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A very successful real estate investor once told me,If you arent embarrassed by your offer, it isnt low enough. Hes made millions in real estate, so I think hes worth listening to. However, you need to understand that a truly low offer isnt going to be accepted most of the time. In fact, it will almost never be accepted. Does this mean it is a waste of time? Not at all! There will often be counter-offers, and a low initial offer is just a way to alter expectations. Buy A Cheap House By Lowering Expectations Once, when I was selling my car, a really nice guy looked at it. After crawling under and inside the car, he politely offered me half of what I was asking, and left his phone number (I said no). I wondered what was wrong with the car, and I found myself hoping I could get just a bit more than that half-price offer. My expectations had been altered quickly. Fortunately for me another person gave me the full asking price before I decided to pick up that phone. The idea of a low offer then, is to alter expectations. If a seller is asking $200,000, and you offer $160,000, will he accept your offer? No. Hell almost certainly reject it. Buying a cheap house isnt going to be as easy as that. However, he may counter-offer. Now suppose you go back and forth, and eventually agree to $182,000. He not have considered going this low before, but now it seems like victory to him after starting at $160,000. The downside? You will lose a lot of potential homes this way. Some sellers wont even take subsequent offers seriously once you have offended them with your extreme offer. This then, is a technique to use when you have time to find that home, and really want the best deal you can get. One investor in California routinely made dozens of offers at a time on houses. He didnt even look at them, but wrote the offers for 25% less than the asking price (he did include an inspection contingency to protect himself). Most of the sellers said no - most, but not all. He repeatedly got great deals in this way. Thats one way to buy a cheap house. |
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