How Much Should I Offer For Your House?

How Much Should I Offer For Your House? by Bill Roberts

We are well into a BUYER'S MARKET. Some people think this means that you can "steal" any piece of property that catches your eye. It doesn't matter what the seller wants, or needs, or even what the comps are. You smell blood. Just make a low-ball offer. If you make a hundred low-ball offers, some poor schmuck will accept it.

He accepts it because he has to. Yours is the only offer he has received and he's between a rock and a hard place.

Now the question is: "should you do this?"

The question should be "why not?" There are two very distinct philosophies in real estate investment. Some think that you make your money by buying "right" and others believe that the profit in real estate comes about by the actions of time, inflation, use change, and utilization.

A story: I bought my first house in 1969 for $18000. I was young and brash. I wanted the best deal possible. The asking price was only $19500. That $1500 difference represented ALL of the sellers' equity. They walked away with nothing. I was proud of myself for getting such a good deal.

Twenty years later my ex-wife sold the house for over $500,000. In the big picture what difference did that $1500 make? None to me but it made a lot of difference to the sellers.

If the property is worth having, it is worth having at market price.

Please understand, I don't mean asking price. Market price is arrived at by doing a comparative market analysis. Since houses in particular neighborhoods are more-or-less similar they lend themselves to valuation comparisons.

Don't Steal

Make your money the old-fashioned way. Not by stealing but by using your head. Find a way to build equity in the property by improving it or changing its use, or holding it to let development to catch up with you (path of progress) or build equity through time and inflation.

A good solid investment property will do nothing but return an excellent ROI if managed properly. Even a property with a 4- or 5% cap rate can make sense if held for a number of years, managed properly, and located in a growing area.

If you are investing in real estate, then you need to think "long Term" since real estate is not for speculators.

Flippers may not like hearing this but too bad. Didn't your mother teach you not to steal?

Right now is a very good time to buy. Prices in a lot of areas are considerably lower than they were last year. The bottom is in sight. Don't miss this opportunity.

For help with your real estate investments call Bill Roberts (619) 244-4610.