Prospective Investorr: “Hey, I am calling about the house you have listed in Cape Coral for $89,000, I am an investor and want to know what the best price i can get it for.”
Houseguy.org: “Well sir/madam the bank has gone through this house with a fine tooth comb, they have three professional opinions of value one of them being from a local appraiser. They price the home at fair market value and generally sell them for close to asking price if not a few dollars more in the hot market we have”
Investor: “Well you know this house is missing AC, Water, Appliances and needs new carpet right?”
Houseguy.org: “Yes that is why we listed it $25,000 below the comps that are livable.”
Investor: “HMM, you see as an investor I can pay Cash and close on this house fast, do you think the bank will take $75K for it?
Houseguy.org: “Sir/Madam, I can appreciate your willingness to buy, but any buyer will have to pay Cash because no lender could loan on a property that is uninhabitable. I am happy to present this offer to the bank, but i wont be surprised if they counter at Full asking price. In this price range the bank knows they will often have multiple offers, so low balling often means you end up with nothing in the end.”
Fast Forward after offer is presented and bank counters at Full Asking Price…inevitably a few days have gone bye because the “investor” wanted the bank to ‘ponder’ his offer.
Investor: “These bank are idiots, I have been buying real estate for decades. I’ve never paid full price for a home.” (just because you purchased your primary residence 20 years ago, doesn’t mean you have been “buying real estate for decades”, sorry sarcasm…i digress)
Houseguy.org: “The other day another buyer made an offer which was close to asking price, so if you want to buy this home, your offer will have to be very strong, and with no contingencies”
Investor: “What that’s crazy, I’ll find something else.”
Fast Forward 6 months later…The same “investor” calls be on another listing I have for sale in Lee County, and still hasn’t purchased anything…
Moral of the story, In a hot market with properly priced homes, making low ball offers makes for a losing “investment strategy.” Instead I always go with the strategy of making a few dollars today is better than spending thousands in the hut for the “home run” investment.