Will my offer be rejected?

[Ty Wesley]

Hi BP Members,

I am a newbie to the site. Im currently looking to purchase my first home and I just wanted to get an opinion or two from some experienced investors on an offer I want to present.

Okay so I saw a 3 bed 1 bath house listed on realtor.com with an asking price of $15,000. I called the agents number and she told me this property is a short sale. Its been on the market for 5 months now, so do you think $10k cash is a reasonable offer or would I be wasting my time trying to get it for that low?

I myself think its a reasonable offer because of how long the house has been on the market, but then again im not experienced in investing so I feel I could very well be wrong.

So in you guys' experience, do lienholders generally accept offers that are 65-70% of their list price after being listed for 5 months?

[Clifton Jones]

TyWes,

Here is a rule that you should use as an investor, "NEVER, EVER trust a realtor to tell you what is wrong with a property." This is for multiple reasons.

1) Most realtors today do not have the knowledge to identify the problems with a property. If it is not disclosed to them by the Seller, they are not required to inform you. (This may or may not be true in your state.)

2) The Realtor that listed the property is working for the Seller, not you. As such, they have an obligation to get the highest price they can negotiate for the Seller/Lender.

3) You are the one purchasing the property, so it is your responsibility to make sure that the repairs needed in addition to the amount you offer still provides you a positive investment opportunity.

Never use a wrench to do the job of a hammer. In other words, the realtor is not the expert in repairs. You should be using the proper resources to meet the job. A contractor/inspector/plumber/electrician should be used to identify the problems with the house.

Always get an estimate. My company always gets three estimates. They can all come from the same person, but we use three so that we can send the high estimate in to the Lender for short sale approval, use the lowest to potential buyers, and the middle for our true repair estimates.

Now, that is not to say that we have our inspector do anything unethical. We ask for what it would cost to do XX repairs and we ask for 3 different estimates, so we know that the price will not come in higher than XXX or lower than YYY without some unforeseen repair.

If it so happens that the high estimate can reasonably be used to justify the repairs, then it is perfectly acceptable to show that to the lender. The same with the low estimate. If it is a reasonable estimate, then we show that to our buyers. If we were to decide to rent it out, then we use the middle estimate to dictate our expenses.