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