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Negotiating real estate prices
Posted on 2/16/16 at 4:42 pm
Posted on 2/16/16 at 4:42 pm
I am not a fan of negotiating in general. I know what I want to pay for something and what I want to sell something for. I hate beating around the bush.
That being said, people want (and I assume expect) to negotiate real estate prices. I'm on the buying end at the moment looking for rental properties. How much is too much to undercut a listed price?
We're looking at a house that's listed at $75k. We could make the numbers work at that cost but decided to offer $60k. The seller was a bit taken aback but didn't bail on us and came back with $72.5k. I guess we'll go back and fourth a few times. If we can't get it at $65k-$67.5k, we'll walk.
That being said, is there a number or a percentage too low to offer? Is it "just business" and throw low offers out there until one sticks?
Also, what's a good book I can read to gain more insight on the art of negotiating?
That being said, people want (and I assume expect) to negotiate real estate prices. I'm on the buying end at the moment looking for rental properties. How much is too much to undercut a listed price?
We're looking at a house that's listed at $75k. We could make the numbers work at that cost but decided to offer $60k. The seller was a bit taken aback but didn't bail on us and came back with $72.5k. I guess we'll go back and fourth a few times. If we can't get it at $65k-$67.5k, we'll walk.
That being said, is there a number or a percentage too low to offer? Is it "just business" and throw low offers out there until one sticks?
Also, what's a good book I can read to gain more insight on the art of negotiating?
14
Posted on 2/16/16 at 4:53 pm to poochie
in b4 art of the deal 
Posted on 2/16/16 at 4:55 pm to poochie
When I purchased my condo: Listing $140k, Offered $120k, Came back $135k, Offered $130k, Agreed on $131k. Just for reference.
The amount is going to depend on comps in the area and who you're dealing with. There isn't necessarily a set amount..
For example.. if the house is worth $65k (assuming the seller doesn't know this) and listed at $75k. They may not respond to an offer of $65k if it comes early in the process. Just depends on how desperate the seller is and if they've had other offers.
I think the $65-67.5k is reasonable based on the asking price. I'd come back and $65k and hope they agree or change their offer to $67.5k.
As a comparison, net lease properties (Dollar General, Family Dollar, etc.) typically sell at 100% or more of asking price because of demand.
The amount is going to depend on comps in the area and who you're dealing with. There isn't necessarily a set amount..
For example.. if the house is worth $65k (assuming the seller doesn't know this) and listed at $75k. They may not respond to an offer of $65k if it comes early in the process. Just depends on how desperate the seller is and if they've had other offers.
I think the $65-67.5k is reasonable based on the asking price. I'd come back and $65k and hope they agree or change their offer to $67.5k.
As a comparison, net lease properties (Dollar General, Family Dollar, etc.) typically sell at 100% or more of asking price because of demand.
Posted on 2/16/16 at 4:59 pm to poochie
quote:
That being said, people want (and I assume expect) to negotiate real estate prices
Dude, are you serious with this question?
Posted on 2/16/16 at 5:02 pm to poochie
quote:
We're looking at a house that's listed at $75k. We could make the numbers work at that cost but decided to offer $60k. The seller was a bit taken aback but didn't bail on us and came back with $72.5k. I guess we'll go back and fourth a few times. If we can't get it at $65k-$67.5k, we'll walk.
You could always offer 60k again.
Posted on 2/16/16 at 5:51 pm to poochie
quote:
I am not a fan of negotiating in general. I know what I want to pay for something and what I want to sell something for. I hate beating around the bush.
That being said, people want (and I assume expect) to negotiate real estate prices.
I agree 100% with all of this. I hate negoiating. I hate it when people try to beat me down, and I try not to do it to them.
This being said, run an APOD, and offer whatever makes your numbers work. There are some basic APOD's online that you can use. As long as you get the measure you want from the the offer price you enter, start there. It should at least help you set maximum price to make this property work for you. The purchase price is only one input, so this isn't 100%, but it's a starting point as you should have projected income and expenses already.
Here's one online version:
LINK
I don't like it. I have one on a zip drive that gives cash on cash, return on equity, cap rate etc. So before you buy, you know at what maximum price you'd get a cap. rate of over 10%, and return on equity over 15%. Or whatever your personal measures are.
Posted on 2/16/16 at 6:42 pm to poochie
quote:well you offered 20% under list. That's a pretty sharp haircut.
The seller was a bit taken aback but didn't bail on us and came back with $72.5k
Posted on 2/16/16 at 7:00 pm to Iowa Golfer
Iowa... would you be open to sharing?
Posted on 2/16/16 at 7:06 pm to Mr.Perfect
Sharing what?
Posted on 2/16/16 at 7:23 pm to poochie
If you don't want to beat around the bush, offer the highest price you're willing to pay and say it's your "final offer".
Beating around the bush might get you another 2.5k off the property--worth playing the game imho.
Beating around the bush might get you another 2.5k off the property--worth playing the game imho.
Posted on 2/16/16 at 7:35 pm to poochie
My primary residence is listed right now for 245k someone offered me 220k today and wanted me to pay 5k towards closing costs. I quickly countered @243k and 4k in closings. They responded with 228k. I haven't countered yet but probably will at 241.
The "low ball" offer didn't bother me but kind of offended my wife
I've bought foreclosures before for 40k less than asking price. It all depends on who you're dealing with.
The "low ball" offer didn't bother me but kind of offended my wife
I've bought foreclosures before for 40k less than asking price. It all depends on who you're dealing with.
Posted on 2/16/16 at 7:35 pm to Iowa Golfer
Your spreadsheet. Understand if no.
Posted on 2/16/16 at 8:07 pm to barry
quote:
well you offered 20% under list. That's a pretty sharp haircut.
That's what I mean, is there ever a point that you say "I'd rather not offer than lowball"?
Posted on 2/16/16 at 8:30 pm to poochie
No harm if you don't mind losing the house. Your agent may get tired of it if you do it a lot.
Posted on 2/16/16 at 8:36 pm to Mr.Perfect
I don't have an Excel spreadsheet. I have an old DOS program on a zip drive. I can only run it on older Windows versions.
You help me figure out how to get it running, I'll get you a copy. Right now it runs on an old Windows XP laptop I have. I've tried to get to a DOS prompt and run it on newer computers, but I don't know enough to get that done.
It's a nice program as this type of APOD is essentially an income property appraisal.
You help me figure out how to get it running, I'll get you a copy. Right now it runs on an old Windows XP laptop I have. I've tried to get to a DOS prompt and run it on newer computers, but I don't know enough to get that done.
It's a nice program as this type of APOD is essentially an income property appraisal.
Posted on 2/16/16 at 9:46 pm to Iowa Golfer
I wish I had paid attention in ISDS
Posted on 2/17/16 at 12:17 am to AUtigR24
quote:
The "low ball" offer didn't bother me but kind of offended my wife
People who get "offended" at lowball offers in any negotiation setting, are the lamest people in the world.
I don't mean to pick on your wife, though. I'm just saying.
Posted on 2/17/16 at 12:18 am to AUtigR24
quote:
The "low ball" offer didn't bother me but kind of offended my wife
People who get "offended" at lowball offers in any negotiation setting, are the lamest people in the world.
I don't mean to pick on your wife, though. I'm just saying.
Posted on 2/17/16 at 6:25 am to poochie
quote:
Also, what's a good book I can read to gain more insight on the art of negotiating?
The Art of the Deal - by Donald Trump
Posted on 2/17/16 at 7:36 am to AUtigR24
quote:
The "low ball" offer didn't bother me but kind of offended my wife
It bothers people because "dammit it's THEIR house". It's too much of an emotional transaction for most people. If treated like a business decision it's much easier to negotiate the transaction.
I'm in agreement with the person that said make an offer at the price you are willing to pay and stand your ground and walk if necessary.
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