When making offers to buy properties, do most of you establish a target buying price and make a “Take it or leave it” or a “Not one dollar more” type offer, or do you make a lower first offer with room to negotiate?
Howdy Kjb1891:
On my last deal the asking price had been dropped several times and it was already a super deal. I may have gotten it for a few grand more and could have maybe even gotten it cheaper after the inspections but I payed full price.
On a previous deal I offered a few grand less than the $29,900 asking price and got it at that price. Again I may have left some meat on the bone but again I knew it was a good deal too.
I missed a VA foreclosure by offering too low. It was a duplex for $11,500 and I offered $10K and was beat at full price.
Hope these examples help some. If you know it is a no brainer then grab it fast. Maybe meet with the seller and agents whatever and hammer out a deal on the spot. I like the face to face contact better.
I recently just read an article that had a different negotiating approach. It said to ask the seller “If I offer you all cash and can close in 30 days, what’s the lowest offer you’ll accept?” If they’re lowest acceptable offer is acceptable to you then you’ve got a good deal on your hands. If not, ask “Is that the absolute lowest you can take?” If they say yes, then say “That’s more than I can pay for this home. I’m sorry I couldn’t make you an acceptable offer. Here’s my business card. Give me a call if you change your mind.”
So, basically you have three chances to get a good deal. Either when they first say what’s the lowest they’ll take, or when you ask if that’s the absolute lowest they’ll take, or finally if they call you back later when they change their minds.
What do all of you think of that negotiating approach?
I’m leaning more towards using the “Take it or leave it” approach. After I look through the property for awhile, and build a good rapport with the owner, I would then explain that I have a set “formula”, if you will, that determines the maximum I would pay for each property I make offers on. I’ll make that offer up front and tell them that’s my offer. I wouldn’t necessarily say it as “take it or leave it”. That’s just the best way I could describe that approach in only a few words. If they don’t take it, I’ll give them my business card and say to give me a call later if they change their mind.
I think this would work well when you make a lot of offers on a regular basis. But, I also could see that approach might lose out on getting some properties for an even lower price because the only offer you make is at your maximum target price. I’d imagine making sure to figure in an “error” margin in case your calulations aren’t accurate for your maximum buying price could help.