on a property that is priced well, let say exactly what it’s worth, $100k. You run all your numbers, conservatively, and at $100k, plus renovations, this property will cash flow your target number, let’s call it $250/month after you refinance. We’ll call it a B/C neighborhood so there is some long term appreciation possibilities. Do you: A: Bid 100k, thinking there is a chance you’ll be the only one at full asking and cash. B: Bid $90k, because $10k less is $10k less and your here for a deal. You’ll cash flow an extra $50/month, but there’s a chance that you are outbid. C. Bid $110k, because it’s only $10k, you’ll cash flow $50/less, but there’s a pretty good chance you’ll be the highest bidder. D. None of the above, explain what you would do. Ready, go. And why? A few disclaimers. There are obviously other factors, but imagine this is similar to other properties in your portfolio and try to focus on price alone, and whether you want to get the best deal, or make sure you get the property. This is for a BRRRR scenario, so it’s a long term hold and you’ll get most of your cash back out, so the 10k you spend or save is financed money. Use your current market conditions, and if that will affect your answer compared to maybe another time let us know. Let’s assume you are one of 3 offers. I’m excited to hear the wide range of answers BP is bound to deliver!

I dont pass over dollars to save pennies. I close deals. Too many people pass over good properties over a few grand, which is just absurd.

@William C. I like what @Jason D. said, also if you don't start low enough you don't know how much better of a deal you can get. Like Rich Dad Poor Dad says, " if you aren't embarrassed by your offer you offered to much".

@William C. I'm "A". If the numbers work and that's what I've determined that property is worth, I want the property. I may go in a little low, just to see what happens, but I'll never go high, and pay more than its worth.

I couldn’t agree more here. If it still makes sense go for it and get it. I play to win. Think about how much time it took to finally be in the position to get this. Don’t lose it for little money.

@William C. I did one with a C variant, I offered cash over ask because I knew there would be a lot of bidders then got it back to ask after inspections. If there are multiple bidders the high strong offer gets it and they are likely to negotiate with that buyer in escrow instead of going back to others. I’ve also done A and B. Sometimes you low ball with cash and they take it! Then you think-I wonder how much lower I could have gone?!? So it really depends on the situation but at the end of the day you want good deals for you and you don’t want to overpay. There is always a price that a deal is worth to you. Maybe you’ve got some secret knowledge that lets you go higher or lets you go in at ask. Like maybe you know that you can get 1500/mo for the units but they are assuming that you can only get 1200. Or whatever your secret knowledge may be. So sometimes ask is a screaming deal. Sometimes way over ask is a screaming deal. I guess my long winded point is that a deal is determined by you. Not the list price, not the sellers expectations. So if you know in your heart what you will pay to make it a deal and you don’t go over that then you win A, B, or C!

if the competition is high and the numbers work, just lock that property in. if you want to scalp some more off the top, wait until the inspections are done - they always find something you can use as a bargaining chip.

I’d go for number 2 . Yes , I lose many deals but the ones I get are great !

Do you low ball, or make sure you secure the deal?

William C.

OP

Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes

7y

Originally posted by @Ayne C.:

@William C. I think the whole point of having criteria and goals is that you know exactly what to offer. Emotions don't come into play.

Are we really talking about emotions though? Emotions can be left at the door, and maybe pay a little more now rather than have to wait another 3 months for a deal like this to come along. Trust me, I know there are 100's of other factors at play, so its are hard exercise to make all variables equal. It's interesting to hear how so many posters are willing to "just more onto the next one" Are you all doing such a large volume that you'd rather save $5000 on each deal, than lock it up and add it to the portfolio? Or is it that you all have such great deal flow that if you can't get a rock bottom deal your able to go to the next? We really don't have the liberty to do that. There's only a small portion of home in a small area that fit the mold. I am seeing more and more deals by the day, but for the past 6 months it's been extremely difficult to find anything even close to meeting the criteria needed to move forward.

Do you low ball, or make sure you secure the deal?

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