Posted by johnman on March 31, 1999 at 17:13:51:
Phil,
So it’s basically a cushion for unexpected adjustments. I got it. Thanks sir.
Tact! What do you say? - Posted by D.Henderson
Posted by D.Henderson on March 31, 1999 at 08:49:08:
Thanks before hand to all that help. 
I have been looking at properties. Half of these are FSBO, most of these have been for sale for a while (6months or more) Can someone give me a tactful way of telling these people that I can’t or won’t pay what they are asking. I have been telling them that I am an investor and that the numbers have to be right or I can’t make the deal. I have a hard time telling some little old lady that her property is worth about half of what she wants for it and that I am going to offer her less than that.
I need help! I have looked at three properties and just sat back for a two days to digest all of this information (I didn’t want to lose or mess up a good deal) these people are calling me back wanting to know what I will offer. Just scared I guess.
Thank you to all for letting me ask questions. I have some rental property but new to the creative real estate.
Thanks again,
D.Henderson
Re: Tact! What do you say? - Posted by Rob FL
Posted by Rob FL on March 31, 1999 at 18:27:34:
You say, “that her property is worth about half of what she wants for it.” So you mean she is asking 100K on a house with a FMV of 50K? Being a realtor, I would in a nice way show her what comparable properties in the area have sold for. “Mrs. Smith, the property around the corner at 123 Elm sold for 50K last month and although it is not quite as nice is yours it has a very similar layout and size.” After showing her 3 or 4 comparables like that, “Doesn’t it seem reasonable that if all these houses, which are very similar to yours, sold for 45K-55K that your house is probably in that same range?” Then of course factor in the repairs and things like that.
Of course, if they are really asking way above FMV then they are not motivated and you should keep on looking.
Re: Tact! What do you say? - Posted by Dave T
Posted by Dave T on March 31, 1999 at 18:10:22:
I would have no problem leaving an open offer with the seller at my price. Perhaps with the following remark:
Mr/Ms Seller, “my company” has guidelines for setting the purchase price for an investment. I followed those guidelines and this is the best price that my company will allow me to make. I realize that this is less than you were hoping for, and I sincerely hope that you get a better offer. In the meantime, I want to leave this offer with you to consider. I will come back for your decision in a week, would 6:00pm next Wednesday be OK with you?
Re: Tact! What do you say? - Posted by PBoone
Posted by PBoone on March 31, 1999 at 10:33:25:
Recognize the fact that YOU are the professional and are more aware of what REAL property values are vs what an emotional property value is. Understand the value from FSBO’s come from many sources, find out how they came up with the value without being beligerent or offensive make an offer based on YOUR knowledge and experience.
Pats rule # 1 “If you are not embarrased by the first offer, the offer is to high”
Pat
Re: Tact! What do you say? - Posted by phil fernandez
Posted by phil fernandez on March 31, 1999 at 09:01:03:
It’s just something you have to get over. The fear of insulting someone or hurting their feelings has to be overcome if you are going to be a successful real estate investor.
Some ideas would be to bring some comps with you to show the overpriced seller. I would then work my way back of the fair market value something like this.
FMV based on your comps $80,000
1st 20% is air - $16,000
repairs needed - $ 4,000
closing / holding costs -$5,000
your profit - $15,000
All you can pay = $40,000
By sitting down and showing the seller why you are offering the price goes a long way to getting offers accepted. If they are motivated they might bite. If not move on.
Re: Tact! What do you say? - Posted by johnman
Posted by johnman on March 31, 1999 at 14:52:25:
PHIIIILLLLLLLLLLL,
Hey buddy! What is air?
Johnman
Re: Tact! What do you say? - Posted by Jim IL
Posted by Jim IL on March 31, 1999 at 13:51:31:
Do NOT show the “seller” that last part…
I can see it now:
“But, Mr. Buyer/Investor, why should I come down on my price, that $15,000 paycheck is rather large?
And you said it is worth $80,000, I agree with that and I’ll take that!”
Not a good idea.
Give them too much to think about, and they’ll think right past your offer.
Then again,
Some will
Some won’t
Some What!
hmmmmmmm, where’d I read that before?
Re: Tact! What do you say? - Posted by phil fernandez
Posted by phil fernandez on March 31, 1999 at 16:12:31:
Hi John,
Air is phantom equity. I think it was Joe Kaiser that said the top 20% of value could be air. In other words it might not really be there. Especially if after you acquire the property, you want to sell it quickly yourself. To do that you might have to discount it 10 - 20% for the fast sale.