Strategies for making a first offer in a tough market

Lewiston, Maine
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Strategies for making a first offer in a tough market

Danielle Turcotte
Member since 2021 · 6 posts · 0 votes

Hi!  I'm looking to make my first offer on a triplex in Maine soon!  I'm looking for help/advice/suggestions on ways that I might be able to approach making an offer in a competitive area that could increase my potential success.

So far, there has been little on the market in the areas I am looking and the properties that are available seem to be extremely run-down with pretty severe roof and foundation issues (among other structural issues)... all asking for absurd amounts of money.  Sweat equity is not an issue for me, but I'm just not finding anything that will work reasonably.  To make things a bit more difficult, it seems that any property that comes close to cash flowing is scooped up very quickly by more experienced investors in my area, who also seem to have more cash-on-hand to throw at it.

I know markets are competitive everywhere right now and inflated prices are making deals even harder to find.  In the dearth of opportunities, how do I make my offer stand out or find ways to beat others to the punch?

Thanks!

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James Alderman
Realtor · Plain City, OH · Member since 2022 · 82 posts · 58 votes
4y

Cash offers are always strong, because the seller knows that the purchase won't fall through due to financing. Waiving inspections is another strategy, though not recommended unless you have a lot of experience.

Other than that, competing on the MLS listing right now basically comes down to your price.

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  • Dwayne Poster
    Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
    4y

    If it's MLS listed, you are up against the competition. In my area, one is not bidding on a property anymore, they are outbidding the competition. I would suggest concentrating on off market properties. It's you and a prospective seller, one on one.

    2Reply
  • James Alderman
    Realtor · Plain City, OH · Member since 2022 · 82 posts · 58 votes
    4y

    Cash offers are always strong, because the seller knows that the purchase won't fall through due to financing. Waiving inspections is another strategy, though not recommended unless you have a lot of experience.

    Other than that, competing on the MLS listing right now basically comes down to your price.

    3Reply
  • Mike Davis
    Lender · Annapolis, MD · Member since 2022 · 154 posts · 70 votes
    4y

    @Danielle Turcotte If using a loan, have a proof of funds letter and get pre-approved.

    1Reply
  • Niyi AdewoleBusiness Member
    Real Estate Agent · Atlanta GA & Orlando, FL · Member since 2015 · 214 posts · 101 votes
    4y

    @Danielle Turcotte hi Danielle,

    I’m an investor and realtor down in atlanta and have been experiencing the same with my buyers.

    We have found success offering over asking with short inspection periods (I.e. 3 days or 5 days if on a Friday) and then clawing back value with seller contributing toward closing. The extra dollars offered, when financed over 30 years equate to minimal increase in monthly payment.

    Real example below:

    Recently renovated Property was listed for $239K. Multiple offer situation.

    We offered $255k with $7k toward closing (less money out of pocket at closing).

    Also helps if you have “crystal clear criteria” and can get an offer out within 2 days of it being listed

    [email protected]
    1Reply
  • Ed Emmons
    Specialist · Milford, ME · Member since 2016 · 630 posts · 378 votes
    4y

    A couple times recently I had the selling agent ask the seller, “what price would you be happy with and be willing to sell it to me for now?”  I looked at the property within a few hours of the listing. The price they responded with was a little over what they were asking but both homes that I bought appraised higher than what we agreed to. I knew my numbers and both of the homes are now rented and performing well. There are tactics used by agents like “give us your highest and best” because we have multiple offers. Sometimes there are multiple offers but all very different and one of them would definitely buy the home as offered. Sometimes this pressures buyers to pay more than they should. Granted agents work for the sellers and they try to get best price, so you can’t blame them. That is why I tried this strategy because it was very fair to the seller and it still worked for me and avoided the ridiculous bidding.

    Another property that needed foundation work had my offer and at least one other. The agent came back with the highest and best tactic but I told them that was my best. The seller later took the offer. So although you will lose some properties because others are willing to pay too much, be patient. Maybe when interest rates rise and markets change, the same homes will be back on the market because the numbers didn’t work. It is much better to lose the property to a competitive bid than to lose it to the bank later.

    2Reply
  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    @Danielle Turcotte Here is some guidance for getting your offers accepted in a competitive market

    -short closing times

    -cash > hard money > conventional financing > FHA/VA etc. financing

    -avoid as many contingencies as possible

    -walk through the property beforehand with an inspector so you can write in an offer without an inspection period

    -provide a reasonable amount of earnest money within a few days of going in contract

    -talk with the listing agent and provide evidence to build confidence in the selling side that you are serious and are planning on closing with the terms provided in the initial contract

    -be flexible with the choosing of the title company. Don't immediately leave it up to the seller but don't be stubborn about using your choice 

    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
    1Reply
  • Danielle Turcotte
    OP
    Member since 2021 · 6 posts · 0 votes
    4y
    Quote from @Dwayne Poster:

    If it's MLS listed, you are up against the competition. In my area, one is not bidding on a property anymore, they are outbidding the competition. I would suggest concentrating on off market properties. It's you and a prospective seller, one on one.

    Thanks so much for the great suggestion! I hadn't really delved into this world yet and think off-market properties and FSBO are a good potential for cutting out some of our competition right now. In just a little looking, we have already found some interesting properties to look into!

    0Reply
  • Danielle Turcotte
    OP
    Member since 2021 · 6 posts · 0 votes
    4y
    Quote from @James Alderman:

    Cash offers are always strong, because the seller knows that the purchase won't fall through due to financing. Waiving inspections is another strategy, though not recommended unless you have a lot of experience.

    Other than that, competing on the MLS listing right now basically comes down to your price.

    Thanks!  Unfortunately, we don't currently have as much cash to put towards the sale as some of the bigger fish, but in a couple of months, I think we will be able to leave out financial contingencies.  We are not yet experienced enough to waive the inspection, but are going to spend some time now on creating better rapport with our team so that we can hopefully shorten the length of inspection period to 3-5 days as another person suggested.  Fingers crossed!  Thanks for your time and advice!

    0Reply
  • Danielle Turcotte
    OP
    Member since 2021 · 6 posts · 0 votes
    4y
    Quote from @Niyi Adewole:

    @Danielle Turcotte hi Danielle,

    I’m an investor and realtor down in atlanta and have been experiencing the same with my buyers.

    We have found success offering over asking with short inspection periods (I.e. 3 days or 5 days if on a Friday) and then clawing back value with seller contributing toward closing. The extra dollars offered, when financed over 30 years equate to minimal increase in monthly payment.

    Real example below:

    Recently renovated Property was listed for $239K. Multiple offer situation.

    We offered $255k with $7k toward closing (less money out of pocket at closing).

    Also helps if you have “crystal clear criteria” and can get an offer out within 2 days of it being listed


    Thanks so much for the suggestion!  Given your recommendation, U think I am going to take some time to connect with and build a better rapport with the real estate team in hopes that, when the time comes, I have the relationships to offer that shortened inspection period and get it done quickly!  Thanks again for your time and advice!

    0Reply
  • Danielle Turcotte
    OP
    Member since 2021 · 6 posts · 0 votes
    4y
    Quote from @Ed Emmons:

    A couple times recently I had the selling agent ask the seller, “what price would you be happy with and be willing to sell it to me for now?”  I looked at the property within a few hours of the listing. The price they responded with was a little over what they were asking but both homes that I bought appraised higher than what we agreed to. I knew my numbers and both of the homes are now rented and performing well. There are tactics used by agents like “give us your highest and best” because we have multiple offers. Sometimes there are multiple offers but all very different and one of them would definitely buy the home as offered. Sometimes this pressures buyers to pay more than they should. Granted agents work for the sellers and they try to get best price, so you can’t blame them. That is why I tried this strategy because it was very fair to the seller and it still worked for me and avoided the ridiculous bidding.

    Another property that needed foundation work had my offer and at least one other. The agent came back with the highest and best tactic but I told them that was my best. The seller later took the offer. So although you will lose some properties because others are willing to pay too much, be patient. Maybe when interest rates rise and markets change, the same homes will be back on the market because the numbers didn’t work. It is much better to lose the property to a competitive bid than to lose it to the bank later.


    This is super sound advice! Thank you so much for taking the time to respond! I am also starting to look more into off-market/FSBO properties, where I think this strategy will work well for me. I have been doing a lot of market research and feel I have a good enough grasp of the numbers at this point to try to negotiate myself into a deal this way... hopefully avoiding the ridiculous bidding you mentioned. Your last sentence, "It is much better to lose the property to a competitive bid than to lose it to the bank later" is an important one to be reminded of frequently as an excited newbie to investing. Thank you so much for your time and thoughtful advice!

    0Reply
  • Danielle Turcotte
    OP
    Member since 2021 · 6 posts · 0 votes
    4y
    Quote from @Joshua Janus:

    @Danielle Turcotte Here is some guidance for getting your offers accepted in a competitive market

    -short closing times

    -cash > hard money > conventional financing > FHA/VA etc. financing

    -avoid as many contingencies as possible

    -walk through the property beforehand with an inspector so you can write in an offer without an inspection period

    -provide a reasonable amount of earnest money within a few days of going in contract

    -talk with the listing agent and provide evidence to build confidence in the selling side that you are serious and are planning on closing with the terms provided in the initial contract

    -be flexible with the choosing of the title company. Don't immediately leave it up to the seller but don't be stubborn about using your choice 

    Thanks so much for taking the time to respond!  This is a good list of ideas and I will be keeping them in mind moving forward!

    0Reply
  • Jeremy A.
    Rental Property Investor · ME · Member since 2018 · 179 posts · 59 votes
    4y
    Quote from @Danielle Turcotte:

    Hi!  I'm looking to make my first offer on a triplex in Maine soon!  I'm looking for help/advice/suggestions on ways that I might be able to approach making an offer in a competitive area that could increase my potential success.

    So far, there has been little on the market in the areas I am looking and the properties that are available seem to be extremely run-down with pretty severe roof and foundation issues (among other structural issues)... all asking for absurd amounts of money.  Sweat equity is not an issue for me, but I'm just not finding anything that will work reasonably.  To make things a bit more difficult, it seems that any property that comes close to cash flowing is scooped up very quickly by more experienced investors in my area, who also seem to have more cash-on-hand to throw at it.

    I know markets are competitive everywhere right now and inflated prices are making deals even harder to find.  In the dearth of opportunities, how do I make my offer stand out or find ways to beat others to the punch?

    Thanks!


     It can be done even during inflation I just did the same thing in maine. On mls i saved $20k off  5 unit by offering cash offer from hard/private lender with no inspections no appraisal closed in 30 days. I dont recommend doing no inspections no appraisal on first deal unless have correct skill set or experience in trades, worked in basements attic etc, find and buy units with most extra space for lowest price in best location that can be utilized or converted into bathrooms, kitchens bedrooms, full or  adding to current units, etc. Max out the building to get max appraisal etc borrow funds with purchase to upgrade rehabbing by adding cash flow adding value. 

    also converting 3 unit with attached shed into  4th apt in maine. Find good master  electrician and plumber hvac poc beforehand as trades is most expensive part but pays in dividends. look for  town sewer unless got land to add to tanks as conversion is much easier to go from 2-4 units on public than private sewer/water. Added 3rd 4th bed to 2 bed with attached unused storage rooms, sheds, carriage house etc. Look for and Convert attached barns garages into insulated heated liveable spaces. 

    Always crunch #s

    0Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    @Danielle Turcotte We have made strong offers for the last 12 months but haven't had any luck either. It's just a numbers game and every investor uses different numbers and strategies. If you're trying to buy cash-flow there's always a limit and some deals don't even come close based on asking price. We don't waste our time with deals that have zero upside. It's a business to make money, day 1, not lose money. 

    How many properties have you walked? How many offers have you submitted? Finding an off market opportunity is great but it doesn't always make it a good deal. Keep that in mind. 

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    Many will say go off-market. But that is just as competitive, they are filtered through investors rather than end buyers. This is risky and don't recommend this, but buyers are waiving option completely.

    0Reply
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