Making the right offer in a Sellers market
So, the question is how do you make the lowest possible offer and still have your offer accepted? Answer; do your homework! It’s all about the research. The following are important tools to utilize in determining your best offer.
Always complete a traditional CMA (comparison market analysis). Pull all comparable properties in the area comparing the active, pending, sold properties, as well as the appropriate adjustments.
- Determine your acceptable cash-flow goal for a property & stick to it. Remember, it's a great market and there are many investors looking for that great deal. Focus on your goals and don't get too greedy. There are times that you'll find properties that are priced below market value. Savvy investors in a sellers market understand a good deal when they see one. They won't be too greedy and often times pay a fair price for the home, they know if they don't, it's very unlikely that their offer will be accepted.
- Determine after repair cash-flow on the property in order to compare the property to other similar properties. Accuracy is key, have your team in-line and ready to assist you when needed. Accuracy will allow you find the best deals quicker. Remember, it's not just the cash-flow that is important for long-term profits. Location, amenities, and condition of high cost future repairs are critical.
- Determine what type of financing is being used in this price range and if you’re specific financing strengthens or weakens your position. IE: Cash offers, 20% down, FHA, etc.
- Is this a unique investment opportunity or a typical listing for the area (rent ability, re-sale ability location, expenses)?
- What is the percentage of selling price v/s asking price in this neighborhood and specific price range?
- What is the price direction of this market? DOM?
We always take all above factors into consideration prior to advising clients on an offering price. Whether you have the resources and time to accomplish this or not, rest assured, it will be done.
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