Isaac Toussie is the author of this article covering the many intricacies of the real estate industry. As always, Isaac Toussie advises that what follows is only personal opinion, based though on several years of first-hand experience working in the business as a professional land developer for residential housing. Be sure to consult the likes of lawyers and accountants when facing a business decision of grave consequences – even if the insights of Isaac Toussie appear sensible to you!
Today we are going to take a look at a common tactic often employed in real estate. It’s called the art of the low ball. You low-ball the numbers and see if they don’t work out in your favor after all.
We are talking about low-balling the asking price with a counter-offer that’s so ridiculously far from the asking price that it would feel insulting.
For example, you can simply offer a substantially lower bid, say a whole one-fifth lower than the asking price, or even more if you’re feeling really lucky. Now such low offers are almost never accepted, but the operand word is “almost,” not “never.” Like much else in business, it’s a numbers game, so you simply keep doing it until you win: you can bid on thirty different lots of property, but that one successful bid will pay for the other twenty-nine which your low numbers made you to lose out on.
The key in all this is to keep trying and not give up. You will basically be treated as if you’re trying to sell people pencils – door-to-door. And so it will be taxing on your nerves, as the rejections pile up. But it doesn’t matter, as long as you understand the feast-or-famine nature of this approach.
But how low should you go? It all depends on your situation. You’re low-balling people, but you’d still want to appear half-way respectable. So keep your figures within the realm of reality. One helpful old rule of thumb to live, and quote, by states that if you’re not personally embarrassed, you haven’t gone low enough.
Yes, there’s a very poker-like aspect to this business. But then again, that’s always the case when any negotiations are involved. It constitutes a great part of what makes the property market so interesting to work in. So low-ball your “disposable” real estate transactions and low-ball your way to real estate investment success!