How many offers have you made?

Hi,

There are two schools of thought on making offers.

School #1 – Volume Means Success

The thought here is that the more offers you make the better. Usually it’s a matter of maybe one or two in a hundred are accepted because the price offered is so low.

School #2 – It’s All About Creating A Deal

This school believes that low-balling is a bad idea as the chances of success are low. Time is an investor’s most important asset and as such, undertaking an activity that has a 98% chance of failing seems futile.

Instead a deal can be sculpted based on the needs of all concerned and as such has a much higher chance to get over the line.

So What Do You Do?

Why not do both?

Personally I belong in the second school because I believe creating a network of agents will lead to longer term success than a ‘wham bam here’s my offer man’ approach.

Yet I still make cheap offers for deals I’m not so thrilled about where I feel that either I or the agent is not interested in forming a long-term relationship.

To answer your question – I couldn’t tell you an actual number, but there are currently:

1. Multiple offers we receive for property we own and which is unofficially for sale (for the right price).

2. Offers we make on wrap properties (yes – contrary to popular rumours, I am still very much active in the wrap market).

3. Offers on multi-million ‘big deal’ +ve cashflow commercial property.

Final thoughts… you won’t catch a fish if you don’t have a line in the water.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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When you say you make low offers, what do you define as low?? 70%, 80%, 90% of FMV.
To me if you are using JV partners the only way to really get decent returns for your partners is to get a decent price. If you buy near market your mark up becomes to an extreme where it makes it hard for the wrappee to re-finance. If someone can tell me otherwise please feel free.

If you pay close to retail you also expose yourself to heavier risk then would be otherwise if you buy at discounts. I think a minimum of 10% needs to be achieved before you even consider a deal, especially in the current climate.

The way I see it whats the point of looking at a houses if you can’t get the price you want. The agents also get annoyed when you look at 10 houses and you don’t buy any because your offers are to low. I think faxing offers is probably the best way. It may pay to tell the agent you acknowledge the offer is low but you do expect counter offers.

Steve in your wrap example you have a purchase price of 80% FMV. Do you consider this low ball.
What % discount to FMV do you consider low ball.

Sorry Steve my mistake.

Mathew you say you couldn’t be bothered wasting time writing out 40 offers. I ask you how long do you thing this will take. How long is it going to take you to inspect 5 houses. You still have no gurantee they are going to accept your offer if you inspect. I think faxing offers is a good way to seek out motivated sellers. It is very hard to tell on the surface if the seller is motivated or not. It could be listed above market value but still be open to offers a lot lower. I think you are restricting your market by only looking at houses which fit your price criteria. Who knows the one down the road listed 10K more may be more flexible then the one you are looking at for 10K less.

What sought of success rate have you had using this approach Mathew?? What sought of discounts have you been able to achieve??