A few months ago, I got an email from a reader who asked me an interesting question.

This person had been hanging out in some real estate forums for a while and they came across a conversation about the strategy of making low ball offers (something my business is fundamentally based on).

Someone in the forum posted this classic line:

“If you aren’t embarrassed about your offer, you asked too much.”

Then another person replied with this tirade:

“That saying is pretty much from hustlers, not real RE investors… there was some guru book in the late 80s about firing out low ball offers just to see if something sticks. These types get blackballed by agents. Offers are presented on the phone with an owner with a few choice words and turned down, if presented at all.

Realtors are wise to this activity too. All they do is ask the owner the lowest price they will consider and make a note to reject any offer below that amount. That way Realtors don’t have to fool around with low ballers.

Realtors are to present all bona fide offers, not some ridiculous offer from a bonafide hustler. Not only do they not have to be presented, they don’t have to be answered. They can go straight to the trash.

While these guys may think they are being clever or smart investor types, they are really making things harder on themselves. Names circulate quickly among Realtors, when your name gets around……well, you’ll basically be ignored.”

This person (the reader who emailed me) seemed rather distraught after seeing this comment as if there might be some truth in this statement. Perhaps the idea of sending out offers for 10% – 30% of market value is a little too ridiculous (maybe even unethical) to actually work?

My Thoughts

I can understand why a new investor might be alarmed by this kind of unsolicited opinion from an anonymous person on the internet. It’s no secret that some folks have a negative perception of real estate investors because it’s true, we do make some ridiculously low offers.

Have you ever listed your personal residence for sale (the one you dumped your life savings into) and gotten an offer for 50% or less of your asking price? I have – and it can be pretty infuriating. To most non-investor types (and even those of us who do understand the business), it’s understandable how one might get offended by the mere suggestion their property isn’t worth every penny they think it is. 

This is exactly why smart investors don’t go after these types of sellers.

For the same reasons a real estate investor MUST make low offers, it’s just as important for them to pursue the right clientele (that small demographic of people who are highly motivated to sell).

When I’m looking for new deals, I almost never deal with realtors. In fact, when I see a realtor’s name on anything, I usually just walk away.

Think about it – when someone has gone through the trouble of contacting a realtor to list their property the conventional way, it’s a clear indication that this person cares. These sellers are NOT apathetic and generally speaking, they’re expecting a “reasonable offer” (i.e. – at least 80% of their property’s value) and who can blame them?? If I were selling my house, I would expect the same thing!

If you make a habit of sending out hundreds of laughably low offers to the realtors in your town, then yeah, you probably will get “blackballed by agents”. That’s because these are precisely the wrong people for you to be targeting in the first place.

We’re looking for that small segment of society that just doesn’t care.

I know it might sound crazy, but when you’re working with a seller who is truly apathetic and/or in a situation where they perceive their property as a CURSE, a 10% offer is completely legitimate… and you aren’t taking advantage of these people, you’re doing them a favor!

Understanding Value

As I explain in this blog post, “Value” is a subjective word – and it comes in many different forms, shapes, and sizes. The word means different things to different people.

To some, value means money.

Others find great value in the alleviation of pain.

Some people place a high value on the elimination of a problem.

A lot of people find extraordinary value in things that are easy.

I’ve worked with many sellers who didn’t care AT ALL about the monetary value I was offering them. Why? Because they didn’t need the money, period! Instead, they valued the fact that I was able to eliminate their problem AND make the process very easy for them. Their property had become a major nuisance and by offering to remove that nuisance, I was giving them all the value they wanted! Even though the money mattered a great deal to ME, these people had a completely different perspective than I did (which is often the case) and my laughably low offer price was irrelevant to them. They didn’t care about the money – all they wanted was an “easy button” and I was there to give it to them.

If you’ve already gone through the process of finding motivated sellers, none of this is news to you – you already know these people are out there. Granted, they may be few and far between when lumped in with the whole of society, but if you know where to find them and how to reach them, there’s no reason you can’t have dozens of these motivated sellers calling YOU in the next couple of weeks.

A smart real estate investor doesn’t waste people’s time (their time, or the time of a realtor and their rationally thinking seller). They make intelligent offers to people who think differently about their property and the “value” associated with it.

The people who gladly accept these kinds of offers are NOT thinking with the same rationale as someone who has their property listed with a realtor. These are two completely different types of sellers… they aren’t just on a different page, they’re in a different book altogether.

The Best Real Estate Investing Strategy I’ve Found

I'll be completely honest with you. The most powerful strategy I've used to build my real estate investing career is probably NOT what you might guess.

Land investing (that's right, buying and selling vacant land) is a massive opportunity that most investors aren't paying attention to. For the few land investors who know how to pursue this business with the right acquisition strategy, it's an extremely lucrative and low-risk way to build serious wealth from real estate.

If you want to get the inside scoop on how to start and run your own land investing business, come and check out the REtipster Club – where I've put together a full 12-module course with dozens of videos, bonuses, downloads, group coaching sessions and a members-only forum (where we spend time answering questions every week). There is no better place to learn this business from the inside out!

About the author

Seth Williams is a land investor with hundreds of closed transactions and nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of REtipster.com - a real estate investing blog that offers real-world guidance for part-time real estate investors.

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  1. Brian says:

    You made some great points Seth. It’s fair and realistic rationale to say that those who are willing to call back on a low offer aren’t being swindled in any way. Otherwise they have every opportunity to simply say no. It sure would be nice to have some statistics on the “easy button” demographic. But clearly they exist, otherwise there wouldn’t be a market for these kinds of vacant land investments. Great post!

    1. Seth Williams says:

      Thanks for sharing your thoughts Brian. I agree – it would be very nice to have the statistics a little more clear cut. I think it’s a hard thing to nail down because it has everything to do with contacting the right people in the first place (which means you need to get the right list, sort it adequately and send them a compelling messages – three things that can have a lot of subjectivity to them).

      One way to add more certainty to your outcomes are to simply follow the same approaches I use, because I know they work!

  2. katherine says:

    Here’s my situation. My late husband did just what you teach: a house two doors up from where we live was in bank foreclosure sale for $65K (less than half it’s owner’s mortgage) back in 2008 during the housing collapse. He low-balled and got it for cash $33K. With minimal repairs we got a rental agency to handle tenants and received $600 per month rent on it for 6 years. Not much for a 2.5 bath 1800 s.f. cottage but that is what our market is here in NC. We made back the initial investment but had crappy luck with tenants that required lots more upkeep costs then we bargained for. Anyway, my husband got terminally ill and passed away and then I was left with the responsibility of this extra house. (It truly is an ‘extra’ house because I own 2 residences in different states besides this one). I thought “Fine. I have a tenant and it’s an income stream”. But Murphy’s Law applied and soon the pipes to the street water main burst and I had to come up with $4K to replace plus all the interior flooring and sheetrock damaged, loss of tenant and income etc. I decided then and there to replace, repair, and paint interior and put on the market. With $22K I have paid in contractors and waterline costs I have had the house on the market for 10 months with a realtor and NO offers and now NO rental income either. Had a bank appraisal done last week and the house is valued at $70.5K. Instant equity for someone who has the patience and desire to buy it at 85% value. I’m one of those people who definitely think of this place as a nuisance but I’m not willing to walk away from money I need to live on now that my husband has died. I was grief stricken and should probably have just put it up for sale “as is” without pouring $22K into “fixing it up”. The market in our area is just so depressed. Even the city has a program to offer people $7500 free loan to buyers who will buy in the city core neighborhood where the house is and still can’t seem to get an offer. So much for the “investment”!!! Where did we go wrong and what do you think I should do now?

    1. Seth Williams says:

      Hi Katherine, I’m so sorry to hear about everything you’ve gone through with that house – that sounds terrible! If you need some ideas on how to generate more interest and find a buyer, you might find this blog post helpful.

      It doesn’t sound like you’d ever want to keep this and rent it out again, but if you ever find yourself in this situation, it may be worth your while to find a good, competent property manager. This is how I’ve managed my rental properties (because dealing with tenants and their problems just isn’t my forté) and it’s one of the smartest things I’ve ever done.

  3. David Meltzer says:

    At the end of the day, finding the gems is all about getting to the real issue behind why the person is selling. I find most people who talk about selling ridiculous lowballs barely even take the time to see a picture of the house.

    1. Seth Williams says:

      Can’t say I disagree David. Thanks for sharing!

  4. Michael J Lambie says:

    Just checking out your site for the first time. It’s pretty awesome. I have a question on low-ball offers. Is there a legal way to incentivize the RE Agent for accepting a low-ball offer? For instance if you were some how able to pay them a commission on the full asking price even though you may be buying at a fraction? Reading this, I was reminded of the Freakanomics chapter on RE Agents homes being on the market longer than their clients, because they aren’t incentivized to hold out for a better deal to earn an additional fractional commission. Is there something equivalent for the low-ball offer?

    1. Seth Williams says:

      Thanks Michael, I appreciate that!

      That’s an interesting (and good) question. I’m honestly not sure. I know there are plenty of ways you can get creative with a real estate agent’s commission (in such a way that they’d be more willing to work with you), but I’ve never even thought about this with regard to the scenario you presented. I’m sure there’s probably a way to increase their commission, but it could get sticky if it causes them to do something that isn’t in their client’s best interests (and I’m not sure if/when that would happen, but if it did, you’d probably want to steer clear of that).

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