Page 21 - From Ghetto to Gucci: The Basic Principles of Flipping Houses

Once you’ve gotten your estimate for the cost of work to be done, you can submit an offer on
the property. Work with the numbers to find out what the maximum price is that you can pay for
the house in order to make the profit that you need to make minus the repairs. Once you know
this number, you know that you can’t go any higher, and if the seller asks for more, you can just
walk away.

Submitting an Offer

When you have your max house price it’s now time to talk to your realtor. Don’t let them know
your max house price, but ask them simply what they believe the lowest price the seller would
accept is. Work with them to craft an offer that is less than your maximum price, but that is also
appealing to the seller.

You won’t want to lowball the seller if you don’t have to—after all, other people are looking at
the same property that you’re looking at. If you lowball, you run the risk of losing out on a
perfectly good flip.

At the same time, you want to stick price-wise under your maximum price. There’s no reason for
you to purchase a house if it’s not going to make the profit that you need to make. On your offer
make sure that you put an expiry date and an inspection contingency. Two or three days is
usually a standard time period to give an individual seller. Do everything that you can to
sweeten the deal—all cash, ten days close, whatever you can do that would make your offer
tantalizing to the seller.

Once you’ve submitted an offer, you can keep looking for another house. It’s always good to
have a backup in case this one doesn’t work out!
When the seller responds with a counter-offer, remember to stick firm to your maximum price.

Just because you’ve submitted an offer doesn’t mean that you have to go through and buy the
thing. Why should you take less than you need? You should be willing and ready to walk away
unless you can get the price you need from the seller. Sometimes the seller will have a
counteroffer that’s outrageously above your maximum price. Feel free to counter their counter
offer at your maximum price, and make sure to include a letter explaining that this is your
maximum price.

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