Lowball Catching On - Diary Of A NJ Real Estate Flipper
From Inman News:
The lowball offer
A picture may be worth a thousand words, but nobody's house is worth what they think it is in this market.
The tough part is telling people that.
I went to see a house in Southwest Newark, N.J., practically in Hillside, in an area where the streets go block-by-block. I went at night, which on reflection was slightly stupid, but I didn't know that part of town well and was trying to get a handle on what the city was like. (I have always held to the "eat your own cooking" philosophy.) So I jumped off a bus and walked along for a while, watching respectable blocks alternate with loud blocks and deserted blocks by turn.
...
Then I waited a couple of days, mulling, and called the agent.
"Look," I said. "I know she's been in that house for a long while, and she's sad to be moving, but it's barely worth $199K new. To rehab it, I've got to put in a new kitchen, revamp the bath, polish up from top to bottom where it hasn't been taken care of. It looks like it's got no major structural defects, but I've still got to put forty thousand dollars into it."
I went over this story with one of my partners. I'm still pretty new at making offers, and I wanted him to hear every detail of the story, see the house as I saw it, be an audience to my conversation with the agent.
And he had only suggestion: "don't be apologetic. Not, 'I'm sorry, but I can only offer you one-forty,' but, 'my offer's one-forty.' You don't know what she's thinking and how she'll handle it. That's it, 'One-forty.'"
Caveat Emptor!
Grim
The lowball offer
A picture may be worth a thousand words, but nobody's house is worth what they think it is in this market.
The tough part is telling people that.
I went to see a house in Southwest Newark, N.J., practically in Hillside, in an area where the streets go block-by-block. I went at night, which on reflection was slightly stupid, but I didn't know that part of town well and was trying to get a handle on what the city was like. (I have always held to the "eat your own cooking" philosophy.) So I jumped off a bus and walked along for a while, watching respectable blocks alternate with loud blocks and deserted blocks by turn.
...
Then I waited a couple of days, mulling, and called the agent.
"Look," I said. "I know she's been in that house for a long while, and she's sad to be moving, but it's barely worth $199K new. To rehab it, I've got to put in a new kitchen, revamp the bath, polish up from top to bottom where it hasn't been taken care of. It looks like it's got no major structural defects, but I've still got to put forty thousand dollars into it."
I went over this story with one of my partners. I'm still pretty new at making offers, and I wanted him to hear every detail of the story, see the house as I saw it, be an audience to my conversation with the agent.
And he had only suggestion: "don't be apologetic. Not, 'I'm sorry, but I can only offer you one-forty,' but, 'my offer's one-forty.' You don't know what she's thinking and how she'll handle it. That's it, 'One-forty.'"
Caveat Emptor!
Grim
5 Comments:
Nice condominium complex - medium sized. Mix of 1, 2 bedrooms single level and multi-level apartments and townhouses ranging from 700 sq feet to 1200 sq feet. One ex-governor owned and lived here once.
The 1 bedroom basement apartment: 1 bed, 1 bath, 700 sq feet, with partial basement 300 sq feet: partially finished 150 sq ft for family room/additional bedroom, unfinished 150 sq feet contains laundry outlet and a second bath possibility.
One went for 187K in July 2004.
One went for 190K in July 2005.
One just came on market this month Jan 2006 (exactly the same as the above two, no newer anything) asking for, hold your breath, 240K.
I dont understand.
cliffy:
Since you live in a condo, would it make sense to sell now while the value is high and then live in an apartment for the next year or two?
--ChrisXS
ChrsXS
I am considering to sell and rent for a year
Cliffy
Cliffy,
If a less desireable unit in your building went for 400K, what could you get for your unit? 450K? 500K? You could sell it and rent a place for a year or two, pocket the profit (perhaps in an online savings account which pays a high interest rate--3.5 to 3.75) and then buy a place in a year or two when the prices come down. Perhaps you could sign a 1-year or 2-year lease on your current place with the new owner"---perhaps we should call it "property debtor"?
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