Making offers on higher end properties


You must be logged in to reply to this topic.

Viewing 6 posts - 1 through 6 (of 6 total)
  • Posts
  • Hi all,

    Looking for suggestions on making offers on high end properties that need very minor repairs if at all. Specially the all cash offers since MAO is most likely an insult to these sellers. Recently, I have come accross some of these and I am finding it more difficult to make all cash offers on these. I remember Jack saying we could get an option for about 80 cents on the dollar and sell the option for 90 cents on the dollar but that is still a huge discount for a property worth around 500K for example.

    The only other thing I can think of is getting an option on the property and doing a Highest Bidder Sale or try to negotiate a master lease.

    Any thoughts or suggestions?

    Thanks,
    Rafael

    Rafael,
    Never worked that market but here are my thoughts. As with any market for us as investors there must be motivation with the seller to spark some sort of discount. If there is no driving motivation then we are really playing in the retail market with realtors as the competition. Term offers are the only way to be competitive if they are seeking retail prices.

    Jack was working in median or less than median price range with his 10% split.

    Jackie has done a number of higher end properties, maybe she can comment.

    Thanks Don,

    That’s what I was also thinking about this morning regarding Jack and the type of houses he was dealing with back then.

    Rafael

    I’ve done a lot of really high end properties, over $500,000 even over $1,000,000.

    You will never make money in this market unless there is some PAIN and true motivation with the seller. If they don’t need the house out of their life fast, there is no chance you will make a deal. That statement pretty much applies to all real estate opportunities, not just the high end.

    With that said, high end sellers are not like other sellers. They are usually not emotionally attached to their property and don’t need to squeeze even dime of equity. They usually just want to get the house sold.

    Of course, a vacant house is where you will always find the best deals.

    You can certainly negotiate on price then get an option to sell using a Highest Bidder Sale. But you really need to know the market to know what is the right price. High End sellers will often sell with terms too but they will want some skin in the game so it needs to be a higher down payments to know you are serious. Not your down payment necessarily but one that you can pass on to your buyers (with a HIghest Bidder Sale is ideal).

    Here in Panama, I’ve been watching one high end property, 5000sf on 3 acres with an ocean view even though it is in the mountains. They were asking $890,000, then $790,000. Then just lowered it to $690,000. I asked if they would take $490,000 with 50% down and 50% paid in 5 years. They said YES! I made this offer because obviously they are motivated if they are doing those kind of price drops AND I know someone who is looking for this exact type house – with views but they need seller financing until they can sell their condo near Panama City. But, even if I did not have a buyer lined up, it would be an easy sell with the terms I negotiated.

    One time I got an option on a $15 million dollar property for just under $8 million.

    Remember, it is not about the price with high end sellers, it is about getting the property out of their life as fast as possible. Don’t be afraid to low ball them AND add terms to the mix too – and always use options to control the property while you look for a buyer.

    Find the need, fill the need – you will make money.

    Jack’s formula is for median priced homes in fairly good condition.

    You need to go much lower for high end properties.

Viewing 6 posts - 1 through 6 (of 6 total)

You must be logged in to reply to this topic.