I got my a$$ kicked yesterday in Columbus, Ohio

20 Replies

Yesterday I was feeling as good as it gets after running the numbers on a SFH and proudly putting in an offer on a house at full asking price with conventional financing; pre-approval letter in hand and a nice letter from my family included with the offer.

Money in the bag, know what I mean?

Well, my eyes have been opened up to the hotness of the market in Columbus. My full asking price offer was basically pushed aside (maybe it came in too quickly to when the house went on the market?) and I heard nothing from the seller for the next 24 hours... even after my offer expired with no accept or decline.

Finally, more than 24 hours after I submitted an offer I heard from my realtor that someone made a cash offer over asking on the house and would be closing quickly.

So my friends, how does the little fish win in a market like this? What could I have done to convince a seller to wait on my 30ish day closing when someone else is a cash buyer? I want to become a big fish / cash buyer, how do you recommend overcoming those cash buyers when I don't yet have the funds to do that myself?

To the likely BP member who gobbled up the house I was offering on, kudos to you my friend.

When little fish swim with the sharks, the sharks usually win.   But, why are you swimming in the ocean when you can be in a nice freshwater pond?

In a hot market, the MLS becomes a feeding frenzy. Don't try to compete there. Go where there is no competition. Try to find off-market deals. Ask lots of friends and family if they have a property. Try walking a neighborhood and send postcards to the unkempt houses. Look in craigslist for the fixer uppers. Talk to wholesalers.

I'm not buying SF right now (I'm 100% MF) but I'm amazed I still get handed good SF deal opportunities simply because I talk real estate with everyone.

Even in hot markets there are deals.  I went on 5 appointments meeting with off market seller leads this week in Columbus and ended up with 1 under contract, 2 in the works short term HOT followup (negotiating), 1 that will be long term followup and 1 that wanted market price so sending to cold drip campaign.  Theres deals out there, just have to find them.

Many people say "It takes money to make money".. but if we are talking real estate, I'd say it takes a lot of patience and persistence to make money.
Keep putting in offers and you'll find the right one. Wholesalers are a good source if you are willing to put some money into the property.

People don't like finance contingencies, sure. But people also don't like inspection contingencies. One way you can gain more leverage and beat a cash offer is bring an inspector with you to a showing. Have him look around the place, obviously it won't be as detailed as a full out inspection.. but with his word you could wave inspection and remedy period. Sellers would love that and if your working with a good lender you could potentially shave some days off the closing date as well.

@Chad B.

MLS is not your friend in hot markets. Try direct mail, door-knocking, creative marketing (good example was someone got a deal posting a flyer at their local grocery story), etc.

The more effort you put in, the more likely you are to get a deal. Targeting low hanging fruit that everyone else is targeting is madness :)

@Chad B. , Here is a Tip.

Grow your network with people who invest in "Non-performing" Notes in the OH area. You got to know everyone in the Tax/Liens sub-forum here in BP (https://www.biggerpockets.com/forums/70-tax-liens-...

When a property is foreclosed by any of these guys, you will be the first to buy from them. These properties wont even hit the market !

Originally posted by @Jeffrey Hotz :

Even in hot markets there are deals.  I went on 5 appointments meeting with off market seller leads this week in Columbus and ended up with 1 under contract, 2 in the works short term HOT followup (negotiating), 1 that will be long term followup and 1 that wanted market price so sending to cold drip campaign.  Theres deals out there, just have to find them.

 THAT'S FIRE JEFF HOTZ. 5 APPTS? I need to get on your marketing level right now. Amazing man. Love what you are doing. I guess I need to send more mail and make more calls to compete with you in columbus now! Good thing you are focusing on singles more than multi!

Originally posted by @Chad B. :

Yesterday I was feeling as good as it gets after running the numbers on a SFH and proudly putting in an offer on a house at full asking price with conventional financing; pre-approval letter in hand and a nice letter from my family included with the offer.

Money in the bag, know what I mean?

Well, my eyes have been opened up to the hotness of the market in Columbus. My full asking price offer was basically pushed aside (maybe it came in too quickly to when the house went on the market?) and I heard nothing from the seller for the next 24 hours... even after my offer expired with no accept or decline.

Finally, more than 24 hours after I submitted an offer I heard from my realtor that someone made a cash offer over asking on the house and would be closing quickly.

So my friends, how does the little fish win in a market like this? What could I have done to convince a seller to wait on my 30ish day closing when someone else is a cash buyer? I want to become a big fish / cash buyer, how do you recommend overcoming those cash buyers when I don't yet have the funds to do that myself?

To the likely BP member who gobbled up the house I was offering on, kudos to you my friend.

 I would say personally Grove City is absolutely on fire as well. One of THE best zips to invest in Columbus suburbs. over 1000 closings a year for single family homes. My mechanic bought a home here as well as one of my teacher friends. Homes are affordable and decent. By the way, THE most new construction of all zips in columbus in terms of number of houses sold. Several hundred in the last 3 years. Largest school district in Columbus as well. 

I had an investor who made an offer on a duplex in south western schools with 7 offers and we didn't get it. Offered over asking price no conditions to purchase (financed though). You have to be patient and you will find a great deal. Switch up your strategy, open up your criteria, try new areas. Finding ONE deal is easy. You can do it. Don't give up! Look at homes with Days on Market above 30. Any agent should be able to help you with this. More motivation in this list and less competition. Don't just look at new inventory. Find a house you can make yours. 

So my friends, how does the little fish win in a market like this? 

The only winning move is not to play. Sit tight and check back in a few years.

You could also go the turnkey route, or offer above asking to get something under contract and leverage appraisal and inspection contingencies to negotiate the price down. (That approach has worked for me in the past.)

I lived in Grove City - great area 20 minutes from downtown jobs and nice schools - and my brother-in-law recently sold his SFH there, put it on the market and had 8 over asking price offers in less than 24 hours. I guess I should have started gobbling up there a few years ago. Was hoping to start buying there now but maybe too late.

Originally posted by @Chad B. :
I heard nothing from the seller for the next 24 hours... even after my offer expired with no accept or decline.d.

When I list a house on MLS in a hot market like this I generally list it on Friday morning. When offers come in they're informed that the seller is out of town for the weekend and will review them on Monday. On Monday morning my agent lets everyone that made an offer (and any other agents that have expressed interest for the clients) know that we have multiple offers (because I always do at the price point I like to operate at) and the seller will be selecting the best offer at the end of the day. When I do this with houses around $200k I get 20 offers, most over asking and go with the strongest offer (considering both price and terms/financing) )

You won't find a great deal on MLS in a hot market. If you buy the house that means you were willing to pay more than 25+ other buyers. A seller or agent with half a brain isn't going to jump on the first offer that comes in just because it's first when the market is hot and there is a ton of interest in the property. They'll do what I do and buy time and wait to see what the other options are.

The only deals I've closed this year were with off market distressed properties with problems that I could solve for the seller. I haven't touched MLS in 2 years for a purchase.

As others said, off market deals are king right now. There's still MLS deals but you've gotta spend alot more time - Beating up overpriced sellers, looking for foreclosures/short sales and overbidding, etc. I'm still not buying in Columbus, and just outside, and some properties are really blowing my mind in how high they're selling over list. In some cases it's worse than 04-06 with pricing due to how little there is on the market.

There are deals out there, both listed properties and off market.  Nobody, including myself, is going to give away any secrets with how competitive the market is now in central Ohio.  Finding deals in this market is part not swimming where the sharks are and part taking more of a risk(because you're smarter and more diligent) than the rest of the sharks.  Figure that out and keep working hard, you'll find some deals.

@Chad B. I'm on a smaller scale than a lot of the posters on this thread. I have never purchased a house off the MLS save for the first house I ever bought. The advantage I have is I've learned to invest long distance and I do it myself no turnkey company. involved. I've bought an investment (can't say rentals anymore cause the last one is storage units). every 6 months for the past 2 years. All not listed on the MLS. The trick is I don't have to live there to find the deals or make them pay. Say what you want about out of state investing but it's kept me out of the shark tank and is making me a bigger fish every day. I too talk realestate with everyone. It's all networking. Whether I'm looking for a partner or another deal or financing. RR

@Chad B. , that was one property, nine days ago. Since then, have you put in offers for several properties, elsewhere?

No good getting hung up on individual misses. Once you've put your "best and final" foot forward, move to: next!

If you're in a market competing against owner-occupiers (or cashed-up investors) - time to look for a different market?

Cheer up. All the best...

@Chad B.

Best way to guarantee you get the house is to put the highest offer and have a strong case for being able to close the deal.  Make sure you have a good pre-approval from a LOCAL LENDER (If agents see stuff from Quicken Loans, Loan Depot, etc. they will often take a pass as these huge volume mortgage brokers are known for 60-day closings).  

Another strategy that you can employ when you offer is to use an "escalator clause".  What this means is your offer will go $X higher than their highest bid (with a maximum cap to make sure you don't pay over what you can reasonably afford).  

And example of this is: House being offered for sale at $200k.  You offer $205k (to let them know you're serious) and include a $5k escalator for any offer above yours with a cap at $225k.  If someone comes in $206k, your offer will automatically bump up to $211k.  Most people will take the extra $5k for 2 weeks of wait time.  $1k - $2k probably not gonna cut it, I would rather have the cash deal.

However, if you're trying to purchase a home as an investment, then all of this is absolute rubbish.  I had been trying to purchase a flip property for over a year in SoCal, even did my own marketing pieces and failed to purchase a single home.  I definitely messed up on 2 that could have been bought had I offered a little more (I was too conservative - learning curve).  But at the end of the day, I just couldn't make it happen here.  Fast forward a few months, I decided to go out of state and started to offer on duplexes in Cleveland area and already have two properties in escrow.  I targeted properties that needed a bit of work and had sat on the market for a while.  Maybe you can start looking at the turds in your area, particularly ones that have been sitting for awhile?  Best of luck, I hope you're able to find the right deal!

You've just learnt the hard way, the market is hot and sellers have choices. 

Really you can't play against a CASH buyer, because they don't have to wait on banks and appraisal, which is what usually kills deals. 

UNLESS You offer higher, which makes up for the additional time required to get the funding using financing and you waive the appraisal with a smart clause that you will fill in the gap with your own funds should the appraisal come in lower than your offering price. 

You could also waive the inspection, but if this is not your first investment I do not recommend this until your a seasoned investor.