Number of Bids to Place on Average Before Securing a Property

11 Replies

New to the business, I have read that you have to place a lot of bids in order to snag a good deal.  On average, how many bids did you place when you first got started in order to get one accepted... and has that number gone down as you have become more skilled at making bids?  Thanks!

Angela,

The answer to your question depends on where you intend to make offers. If you only intend to bid on MLS Listed property, your conversion rate will depend on how good your agent is and how much competition your local market has. If you run your own marketing campaigns, like bandit signs, direct mail, google adwords, etc., you may have a better conversion rate. Especially if you are getting leads on houses which are not yet on the open market. This strategy requires you or someone on your team to be a good negotiator.

Happy Investing

Derek Dombeck

Originally posted by @Angela Barrere :

On average, how many bids did you place when you first got started in order to get one accepted... and has that number gone down as you have become more skilled at making bids? 

When I first started flipping houses, we had a 100% win rate. Quite frankly, we were paying too much. As i became more seasoned, we've been offering progressively less and less and being far more picky about the projects we take on. This year, we've had about a 30% acceptance rate, with 5 purchases total. We've had a couple of properties get away that I wish we had bought, but you can only do what you can do, right?

-Christopher

Originally posted by @Christopher Brainard :
Originally posted by @Angela Barrere:

On average, how many bids did you place when you first got started in order to get one accepted... and has that number gone down as you have become more skilled at making bids? 

When I first started flipping houses, we had a 100% win rate. Quite frankly, we were paying too much. As i became more seasoned, we've been offering progressively less and less and being far more picky about the projects we take on. This year, we've had about a 30% acceptance rate, with 5 purchases total. We've had a couple of properties get away that I wish we had bought, but you can only do what you can do, right?

-Christopher

 Less is often more. Working to gain work is very different than working to earn gains. When your hard earned capital is on the line even the most liberal of folks tend to get conservative.

In a recent conversation with a prospective investor I shared a project proforma with him. When we discussed the maximum number I'd be willing to buy the deal he balked and said there was more room for use to go higher if needed.

I reminded him of our discussion moments before of the minimum gains (%) we'd use to guide the investment. He laughed, reminding me I hadn't any "skin in the game" since he was proposing to fund the deal 100% so what was I so worried about if we paid a little higher price if it meant "getting the deal". 

As much as I need an investor to fund my deals right now, I can't buy simply to gain work. My buys need to work gains.

Greed will guide fools, and fools will follow greed.

Your experience has guided you to never be made a fool. Stay disciplined.

hi angela. thats a tough question. the really is no average amount of bids or time. each deal is different. for instance, my first house, the first bid was accepted. the most recent one, i have been trying to get this place, on and off for 5 years. i haven't bid on it in that 5 years, but i have had trouble getting to the owners. every deal is different and you have to annalyze what you may be doing wrong in each bid, if  it is not accepted. lowball bids often do not wok well, but they can at times. study each bid you make and educate yourself along the way. if you don't get the house the first time, try again. if you never get it, it just means that there is a better deal out there waiting for you

Not sure what the numbers were when we started, but this is what our numbers look like for the year.

407 potential deals physically inspected analyzed, numbers crunched. 

110 offers submitted

29 purchases

We write offers on a little more then 1 in 4 of the properties we analyze. 

We have just under 1 in 4 of our offers accepted.

I know our acceptance rate is much higher than it was years ago, the main reason for that is we have become much better at offering only on properties that we think have at leat a remote chance of getting accepted, and we have become much beter at prescreening properties before we do a physical analysis of them, we also dont blanket low offers. 

We do buy the most all our houses from the mls, we rehab about half and wholesale the rest to other rehabbers. 

Find motivated sellers and try and buy at a 30% discount. If you have 40%+ offers accepted, you're offering too much. I've talked to several people that have a 10%-20% accepted offer rate, so they're only getting the best deals. You make your money when you buy.

Originally posted by @Angela Barrere :

New to the business, I have read that you have to place a lot of bids in order to snag a good deal.  On average, how many bids did you place when you first got started in order to get one accepted... and has that number gone down as you have become more skilled at making bids?  Thanks!

When you say 'bids' that sounds like you are trying to get properties through the MLS? That happens to be a route that, depending on the local market, may be frustrating for the investor who wants any sort of reasonable discount on the property. Retail buyers (or buyers willing to pay retail price) are also likely to get an average number of bids that get accepted that differs from that of investors.

Greg, yes, we are going through the MLS. How do you recommend seeking out the best deals? We have been hearing/reading a lot about flyers and marketing in our farm area, but have not started down that road yet. We got our first one through the MLS, but grabbing a second has been very difficult in this market. My husband still does not have his RE license (plans to get it this year) so including RE commissions in has made the market difficult to find a great buy in. Any suggestions are appreciated!

Account Closedundefined

It varies based on the market, where you're making your offers and how aggressive your being as well as how much rehab you're willing to put in (for houses that need very little, you will probably need to make more offers to find that one good deal). When we're making offers on REO's on the MLS, We usually will get about 10% of those we offer on, but we also don't even bother on about a third of the one's we view and we have a skipped a bunch of other listings we looked over. But it varies on a lot of factors, when we were doing mailings, we got a bit higher percentage.

Originally posted by @Vincent Crane :

Find motivated sellers and try and buy at a 30% discount. If you have 40%+ offers accepted, you're offering too much. I've talked to several people that have a 10%-20% accepted offer rate, so they're only getting the best deals.

They may or may not be getting the best deals at at 10-20% acceptance to offer ratio. 10-20%  tells you nothing about the value of a deal, our acceptance rate is about 29%. Our rate has increased because we have become much more selective in the offers we submit and use multiple strategies to get profitable deals. We rarely win on new listings in multiple offer situations, probably - 10%. 

We wholesale houses to rehabbers that have much lower acceptance rates to offers then we do. 

It is easy to throw low ball offers in on the mls and have a really low rate of acceptance. That is in no way indicitave of  getting a good deal. There are plenty of properties where 30% discount is a bad deal, and other times where paying above list is an awesome deal. 

@angela berrere

My advise, crunch the numbers and make sure you have a good deal. That's the important component. Just know it may take a while, especially when you are new and competing against a bunch of experienced people... Mls is tough, lot of competition, good luck.