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by Jesse Davis

Most of the time, the banks set a price on properties too high because they are in the business of lending money, not real estate, and as a result often they do not have a good understanding of the real estate market. Also, most banks are large, they have specific policies on lowering the price on a property based on how long it has been on the market.

Realtors (especially REO realtors) play a different game than investors. All of them know what a property will most likely sell for, but they have to give a high estimate of value or they probably will not get the listing. What the banks do is get a few realtors to give them what is called a brokers price opinion, which is nothing more than pics and their discounting the property for certain things. Bottom line: when everything settles, the bank tells the realtor what to list it for, so expect them to be high and do not let that stop you from making offers.

So go ahead and make offers! Make them low. Do not worry about what anyone else thinks; you are the one with the cash so you have the power! The only thing that you may run into every now and then is realtors who think they are the owner. They will tell you that the offer is too low, or even discourage the offer. You will be the judge of that. If this realtor does a lot of REO business, you may take their advice and try to build a relationship with them. Otherwise, you may want to politely remind them that they are required to submit all offers, and if you think that for some reason the realtor is not submitting your offer (it happens, but very seldom; most are honest, there are a few bad ones), then go to the broker and ask for the rejection notice from the bank.

What is the most important, make low ball offers! I normally start off every offer at least 10-20k below list price, unless it is listed for like 15k and I know they are not going to give it to me for a dollar.

For example, if the property is listed at 25, I would not start higher than 15k and see what happens. Sometimes I may even start at 10k or lower, that depends on the house, but definitely low.

Making offers is what makes dreams come true and changes peoples lives! Always start out low; when it comes to offers, it is easier to go up than come down.

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