Have you been in a multiple offer situation? A dollar short or day late? Outbid by a small or drastic margin? Competition poses an interesting challenge to investors, if there was one piece of advice it would without a doubt be “Avoid It!” Here are a few tips to deal with competition.
- No emotions – this is a business decision not an emotional one. Do not fall in love with a deal. Making decisions based on emotions can lead to enormous mistakes.
- Stick to your criteria – This is a business and you base it on the numbers. Do not pay a penny over your LTV, cash flow and other thresholds.
- Find 10 more similar deals – It often is a numbers game, find 10 more deals to offer on and cherry pick the best one.
- Find distressed property not listed – Find sellers who do not have their property listed, this you are the only offer. There are many lists you can market too such as defaults, probates, absentee owners, expired listings, for sale by owners, ads for rent, divorce, bankruptcy, etc.
- Pay your buyers agent out of escrow – Put your offer in with the listing agent so they get a double commission. You may increase your chance of getting an offer excepted and you can still award your buyers agent out of escrow. I have lost on highest and best situations many times to find out I was barely outbid by a buyer who was represented by the listing agent.
- Rethink your strategy – If competition is too rough and all else fails, regroup and come up with a new strategy or tweek your current strategy.
The best deals are deals with no competition. Finding sellers that do not have their property listed means you are the only offer, have a ton of negotiating power and can deal directly with the seller. I have seen properties get 20 offers in 3 days, many over asking price. When the bank asked for highest and best guess what I did? I offered the same as my initial offer because that is all the property is worth to me. Then I searched for more prospects to offer on. Happy investing!