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REAL ESTATE Negotiating a price

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mozola

New Contributor
Aug 17, 2007
10
1
9
ohio
I'm planning submitting an offer on my first property. What factors do others use to decide on what to offer.
Background on the deal:
Duplex, asking price is 149,900
The market is overcrowded. Each side street literally has multiple houses for sale. I'm not too concerned with the current market because I plan on living in one unit, and renting the other unit. When I grow out of the residence, I will keep the property as cash flow and rent out the unit I live in making this a long term investment.
Comps range from 128k to 146k.
Also, from my initial inspection of the property, I noticed both the house roof, and the garage roof will need work. How do I factor this into my offer?
 
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Bilgefisher

Bronze Contributor
Read Fastlane!
Aug 29, 2007
1,812
291
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Aurora, Co
JScott,
Wouldn't the excel sheet you posted last month help in the evaluation of this property?
 

AroundTheWorld

Be in the Moment
FASTLANE INSIDER
Speedway Pass
Jul 24, 2007
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I second everything J said. What can you rent the other side for? What are you expecting your interest rate to be? What other expenses will you have? What is your personal budget for housing?

Also...

Question: Is this a home you want because it will be your home or are you strictly making an investment decision to live in a duplex and rent one side out?

If this is strictly an investment decision - then consider this:

If every other place in the neighborhood is for sale, make VERY lowball offers - 80K or so on all of them. Why have you narrowed down to this specific house?

I'll bet you get atleast a few counters if not an accept.
 

lee_mre

PARKED
Aug 31, 2007
9
0
9
I second everything J said. What can you rent the other side for? What are you expecting your interest rate to be? What other expenses will you have? What is your personal budget for housing?

Also...

Question: Is this a home you want because it will be your home or are you strictly making an investment decision to live in a duplex and rent one side out?

If this is strictly an investment decision - then consider this:

If every other place in the neighborhood is for sale, make VERY lowball offers - 80K or so on all of them. Why have you narrowed down to this specific house?

I'll bet you get atleast a few counters if not an accept.


AroundTheWorld, I'm curious how you arrived at this number? Has it been your experience that people will even counter an offer that is 33-45% below asking? I would have thought that most folks wouldn't even consider dealing with you?

Anyone else have any erperiences around this?

Thanks
 

yveskleinsky

Silver Contributor
Speedway Pass
Jul 26, 2007
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I would approach this as a puzzle you need to work backward. (...If you goal is to have a small multi unit as an investment, why not go 4 plex? Less money out of your pocket every month.) Assuming that you are really wanting to go duplex, then start with how much you can afford a month in rent. Then how much the other side will rent for. Then get a lender to work up a good faith estimate- which will tell you interest rate and terms. Since this is considered a primary residence for you, you can get great terms. Ideally you want to set it up to where you live for the least amount of money as possible, and when you do rent it out you will be able to make money every month.
 

AroundTheWorld

Be in the Moment
FASTLANE INSIDER
Speedway Pass
Jul 24, 2007
2,874
1,908
550
.
AroundTheWorld, I'm curious how you arrived at this number? Has it been your experience that people will even counter an offer that is 33-45% below asking? I would have thought that most folks wouldn't even consider dealing with you?

Anyone else have any erperiences around this?

Thanks

Most folks probably wouldn't.... but a few would. Notice I said make an offer to everyone with a for sale sign up in the neighborhood. Some of them are probably selling because they are on the brink of foreclosure. Play the numbers. Some will take that much less. I have made that offers that low before. Some people laugh at me. That is fine. All of them don't laugh.
 

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