Hi BP Fam! Have a question for any experienced investors out there. How do you approach a multiple bid scenario in a competitive market like the SF Bay Area? I've never encountered such low inventory in my life! I can literally count on 2 hands the # of houses for sale in a given city. My husband and I are looking for a new primary home, while adding our current house as another rental.
Just this past weekend, we placed a bid on a fixer upper with termites, extensive water damage, dry rot, you name it. Current owner appears to be a pack rat. The house is not worth its $1.2M price tag, but we went in anyway at above asking. We're going with 20% down payment, 30-yr. fixed financing, and other niceties thrown in. Then low and behold, our agent calls and says someone placed an all-cash offer for $1.3M w/ no contingencies.... My jaw dropped. There are also 2 other bidders, one of whom offered 25% down payment, but rest of offer was similar to ours.
If this house was in decent condition, I wouldn't mind dropping contingencies, but in its current condition, I just can't logically remove inspection contingency. We're willing to increase our bid if we receive a counter, but we just feel this person can just as easily throw-in another $100k+ in cash....
Anyone have any good stories of how they stuck it to an all-cash buyer? :)
The days of just using the MLS and getting a realtor to find value in most markets are long gone.
You need a distressed owner or a good wholesaler or a different market.
I remember the frenzy of 07' being like you decribed... right before nobody could sell anything for years and values crashed. Not saying that will happen again, but sounds the same.
Not being able to compete with a cash buyer for a 1.3 million dollar termited and rotted POS is doing you a favor IMO. Thank your lucky stars and find another way to source your next property.
You're right @Steve Vaughan ... thanks for waking me up. I needed that. We'll look elsewhere to put our hard-earned money. Thanks so much!
Interest rate today is 4.5% 30 years. It will go up 3-4 times this year ditto in 2019.
$2M home mortgage is fairly common until low employment turns to no hiring. The days the angel investor realize they are betting on non-profitable companies in SFBA are not too far.
Inventory is low and prices are appreciating all over the bay area. The best way to not compete with cash offers is to find a home that does not need so much work. I am seeing fewer cash offers on homes that are move in ready so then it is just a question of price. I still believe the market in the Bay Area is a great investment, if you are in it for the long run. Sure, it may correct at some point, but over time this area has too many people, too many BIG companies, and too much going for it to become a ghost town. You just have to be able to wait it out if the market drops.
@Marcy Moyer - Thank you for your sound advice! I can tell by your post that you're a very experienced realtor. I will keep your tip in mind as we continue our search.
Thanks @Ana Marie B.
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