Nothing But Low-Ball Offers – Wanna Bet?

One thing that REALLY sticks in my craw is the number of folks who claim that all I do is make low-ball offers when making offers to buy houses.  Kim and I have heard this nonsense for more than 18 years. 

Want the truth?  Can you handle the truth?  Almost every offer I make includes a full-price offer!  Don’t believe me?  I’m in the middle of a 30-day knocking-on-sellers’-doors challenge.  So far we’ve talked to 25 sellers at the door; 22 have invited us in and we’ve made 18 written offers.  You can see us in action – along with a number of full-priced written offers that we’ve made – by going to North Georgia REIA’s Facebook page.

Last week, I met with a realtor and a seller at the seller’s house.  Before I got there, the realtor told the seller that this would be a total waste of her time.  She said, “Bill’s nothing more than a scum-sucking bottom feeder.  All he does is make insulting, way-below-market offers.”  But here’s the thing: I had never met this realtor, nor made a single offer to one of her sellers – EVER!

OK, time to get back on the teaching soapbox so I can show you how this offer was constructed.  The seller’s home had a FMV (fair market value) of $125,000.  She bought her house in 2010, when real estate values were really low, for $75,000.  She paid cash so there was no mortgage.

Now it’s your turn.  Knowing these details, how would YOU construct this offer?  What’s the MOST you’d pay for this property?

My written offer for this property was $1,000,000.  Not kidding – one million dollars!  Needless to say, the realtor’s eyes bugged out of her head…and the seller’s jaw hit the floor.

Remember – when buying an investment property, there are two main components to the deal: Price and Terms.  To be fair, I let sellers choose which one is most important to them.  If they pick price, then I get terms.  If they want terms, then I get price.   NOTE: If you want to become a master deal structurer, this is a critical lesson to absorb!

Next, I explained that I was exactly $1,000,000 light of having the cash I needed to close this deal.  Here’s how I proposed to pay for the property:  I’d give the seller a one million dollar note secured to the property, with monthly payments of $335 per month until paid.  In other words, I’d pay her $335 FOREVER!

Let’s look at how I came up with $335.  The home will rent for $900.  Expenses (taxes, insurance, repairs, vacancies and maintenance) will run about 35% of rents ($900 – 35% = $585).  We need to make a $250 per month profit ($585 – $250 = $335). 

So there you have it: I can afford to pay $1,000,000 for this home as long as I can pay the seller $335 per month forever.

Well, I think that covers all the “he just makes low-ball offers” nonsense.  Want to brag to your family and friends about selling your house for $1,000,000?  Just give us a call!