| Thinking of investing in real estate? | | | | estate isn't to get the property at that |
| Make money more consistently with this | | | | price. That's just a nice bonus if it |
| simple technique. | | | | happens. The real point is just to lower |
| The first time I invested in real | | | | expectations. |
| estate, I was able to make money in part | | | | Consider the following scenario. You are |
| because I bought a piece of land cheap. | | | | ready to sell your house and you think |
| In fact, I offered 22% less than the | | | | it's worth $340,000. Then a friend with |
| asking price. Understandably, the real | | | | some real estate experience comes along |
| estate agent didn't want to bring my | | | | and, after hearing that you plan to |
| offer to the seller. But fortunately I | | | | sell, says, "You can probably get almost |
| was too ignorant to know that such a low | | | | $300,000, right?" How confidant would |
| offer would normally be insulting, and a | | | | you then be in about your estimate of |
| waste of time. | | | | $340,000. You might lower your |
| I say fortunately, because my offer was | | | | expectations, right? |
| accepted. This was my introduction to | | | | That is why smart investors use |
| the art of the low offer. It was of | | | | "lowball" offers. They make money by |
| course, a misleading lesson for me, | | | | lowering expectations. Suppose, for |
| because the truth is that such low | | | | example, that you look at a rental house |
| offers are almost never accepted. But | | | | that is for sale for $123,000. You make |
| this doesn't mean that they're not worth | | | | an offer of $102,000. Will it be |
| making. | | | | accepted? Almost never. But you will |
| First of all, it is important to | | | | sometimes get a counter offer. You might |
| recognize that low offers ARE sometimes | | | | then go back and forth until a price of |
| accepted. A friend of mine bought a home | | | | $113,000 is agreed upon. Prior to your |
| on a lake for $40,000 less than it was | | | | low offer, the seller might have never |
| worth, simply because he made a low | | | | considered selling that low, but now he |
| offer. No one else was making any offers | | | | sees it as getting you to come up |
| at the time, and the seller was ready to | | | | $10,000. |
| move. | | | | Of course you'll have a lot of offers |
| Of course, as I said, this doesn't work | | | | that are just plain rejected. Sellers |
| often, so you have to balance the time | | | | will often feel annoyed or insulted, and |
| and trouble of making many rejected | | | | won't even consider subsequent offers. |
| offers against the occasional profit | | | | That's okay - it is just part of this |
| from one that is accepted. In the case | | | | game. Investing in real estate in this |
| of my friend, he had probably made ten | | | | way is about the numbers. You make your |
| offers on various homes before getting | | | | money by making more offers. |
| this one. $40,000 for ten offers seems | | | | How low should you go? You'll have to |
| like decent pay, doesn't it? For that | | | | work that out for yourself, based on |
| matter, if you aren't too busy, wouldn't | | | | market conditions in your area, and on |
| $40,000 justify one hundred offers? | | | | the specific of a particular property. |
| (That's $400 per offer, by the way, if | | | | But one millionaire real estate investor |
| you want to average it out.) | | | | who uses this technique told me, "If |
| Make Money By Lowering Expectations | | | | you're not truly embarrassed by your |
| The real point of a low offer on real | | | | offer, it isn't low enough. |