What amount to offer?

**lovin diz** · 02-02-2010, 06:12 AM

Hey everyone...I am a newbie about to make an offer on a waterfront lot...here is some background:

After Katrina real estate sky rocketed. People were paying big $$ to build or buy in this neighborhood (which is on a river). Now that the market is bad, sellers are coming way down. for an 80 x 150 lot, which was selling at $125,000, this seller is selling it for $89,900. Nothing is selling really well out there b/c people who bought after katrina will loose $, so they cant go too low.

Anyway, this seller has dropped his price to $89,900, which is the cheapest lot out there. The closest price to this is $99,900.

He is willing to pay $1500 closing costs. What would you offer him? I am looking at it 2 ways--1. he is really ready to get off of this land, b/c it is already so low....2. since it is already a great price, he wont come off much

--So, what would you offer?

TIA

**Greg** · 02-02-2010, 08:35 AM

You need to find out how much the lot is worth. Look at what other similar lots have sold for and go from there.

If there are no sold lots to compare use sold river front houses and subtract the value of the house.

Or look at the tax assesment of the sold houses and see how much under tax assesment they sold for. (this will only work if they do not assess at sale time.)

Around here prices have rolled back to pre 2003 so looking at what this type of lot sold for back then would work.

What the seller paid for it means nothing and what they owe it means even less. The only thing that matters is how much it is worth right now.

Make sure you have a contingency for an appraisal so if you offer too much you can get out.

**Chrisopher Moltisanti** · 02-03-2010, 05:56 AM

The lot could be worthless, especially after Katrina; like that won't ever happen again.....

If you don't have the time to do what Greg said, and you really want the property and have nothing to lose, I've been advised by investors in my personal experience to offer the seller 10-15% less than what they're asking. And also offer to pay those blasted closing costs. If the seller is desperate, he'll agree.

This strategy told to me by serious investors ONLY works if 1) A buyer has nothing to lose and 2) The seller showed their hand in desperation and the buyer will take the burden off of their shoulders by paying the closing costs and "handling it". So all the seller has to do is pack their bags.

Good luck.

**Chrisopher Moltisanti** · 02-04-2010, 07:18 AM

You're not anticipating another CAT 5 hurricane are you?

Do you really believe those only happen every hundred years? Can you even obtain insurance today that'll cover specifically "hurricane/wind" perils?

Katrina bankrupted some insurance companies. They wised up and know that they're under no obligation to pool their risks, much less cover wind damage.

You might have a tough time locating a company that'll cover "wind". (NOT flooding).

Good luck.