Counteroffer Question... - Posted by JThompson

Posted by Joe M on July 19, 2001 at 22:16:50:

I was just kidding, really! You did great. Now get it signed up on the sell side! Way to go!

Counteroffer Question… - Posted by JThompson

Posted by JThompson on July 18, 2001 at 12:30:37:

…I remember seeing a couple of months back in a post by Steve Cook or Joe Kaiser that anytime you make an offer on a property and the seller counters, you should come back and counter with your original offer.

Anyone see that, and how do you feel about it?

I made an offer on a property yesterday through a realtor and got a call this morning saying that they had no problem with any of my contract terms, but they countered on price (I offered $25,000 on a $35,000 property, they countered with $30,000).

Should I make them blink first and resubmit my original offer?

I have three buyers preapproved and ready to look at the house (it only needs painting), and the house actually comps at $45,000. Two of my preapprovals are thankful that I got them preapproved and are anxious to buy at. I am confident I can resell it to either of the three for $45,000 - $50,000 without problem.

Owner lives in another state and needs cash to add on to their house there so wants to sell.

Thanks in advance for your responses.

John

Re: Counteroffer Question… - Posted by SCook85

Posted by SCook85 on July 19, 2001 at 08:59:48:

John,

First off, I’d like to start out by saying that Ron may be incorrect when he stated that I am smarter then he is.

Secondly, going back to the original post where I stated that I come back with my original offer, you may be taking this situation out of context. There is a number that works for me and I usually make that my first offer. Banks like to come back and play games. They say that they have numerous offers on the table and they are giving us a chance to put up our “best” offer. My response is always that they have gotten my best offer.

I think like Ron. Since I buy many bank owned properties. I want them to know that they are getting my best offer up front.

Before you made your $25k offer on the home, I’m assuming that you used some sort of formula that helped you to come up with that number. I don’t know the formula that you used, or what you need to get out of the deal. But if $25k was the number when you originally figured it up, then the bank making a counter offer shouldn’t change that number. You have to pay what you can pay. Now if you originally came up with $30k and decided to offer $25k just to see what the bank would do, then $30k will still work today.

The numbers are the numbers, they don’t change that quickly. I offer what works for me and that is why I stick with my numbers.

I hope this helps,

Steve

Re: Counteroffer Question… - Posted by Ron (MD)

Posted by Ron (MD) on July 18, 2001 at 14:41:19:

John,

The two guys you mentioned are a lot smarter than I am, but I’ll tell you what generally works for me. (By the way, most of the houses I buy are bank-owned and in the same price range you’re talking about.)

I often make offers similar to yours (i.e., $25k on a $35k listing). When I make the offer, I tell the listing agent that that is my number and it’s not a lowball offer with the intention of negotiating upward. The counter-offer you got is typical. (Actually, I’d say it’s encouraging…very often they counter at only $1-2k below list.)

I will then raise my offer by $1k, telling the listing agent that my original offer was supposed to be my max, but I’ll go up a bit just to show that I’m trying to work with them. I emphasize that that’s as far as I can go. I also ask him/her to get an answer within a day, or so, because I have other offers pending and I only want to buy one house.

This doesn’t work every time, but it often does. If they won’t come all the way down to your offer of $26k, it’s easy for you to flex a bit more…especially if you have a buyer on the line. Myself, when I tell a listing agent that I’m at my max, I won’t go higher…period. I want the REO agents to believe me (now and in the future) when I tell them how high I am willing to go.

Good luck.

Ron Guy

Re: Counteroffer Question… - Posted by Joe M

Posted by Joe M on July 18, 2001 at 13:09:32:

I didn’t see the post about countering the same amount. Maybe it was regarding REOs? If you are really not willing to spend a dime more than 25K, it would make sense. But you know you’ve already got this house sold for 45K-50K, so why play hard ball and risk losing?

I would counter something like 25,953. They’ve come down $5000, my counter would be a much smaller increment (to show I’m not willing to get near 30K), and an odd number to make it appear that I’d analyzed the numbers and tried to squeeze as much as I could into the counter.

There was a post a couple of years ago on here that went over the psychology of making offers, and this is where I learned about using odd numbers in a counter.

I like to get the seller to decrease the price in larger chunks than I do until we’re close to my figure, then I ask them if they would split the difference with me. I’ve never been turned down (knock on wood) when I’ve said these words, since it appears I’m being considerate and meeting them half way, even though they’ve made larger moves to get to that place.

In your example:

Asking 35K
I offer 25K
They counter 30K (-5000)
I counter 25,953 (+953)
They counter 29K?
I ask if they can meet me half way and split the difference at 27,475.

End result, they’ve come down 75% but I’ve only come up 25%.

Re: Counteroffer Question… - Posted by Ben (FL)

Posted by Ben (FL) on July 18, 2001 at 12:51:16:

I did not see the Joe Kaiser posts, but dealing with a bank or other institution is different than working with a real person. Unless they are gasping, slobbering desparate to sell, I would think countering with your original offer, especially through a realtor, will poison the situation. If they asked $35, you offered $25, and they countered at $30, I’d bet they would settle for $27,500. For some reason, realtors always want to split the difference on the counter offer. How little imagination that shows.

Since you have buyers already lined up, if you can live with $27,500, I’d bet the seller could too.

Re: Counteroffer Question… - Posted by Carey_PA

Posted by Carey_PA on July 18, 2001 at 12:41:05:

John,

I did see that same post and I’m going to try that technique ESPECIALLY with bank owned properties that have been on the market for a while.

As far as your property is concerned: Can you still get your appropriate financing if you pay them $30k, including your rehab costs? Can you still make the profit that you want IF you pay them $30k?

If the you already have a buyer set up to pay you $45-50K then perhaps you could still buy it for $30K…by why don’t you counter wiht your original offer and see what happens? or split the difference even, counter with $27.5k…just make sure the numbers work for you, including rehab costs, closing costs, etc.

Good luck and keep us posted,

CAREY

Re: Counteroffer Question… - Posted by JThompson

Posted by JThompson on July 19, 2001 at 16:43:39:

Thanks Steve, and everyone that commented!

I countered with $27,133 and the seller agreed! I only went up $2,133 and they came down $7,867! That’s a good deal I hope, and yes I would have been happy and profitable at $30,000.

I am new to this, I have one deal where I am closing next week with a $10,000 profit, and I am going to make some nice profit on this one, thanks to the confidence and advice you guys give out.

Thanks Steve, Joe, JohnBoy and everyone for all your help on this board.

John

Re: You Blew it - Posted by Joe M

Posted by Joe M on July 19, 2001 at 16:58:29:

If you would have offered 25,953 like I said, they probably would have accepted! You just threw away over a thousand dollars!

Hey…I’m just kidding. That’s the problem with negotiations. You always wonder if you left something on the table. But, you got the deal, and you negotiated well!

By the way, you used an odd number, and it worked. See how smart I am? LOL.

All kidding aside, nice going!

Re: You Blew it - Posted by JThompson

Posted by JThompson on July 19, 2001 at 17:49:02:

Hopefully you are not right! But I guess I’ll never know, huh (LOL)!

Part of learning, I guess.

I was happy with a potential $20,000 payday, and wanted to come across that I was attempting to meet the seller somewhere near the ‘middle’.

I’ll get gutsier as I do this more.

So far, so good!

Thanks for the help guys!

John