When people submit an offer to buy a piece of real estate, they almost always wonder if they bid too high or too low. Usually you know if you bid too low right away by the seller’s agent. If you get the offer accepted without a counter offer, you wonder if you bid too high.
Do your Homework before you Offer
Most of your homework should be done before you offer, not during counter offers. Here’s a few things you should find out:
*How long had the property been on the market? That way you can get a feel if the property was overpriced to begin with if it’s been on the market for a long time.
*Has the seller rejected any offers? If the seller hasn’t rejected any offers because there hasn’t been any, that is a good sign for the buyer making a lower offer.
*What are the comparable going for in the neighborhood? You need to get the SOLD comparable, not the ones currently listed for sale.
*How much work does it need? Are you a contractor type or do you want it move in ready?
*Why is the seller selling? You can then get what is motivating the seller or how motivated she is?
Who is more motivated, the seller or the buyer?
This is where it becomes like a Texas Hold Em Poker game. If you submit a price and the seller counters at a reasonable counter, that’s a sign that the seller wants to play ball and is more motivated. If the seller only counters a little or doesn’t counter at all, that could be a sign that he is not motivated.
I was recently involved in buying a piece of property. It just so happened that both the seller and I were similarly desperate. In these rare cases, the seller didn’t get as much as she wanted and I had to pay a bit more than I wanted. It turned out to be a fair deal for both parties.
Tie ‘em up
I have a fix and flipper client who bids on houses where he knows he is going to be the high bidder. He gets it under contract with an inspection contingency as most houses are.
When the inspection report comes back, there is a laundry list of problems that there are with the property. He then tries to get that amount of money off of the original offer. Sometimes it works, sometimes it doesn’t and he loses his $400 for the inspection fee.
It’s the Homework
A piece of real estate is probably the largest single purchase you’ll ever buy. If that is the case, why would you spend more time on planning your summer vacation than you would doing your homework on a piece of property? Just like in school, always do your homework and things usually work out.