"Offer too little, and you lose the deal. Offer too much and there
is no profit."
Whether buying to renovate the house and resell; to keep it as a
rental; or to sell it wholesale to another investor, these mistakes are often
made by both novice and even more seasoned investors.
If I'm completely honest with you - I catch myself still starting
to make some of these crucial errors. Make sure you are informed and armed
against these deal killing mistakes.
Top Mistakes
Not dealing with a motivated seller - If the
seller is not motivated - even desperate to sell - then you will never be able
to negotiate a price that works and you are just wasting time and frustrating
yourself for no reason. In case if your are looking for flats in Jaipur, choose
your reseller or builder wisely.
Too much emphasis on seller's desired price - Investors
often start with the Seller's desired price as a benchmark and attempt to work
the seller down from there. What the Seller wants for the property is
irrelevant to what can be paid. Use a formula you trust and determine your
price first. Begin your negotiations with a number below your top price and
negotiate up from there. If the seller is not remotely interested, then they
are not motivated.
Using comps that aren't really comps - Although appraisers
can use houses that are as much as a mile away and sales that up to a year old,
it is better to use comps that are less than six months old and less than a
quarter mile away (even up to ½ mile). Make sure the comps truly are similar
houses, in similar areas. Lately, many wholesalers are using comps from
neighboring areas that are within the desired distance, but completely
different type areas. The house and the neighborhood must be similar to be an
accurate comp.
Not determining your highest price before starting negotiations - Before you
even start to negotiate with the seller you need to determine your maximum
profitable offer (MPO). This is your drop dead point - the deal breaker price
over which you will not pay. You must know what that number is.
There are some mistakes to avoid while investing in property.