Process Improvement: Submit 100 Offers before or After Comps?

Question

Hi BP Team!

TLDR: Submit Offers after I receive Comps or submit offer, get accepted then during due diligence phase review comps and other due diligence activities?

Starting out and looking to continue to improve my process. In @Brandon Turner's Webinar last week he offered this process: 1. Leads 2. Analysis 3. Offer 4. Buy.

I currently analyze deals everyday using my spreadsheet. If the cashflow is >$100 (Expenses includes: 10% Property Manager, 5% Capex, 5% Repairs, etc) then I move property to next phase.

I planned to request comps from a real estate agent to move forward, but I then heard the mantra: "Submit 100 Offers, get 10 accepted, buy 1." Should I wait for all the comps to submit offers or modify the list price to where my numbers work (per the webinar) and then immediately submit the offer.

Any assistance or wisdom is greatly appreciated! I love process improvement and want to continue analyzing many deals day after day. Thanks in advance!

Brandon L. · Answer

@Nathanael Rojas maybe this method works for a company or a person that has a lot of cash to close deals, but it's horrible advice for someone just starting out.

If an offer gets accepted you are legally saying that you will make a good faith effort to close on that property. If you do not have the funds to close on the 10 offers you get accepted you are negotiating in bad faith.

You can ultimately do what you want, just something to think about.

Frank Wong · Answer

Hi Nathanael,

I would never submit anything unless I review the comps first.  Unless I worked with a buyer before I would never submit an offer for them unless the buyer reviewed the CMA I provided.

Submit 100 get 10 accepted and buy 1 is amateur in my opinion and lots of wasted time.  I submit 10, 3 get accepted I buy 3 unless something drastic comes up in the inspection.  It's never about value.  I know once I submit the offer I know what its worth.  BTW I buy SFRs.

If you want to take your investing game to the next level.  Don't rely on the agent's comps.  Do your own research and get to a level in which you know the values.  All I do is ask the agent to show me the house.  If you know what the ARV will be and there is a lot of equity the rest of the numbers will fall in line. ARV first in my opinion and everything 2nd.

Russell Brazil · Answer

I receive offers from the same lowballers on every listing I have. I dont even open their emails, because its literally not worth my time to do so.

Its simply the strategy of an amateur. You know how many offers I need to make to buy a property? 1. I know exactly what a property is worth, what Im willing to pay, and I know if I can get someone to sell it to me at that price.

The people making these fruitless offers fall into 1 of 2 camps. The majority of them have never done a deal. The other, and far smaller are huge major companies sending out 10,000 direct mail pieces a month, and running commercials etc. The former of these are people who dont know how to value their time, and thats because their time isnt valuable.

Sam Shueh · Answer

There got be compelling reasons for not wanting to complete transaction after an offer is accepted. Show them laid off letter etc.  Sellers in competitive neighborhood expect you release contingencies after viewing etc.  You can lose your EMD. These properties often are being eyed by others as well so they go quick. I search most recent listings finalize to a few. Submit the highest and best 3 hopefully I hear from all 3.  If ARV is not good stop there. IMO you got to be very good with estimates know what you are doing.

Nat Rojas · Answer

Brandon to my understanding the offers are to be so low that the majority wouldn’t be accepted. On another forum/article I read, “If your offer doesn’t embarrass you, it’s too high.” Hence my desire for asking the question as there are so many “processes” to choose from. I am now better understanding different people with different personalities follow different techniques and strategies.

Nevertheless, you offer strong and valid points. Yes, based upon my due diligence (and legally, apparently!) my intention should be to close on the property.

At no point in my investing career will I feel comfortable placing myself or another person in a negative situation. Based upon the advice and epiphany provided from you and @Frank Wong, I’m currently changing my mindset and process to conduct all business transactions in good faith.

Thank you for your input, Brandon.

Nat Rojas · Answer

Hi Frank,

Thanks for the response!

This makes sense and the last thing I would want is to waste anyone’s time. I don’t mind doing the analysis before reaching out. As long as the ball is in my court, I can push the pace.

What do you mean by “it’s never about value”?

That’s certainly a great point. I’ll be sure to learn how to compile comps and determine ARV. I enjoy researching and learning, so thank you very much for focusing my direction. As I begin my research, do you by any chance have any expert tips or recommendations regarding pulling comps/determining ARV that I won’t find online?

Again, thank you, Frank for your assistance!

Process Improvement: Submit 100 Offers before or After Comps?

Most Popular Reply