How do you bounce back from getting outbid?

12 Replies

If you are in a competitive market, expect to lose out on some offers.  Get mad, then start looking for another place.

I don't know how your offer was worded, but all they should know is what the subjects are (inspection, financing), possession/closing date and who much you are willing to pay.  I'm betting it was closing date, subjects or price that made them go with the other offer.

I don't see the problem, unless you're getting emotionally attached to the property or making that deal.  Then the problem isn't that you didn't get the deal.  The problem is you getting emotional about it.

Getting outbid is just part of this activity. Usually we put in our maximum offer and if someone outbids us, oh well.

Originally posted by @John Teachout :

Getting outbid is just part of this activity. Usually we put in our maximum offer and if someone outbids us, oh well.

 Perfect.  If you go over your maximum, all you're doing is bidding against yourself.  Sometimes the best deals are the ones you didn't get.

Why is the guy putting 25% down a schmuck?   If you were the seller you would take the offer from a buyer with 25% down. So let's not focus on the other buyer lets focus on what you have to work with which is 5% down. 

You really have 2 options here if you want to buy something in a competitive environment.

1. Do what Russell said be more aggressive on your offer which could be price and terms.

2. Look at less competitive properties with less competition. 

The reality is most of the buyers will have more down payment than 5%. So you need to do something to make your offer stand out. It is what it is.  

Originally posted by @Frank Wong :

Why is the guy putting 25% down a schmuck?   If you were the seller you would take the offer from a buyer with 25% down. So let's not focus on the other buyer lets focus on what you have to work with which is 5% down. 

You really have 2 options here if you want to buy something in a competitive environment.

1. Do what Russell said be more aggressive on your offer which could be price and terms.

2. Look at less competitive properties with less competition. 

The reality is most of the buyers will have more down payment than 5%. So you need to do something to make your offer stand out. It is what it is.  

 If both offers involve the balance in financing, then the guy is a schmuck for putting 25% down.  That's 5 times as much money the buyer would have to recover before making a profit.

I wouldn't necessarily call the guy a shmuck for putting down 25% 
1.  His bid with a higher % down is what allowed him to win,
2.  Perhaps he had 1031 exchange funds that he had to invest,
3.  Perhaps he doesn't feel comfortable financing,
4.  Perhaps he borrowed that downpayment from another source,
5.  Perhaps he intends to hold the property for the long term.

Expect to be outbid - multiple times.  It is the name of the game in a hot market. When we were finding our property, we couldn't afford much so we had to essentially compete with a lot of local cash buyers.

A few things we did was include a pre-approved letter from our lender with the offer, include a higher Ernest Money Deposit (which goes to your closing costs anyway), offered their asking price (with a few fixes at a later point), and we moved QUICKLY.  It's hard for a seller to say no if you're the first offer he receives at full asking price.

Hope this helps!  Take this as a learning curve and keep your eyes on the next deal coming your way.

I get outbid 90% of the time. Sometimes I offend sellers (then see they accepted a similar offer 6 months later), or I offend the agents.

As an investor, your brain needs to be wired differently. Youre in it for investment purposes don't get attached to properties, just move on to the next one. Believe it or not, there are plenty of deals out there. And there is always a better deal to be found.

It's a numbers game. Put hundreds of opportunities through the funnel and you won't care about one. When we begin to understand that REI is all about deal flow, we begin to take the steps that are most critical to our success.