I am curious to know how much you guys are offering to pay for land? I’ve purchased several “cheap” lots and in some cases have paid only 10% of value but I am about to send some offers for more expensive properties (Market Value $40k - $120k). I am pretty certain I will need to increase my offer percentage of value closer to the 50% range to get some deals.
While paying the least amount possible for a property is ideal I also realize I’ll need to mail a lot more property owners to get those types of deals. What percent of property value are you guys paying for properties valued in the $40k - $100k+ range? Mail isn’t cheap!
Also, what is your typical close rate (how much mail do you send for every property you acquire?)
@chiltonj Hey there, one thing I’ve noticed is that obviously there is more competition these days… but for the sake of community and keeping the industry balanced, you may consider keeping ur offers around the 25-35% range.
I liken it to companies who are willing to take a fraction of the cost for a product or service in comparison to industry standard. Eventually it drives the value down of the product/service and makes it harder for everyone else to sell.
Same with land. If ppl contribute to driving the price up for land, then it closes the margin gap and makes it harder to make money for everyone Not saying that you single-handedly will disrupt the market but it’s something to consider.
What if I were offering 65% in the same market you are looking to try!?
anyway, i think there are special cases where offering more makes sense. High dollar properties (+100K) or areas where DOM is like 2 days or where there are multiple times more “sold” properties than “for sale” …. something crazy like that!
We usually stick to 25-30% to answer your question
This has a lot to do with the type of lot and the market you’re targeting. On some lots I offer 30% on others I sometimes offer as high as 60%. It can vary considerably.
@blt This is a prisoner’s dilemma situation where you are suggesting collusion is the key to profits…sure that’s true, but someone will cheat (offer more) to gain in the short run. It can’t be centrally controlled unless there is a real oligopoly, but thats the beauty of capitalism… the consumer wins because prices are driven in a competitive direction and quality increases at the same time.
I say don’t fight it, just be more competitive, because you won’t get several thousand land flippers to collude.
