Real Estate Investor · Mountain View, CA · Member since 2008 · 53 posts · 6 votes
I placed 3 offers in the last month in California, one of them over asking price. Lost all 3 to cash buyers. I'm offering 20-25% down and have an excellent crredit rating. What's a body to do?
One of my best contacts told me that an REO listed for 180,000 sold for all cash, 225,000.
This is common place in So CAL for REO properties on MLS.
Banks have been pricing properties lower on purpose to get 20 offers and have a bidding war between the buyers.
This is exactly what NOT to do as an investor. Why would any ionvestor pay $45k OVER the ask price, when they could have had the ability to work the ask price below $180k and get it before it ever hits the MLS.
I am not sure you are buying them as cheap as you could. That ratio is too good to be getting home run deal. Sounds like singles at best.
Ofcourse a deal could always be better. Here in the area's we want to buy in, the deals aren't like what they are in the war zone areas. And we just won't buy in those areas. Part of our reasoning is sometime down the road we may want to sell some or all of these homes and so resell ability is an important factor.
Correction, find 20-30 realtors who SPECIALIZE in REO properties and become buddy buddy with them!
Also, and more importantly, all the suggestions are based upon making offers on REO properties that are on the MLS. While this certainly can be done, you need 25, 50 or even 100 offers entered bfore you get one. That is way to much paperwork in my book. You need to be getting them BEFORE they hit the MLS. Then your great credit and financing has a chance, of course, all cash almost always wins!
One of my best contacts told me that an REO listed for 180,000 sold for all cash, 225,000.
This is common place in So CAL for REO properties on MLS.
Banks have been pricing properties lower on purpose to get 20 offers and have a bidding war between the buyers.
This is exactly what NOT to do as an investor. Why would any ionvestor pay $45k OVER the ask price, when they could have had the ability to work the ask price below $180k and get it before it ever hits the MLS.
One of my best contacts told me that an REO listed for 180,000 sold for all cash, 225,000.
This is common place in So CAL for REO properties on MLS.
Banks have been pricing properties lower on purpose to get 20 offers and have a bidding war between the buyers.
This is exactly what NOT to do as an investor. Why would any ionvestor pay $45k OVER the ask price, when they could have had the ability to work the ask price below $180k and get it before it ever hits the MLS.
Wow you hit the nail on the head with that one. :cool:
Don’t feel frustrated. Prices have dropped so much that multiple offers are becoming the norm again in many areas of Southern California -- SW Riverside County and San Diego, in particular (can you say “bubbleâ€). Offering above the asking price does not guarantee you have a deal; nor does paying cash. It’s difficult to know whether one puts you at a greater advantage than the other and I’d try not to crawl into the head of an asset manager anyway.
There’s an ongoing argument regarding a glut of inventory. As evidence, many point to a large discrepancy between NOD’s and trustee sales. Some claim banks are holding onto homes because they now have TARP money and don’t have to mark to market anymore, or are being pressured by the government. Others subscribe to simple economics, suggesting banks are not foreclosing due to the high costs of holding a vacant home. Rumor and opinion abound and it’s difficult to say whether there will be a glut of inventory released anytime in the near future. I find this interesting, but prefer not to let it rule my decisions.
Rather than trying to predict the future, I believe your best bet is to make your best offers now using the best resources available to you, and not get frustrated. If it turns out that prices have permanently rebounded to where you can’t make money, which I personally doubt, you’ll have to change your investment strategy. Just because others overpay, doesn’t mean you have to.
I too hear of the "upcoming REO releases" but have a difficult time believing that banks would do anything that is not in THEIR best interests and flooding the market with inventory would drive prices down, thus, the bullet in the bank's foot.
It is a “Buyer’s Marketâ€, but the best bargains are selling quickly. For the first time in several years, we are seeing “multiple offers†on the well-priced properties. Remember now is the time to buy that home you always wanted with prices where they are today,one of your best ways is to work with a realestate agent who has the knowledge and expertise to help you along the process.
I have ran into the same problem. I was able to purchase using cash earlier this year...gives you a lot more confidence when submitting your offer. But I eventually had all my cash invested into deals. Currently I am running into situations where other investors are offering cash and also offering more than the asking price. This was not happening here earlier this year! I have decided to team up with other investors and begin offering cash deals again. Conventional loans do not appear to be easy obtain even if you have great credit!
I would suggest getting the word out through family and friends about what you are doing, write up a deal that shows the return they will receive, and how much you require for someone to invest with you. This has worked for me.
There is a tool which can erase all the confusion related to home buying.
Yes it's called a pencil and a piece of paper..... you don't really need all these fancy spreadsheets and programs to figure out what price to buy at. Have a simple formula to follow and stay within your numbers.
One of my best contacts told me that an REO listed for 180,000 sold for all cash, 225,000.
This is common place in So CAL for REO properties on MLS.
Banks have been pricing properties lower on purpose to get 20 offers and have a bidding war between the buyers.
This is exactly what NOT to do as an investor. Why would any ionvestor pay $45k OVER the ask price, when they could have had the ability to work the ask price below $180k and get it before it ever hits the MLS.
As a newbie, I thought I was running my numbers incorrectly -- Will that is one of the reasons I spoke with you, Monday afternoon. I have been encountering a lot of resistance form listing agents who barely even entertain the thought of receiving one of my submissions because of "investors" putting in very high offers.
Just today, I submitted on a property after carefully crunching numbers only to be told I'd be "wasting my time". The broker mentioned that the guy ahead of me had offered slightly less than the asking price. There was a $64,000 spread between his offer and mine -- and this was on a 3 bed/2 bath fixer! Several other buyers ahead of me apparently offered well above the ask.
Depending on the area, banks have indeed spruced up certain properties in order to attract owner/occupants. In particular neighborhoods these places sell faster than Viagra in a bordello.
Screw it. I'm remaining disciplined and sticking to the stuff I've learned in this forum -- no bidding wars for me. I'm here to make money not hold house warming parties bragging about how much more I paid for the joint while I sip my chablis, showing off the master boudoir.
While there are some deals to be had on the MLS, the signal to noise ratio is a little too lopsided for my tastes. Will you have the right idea. Striking before the stuff hits the MLS is the way to go.