Asking prices don’t equal selling prices.
As a real estate investor, you should always keep in mind that when a savvy seller puts properties up for sale, they usually ask for a higher price than they think they will get. Why? It gives them wiggle room; some extra negotiation space to work with. Remember that no matter the real estate market, the average asking prices and average selling prices are never the same. Sometimes the difference in price can be quite large!
Know that asking prices mean little to a smart real estate investor even when that asking price is supported by an appraisal. An appraisal is just an estimate of what the market value of that property would be if you assume that proper marketing is done and a sufficient time is set aside to procure a buyer.
Of course, an appraisal is important in order to set retail values and is a necessary duty to get financing from banks. However, they have nothing to do what that property is valued as an investment.
Armed with this knowledge, you should know now how important it is as a real estate investor to attempt wholesale offers (offers below asking price). However, there is usually one MAJOR obstacle that holds back most people from making wholesale offers. Fear. They don’t want to offend sellers.
What if they get mad?
Most sellers base what they think their property should sell for on overinflated estimates given to them by real estate agents that want to list their property or by appraisals (which we have already concluded is not what the property will generally end up selling for). Also keep in mind that sellers may have a vested emotional interest in the property, which will cause them to think it is worth much more than what it will attract on the real estate market.
A basic fact to keep in mind is that sellers are generally less willing to negotiate their selling price down immediately after putting their property up for sale as opposed to when they’ve been waiting months and months and are getting desperate. Don’t let this stop you from making offers early on! Many times an offer may be rejected at first and the seller may contact you and your Realtor to ask if your offer still stands. Oftentimes though, it is worth to pay more than asking price if the terms are truly extraordinary.
Terms of a real estate transaction play just as big a part in your investment as does the purchase price. Especially if you’re planning on long-term investment in real estate properties, keep your eye on the terms.
As an investor, it often pays to go low!
Related Posts:
- How to Wholesale Real Estate To Make Quick Cash
- Real Estate Investing Startpoints: Negotiation, Legality, and Referrals
- How to Beat Other Real Estate Investors by Using Full Price As Is Contract Offers
- 4 Reasons Why You Can’t Find a Buyer For Your Wholesale Deal
- Real Estate Investing: Alternate Methods
- The 2009 Real Estate Investing Market Predictions: Getting the Edge in the New Year
- How to Use Public Records for Real Estate Investing Success
- Real Estate Investing in Manufactured Housing
- Commercial Real Estate Investing Using Triple-Net Leases
- Focus on Profit: Accepting Counter-Offers and Trusting the Seller
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