How To Beat The Rising Home Price Trap

Q: Hi Gerald, I’m a rehabber negotiating a purchase of a bank-owned property.  The listing broker keeps telling me I have to raise my purchase offer price because the market is hot.  I want to build a good relationship with him, should I offer more? Eddie, Florham Park, NJ

A: Great question, Eddie.  I understand the pressure you’re under today with rising home prices and low housing inventory.   The listing agent’s goal is to get the house sold, so it makes sense that he wants you to make a higher offer. That makes his job easier with the bank.  But in order to be successful as an investor, you have to think independently and you can’t afford to let other people affect the specific decisions you make as an investor.

Billionaire investor Warren Buffett said that, “no one ever got rich paying too much for something”.  As a rehabber, you should know that in order to make money buying, rehabbing & then selling a property, you can’t pay too much for the property.  I know it’s challenging, and it is important that you never to waste a realtor’s time because that can hurt your relationship with them, but it’s important you stand your ground on the maximum allowable price you are willing to pay for a rehab property, because overpaying can be disastrous to your bottom line.

Thanks for your question, Eddie, good luck.

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