Posted by ron on July 29, 2003 at 15:44:23:
GREAT ADVICE !! : )
Posted by ron on July 29, 2003 at 15:44:23:
GREAT ADVICE !! : )
I ALWAYS PAY TOO MUCH. - Posted by Dan(PA)
Posted by Dan(PA) on July 29, 2003 at 15:04:44:
Ok I have this problem, Whenever I sell I tend to want to sell as quick as possible as long as I make a profit. When I buy its even worse.
When I see a good deal I get excited and I am pretty much willing to pay asking price. I am afraid that if I do not move on it asap I will lose it. Because of this I probably pay 10k more then I may have if I took my time and chewed them down or acted less interested. I am sure though that If I didn’t move on some of the deals I have done I would have lost a few. What do you guys think?
Nothing new here… - Posted by Eric C
Posted by Eric C on July 30, 2003 at 11:05:10:
Hi Dan -
I guess you’ve learned that you’re not the only one who sometimes suffers from a touch of regret.
And whether or not that regret occurs as a result of paying too much or selling for too little doesn’t really matter, does it? The feeling is the same.
Trust me, everyone has days like these. And everyone experiences some of those same emotions whether they are experienced negotiators or first-time newbies.
In 1901, Andrew Carnegie allowed JP Morgan to purchase his interest in Carnegie steel for $480 million dollars. As a result of this transaction, Carnegie became the wealthiest man in the world.
A year or so later, the men met again while sailing on the same ship bound for Europe. Both men were early risers and both liked to walk the decks alone.
Each morning Carnegie would start in one direction and Morgan in the other. As they passed one another, each would respectfully tip his hat and continue silently into the morning fog.
About a week into the cruise, Carnegie hailed Morgan on their daily walk.
“I’ve been thinking I should have asked for $500 million”, he gruffly said.
“And I would have happily paid it”, replied Morgan, never missing a step.
Get the point? It’s just something that you learn to live with – or you don’t.
YOU SOUND LIKE ROTHSCHILD - Posted by GL - ON
Posted by GL - ON on July 30, 2003 at 09:49:02:
One of the millionaire Rothschilds was asked at a party, what the secret was to making money in the stock market. He replied:
“I have a system that is absurdly simple and as long as I stick to it I can’t lose. I never buy at the bottom, and I always sell too soon.”
It works in real estate too.
Me too. - Posted by Kristine-CA
Posted by Kristine-CA on July 29, 2003 at 22:47:39:
I also feel that I pay too much and sell for too little. The deals are profitable but I always see how I could have done better on both ends. I’ve been trying to be firmer on my offers and not just taking the first counter offer. It takes guts to say no. But some people do call back when they are ready. But I work with only distressed properties and rarely do the sellers have anyone else making offers. With the few mls offers I make, I don’t care if they sell to someone else. I’m very clear about my max price with those offers.
But there’s something about working directly with the sellers that always has me wondering if I couldn’t do better. I’ve also been reading some books on negotiating and see that I don’t control the conversation or the deal very well. Trying to do better with that.
I think I might try Ron Starr’s idea. It would be good to have a little data. I have been hoping, though, that this is something that gets better/easier with experience.
Re: I ALWAYS PAY TOO MUCH. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 29, 2003 at 20:18:34:
You might do an experiment. Randomly assign each prospective purchase into one of two groups: normal way of going vs “push down on the price.” Then see what happens. Keep some records of the asking prices, purchase prices, profits, etc. See what happens.
I think that would be a fasinating little study. Please do it and report back.
I overpay also. The last couple of houses I have bought on the Oklahoma County tax resale auctions, I jumped from an even thousand bid by the competitor up to $500 more. In both cases, I probably could have just bid $100 more and gotten the property. However, I got both for about 1/2 of market value. The one I bought last year for $19.5K, I have rented for $675/month on section 8. So I’m not going to be too unhappy with myself.
Good Investing**************Ron Starr*************
WHERE ARE YOU WHEN I HAVE SOMETHING FOR SALE? - Posted by GL - ON
Posted by GL - ON on July 29, 2003 at 19:31:08:
Are you making money? That’s what counts. If you are getting every property you make an offer on, maybe you should try making worse offers. Who knows, you may get them anyway. If you don’t you can always raise your offer.
At least you aren’t scared to make an offer so you already have about 99% of the people who read this board beat.
Re: I ALWAYS PAY TOO MUCH. - Posted by Brent_IL
Posted by Brent_IL on July 29, 2003 at 16:56:11:
There is always a trade-off when we choose a course of action. One positive part of overpaying is that you get to talk to sellers who won?t let most others in their door. Messing around with the financing and the collateral is the ?creative? part of creative real estate investment.
I have a slightly different attitude toward this. I assume that the constant is that I’m going to be dealing with a screwed-up property or a screwed-up seller and that considerable effort will be invested into the search for both. Well, small world, my seller?s got to deal with a screwed-up buyer.
If there are no problems, the house would be listed on the MLS and sold within days. Since I’m not into buy-and-hold, my question is, “Is the deal profitable”? Big profit or little profit doesn’t matter because after closing, I?m there in name only. I overpay a lot, but I?ve learned to pay the top portion in the CRE equivalent of MONOPOLY® money. I think my time is better spent learning how to make every offer count toward the bottom line than in worrying about paying a couple of thousand more than I could have. Done deals done well are always good.
Re: I ALWAYS PAY TOO MUCH. - Posted by Trapper
Posted by Trapper on July 29, 2003 at 16:22:36:
Twice I bid more than asking on the first day up for sale and was not the highest offer. My last rehab, number 7, I bid $1,400.00 more than asking and got it. The realtor told me the next day he had 20 calls the first day. I have the house under agreement and will make approximately 25K before uncle sam. I would buy that property every three months for more than asking. My point is, if I would have bid less than asking on the first day, there is a real good chance I would have lost out on 25K. If you overbid by $2,000.00 on each home you do, it would take 10 overbids to make up for one house you didn’t get because you bid a little too low. Where in Pa. are you? just my $.01, I’m saving my other $.01 for later. In case I have to pay extra on something.
Re: I ALWAYS PAY TOO MUCH. - Posted by rm
Posted by rm on July 29, 2003 at 16:17:18:
>When I see a good deal I get excited and I am pretty >much willing to pay asking price. I am afraid that if >I do not move on it asap I will lose it.
Please read this aloud.
In your mind, you’ve linked losing it to not moving fast and not paying too much.
Moving fast IS important. AND, buying it right is important, too. In fact, you should be able to pay less in many cases because you move quickly.
Solution: Stop Paying Too Much. (nt) - Posted by Hog
Posted by Hog on July 29, 2003 at 15:22:04:
Re: I ALWAYS PAY TOO MUCH. - Posted by Heather_Tx
Posted by Heather_Tx on July 29, 2003 at 15:21:51:
Do you still make a nice profit on these deals ? Is it acceptable to you ? You may have gotten those deal because of the fact that your offer came in a little higher than the others.
Or are you making your deals skinny and not really worth the effort put into them with that profits you come out with.
I know different investors with different criteria,(some will look at 15 K profit, and I know others that won’t look for less than 25K) and it seems the more experienced are in more of a position to hold off on ones that might make a nice profit, for ones that are a “homerun” It all depends on I guess what you are willing to make and where you stand in your REI.
If your doing these deals, and making decent returns, I’d say your doing ok. I kind of like to look at at least 20K myself, and if it’s a BIG Rehab, needing 30K in repairs, I like to make 30K, 40Repairs? 40 profit would be nice 1 on 1 ratio.
Saying all this though, I am still new to the game, so others advice might be better. I’m on rehab #2 as of now.
Hope this Helps,
Re: Me too. - Posted by rm
Posted by rm on July 30, 2003 at 06:42:37:
>I also feel that I pay too much and sell for too >little. The deals are profitable but I always see how >I could have done better on both ends.
That’s good! That means that you’re learning something new with every transaction.
>But there’s something about working directly with the >sellers that always has me wondering if I couldn’t do >better.
First, it’s okay to leave a little money on the table, as long as your deal makes sense. Second, you might try setting clear objectives before you meet with the sellers. I have a little checklist sheet. A couple of questions that are on it:
“What price and terms would make this a great deal?”
“Based on the comps, what’s the most I’d be willing to pay for this home?”
“What am I willing to settle for?”
This way, I’m setting a low, high and medium price.
By reviewing these items just before I go in to meet with the sellers, I’m more focused on the outcome that I want. And, I’m psychologically prepared to respond appropriately to their demands.
And I don’t pay too much.