I want this property, how do I get it?

Buying & Selling Real Estate
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I want this property, how do I get it?

Brian Zaug
Lagrangeville, NY · Member since 2017 · 144 posts · 218 votes

So this property popped up on the MLS the other day and my agent and I went to see it yesterday. I knew it was a sweet deal as soon as we walked through it so we put in a cash offer for full asking price (135K). So few hours later, my agent calls me and tells me the house has 15 showings scheduled this weekend and the seller will make his/her decision Monday. ugh.

Well, I really want this property so my question for you all,  is there anything I can do to improve my chances at this point? Any tips or tricks?   I was thinking of upping my offer by 2K and hoping no one else goes above asking price..The numbers still are great at this price.  Do cash buyers typically go above asking price?   Thanks for any help with this..

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y

Brian you have a very simple answer here 

its called an  " Escalator Clause."  which is quite common in most HOT markets especially on the west coast were multiple offers were the norm.

I bought a lot a year ago in Charleston and used it and got the deal.. none of the relators had ever heard of it before. 

so in that market it was not common knowledge of course there will be realtors that know what it is. 

but this does not pigeon hole you to one highest and best.. 

and you don't spend more money than you have to get the deal..  

On this particular block this lot was on there was only 3 vacant lots I had already bought the other two and built the homes out.. so I really wanted the last lot and I got it.   using this clause the other folks interested in it just did the ole highest and best and they lost out.

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  • Mike Dorneman
    Rental Property Investor · Drums, PA · Member since 2017 · 345 posts · 365 votes
    7y
    @Brian Zaug Usually when a property is so “hot” the seller will send out a “best & last” request. So you’ll likely have 1 chance this week to send in your highest offer. You do have leverage since you’re cash. If you’re not dead set on a specific closing date, you can write in that the seller can select duration “allowing for title search”. That has helped me beat out some other investors in the past. Know your highest number that still makes this a great deal and stick to it. Best of luck!!
    1Reply
  • Brandon Frulla
    Real Estate Agent · Omaha, NE · Member since 2018 · 83 posts · 51 votes
    7y
    @Brian Zaug could see if they’re interested in a sizable cash down payment + seller financing that would put them over their asking price. You’d pay more, but at least you’d secure the deal
    1Reply
  • Kevin Dong
    Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes
    7y

    @Brian Zaug typically. Giving the best term if possible if you can't make a offer too over price. And to answer your question. List price doesn't really matter, investor have their own set of number. And in the MLS in this hot market. If there is a great deal pop up. Get ready for a bidding war. If it ever gets to the points. Seller asked for the best and final. You have to come up with the best price you offer that you won't regret paying too much if you get the deal or you won't regret paying too little if u lost the deal. Having your own agent is not really a smart choice especially in this situation. I always call the listing agent. People are in the business to make money. So give that listing agent double commission get u the higher chance to win the deal. So Now since there is one thing you can do. Have your agent called. Asked them what kind of price are they looking for in order to lock down the deal before other people see it ? Or waive inspection put closing date to as soon as the title come back with maybe 100k escrow to blow their and tell them how serious you are

    2Reply
  • Brian Zaug
    OP
    Lagrangeville, NY · Member since 2017 · 144 posts · 218 votes
    7y

    @Brandon Frulla I asked if they'd do seller financing and agent said seller is not interested because he's dead.  

    4Reply
  • Brian Zaug
    OP
    Lagrangeville, NY · Member since 2017 · 144 posts · 218 votes
    7y

    @Kevin Dong I think calling the listing agent is a great idea but my agent found this property and got is in it immediately.  I'm ok with a bidding war as I know my top number.  I was just pondering raising my offer a bit more ($2500) than asking price in hopes to avoid a bidding war....I waived inspection and said we could close as soon as title search is finished....

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    Brian you have a very simple answer here 

    its called an  " Escalator Clause."  which is quite common in most HOT markets especially on the west coast were multiple offers were the norm.

    I bought a lot a year ago in Charleston and used it and got the deal.. none of the relators had ever heard of it before. 

    so in that market it was not common knowledge of course there will be realtors that know what it is. 

    but this does not pigeon hole you to one highest and best.. 

    and you don't spend more money than you have to get the deal..  

    On this particular block this lot was on there was only 3 vacant lots I had already bought the other two and built the homes out.. so I really wanted the last lot and I got it.   using this clause the other folks interested in it just did the ole highest and best and they lost out.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    9Reply
  • David H.
    Madisonville, LA · Member since 2018 · 125 posts · 71 votes
    7y
    Seems like a no brainer to raise your price to me. If the deal is that good is it worth even thinking about over 2500?
    0Reply
  • John Semanchuk
    Charleston, SC · Member since 2013 · 380 posts · 157 votes
    7y

    Plus 1 to Jay Hinrichs' idea.   If you get into a bidding war and assuming the seller will accept an escalation clause, that's the route I'd go.  The other ideas, sweetening your offer with a flexible closing date, offering more to simply lock the deal before it turns into multiple offer, etc are also good. 

    1Reply
  • Brad Braun
    Realtor · Charleston, SC · Member since 2018 · 84 posts · 51 votes
    7y
    @Brian Zaug Firstly, I would have given the seller about 4 hours to decide on my list price offer. Once they contacted me with a "best and highest" I would have added an addendum that states my client will pay $100 over the best and highest offer up to 1% over asking.. Something like that. To me its really crappy that you position yourself to win a home and the seller wants to keep shopping. Unfortunately, its part of the game. The seller is risking a full price offer walking away from the offer hoping to make an extra 1k or two.
    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Brad Braun:
    @Brian Zaug Firstly, I would have given the seller about 4 hours to decide on my list price offer. Once they contacted me with a "best and highest" I would have added an addendum that states my client will pay $100 over the best and highest offer up to 1% over asking.. Something like that. To me its really crappy that you position yourself to win a home and the seller wants to keep shopping. Unfortunately, its part of the game. The seller is risking a full price offer walking away from the offer hoping to make an extra 1k or two.

     Brad has given you the escalator clause .. although for me I use 1000 dollar not 100  I want my deal to stand out.. 

    and in the case of the lot I really wanted in Charleston I used 5k. 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Account Closed
    Rental Property Investor · Seattle, WA · Member since 2018 · 129 posts · 163 votes
    7y
    @Brian Zaug Remove any contingencies (inspection) or buy “as is”. This is risky, and you want to know what you are buying. Not a big deal if it’s turn key. Also offer fast close - 30 day. Lastly, any money in escrow - would be forfeited to seller immediately. All of these things make the offer even stronger than 2000$ above asking.
    1Reply
  • Kyle McKnett
    Real Estate Agent · West Chester, PA · Member since 2018 · 63 posts · 46 votes
    7y
    @Brian Zaug Jay is right, throw in an escalation clause. You shouldn’t have a problem with appraisals or anything since you’re paying cash. It throws a red flag sometimes for banks if they see that addendum. You can lean on your agent here a little as well. See if they can find out what is most important to the sellers and act on it. Even offering to pay the U&O inspection fee for them can help(should be around $100).
    0Reply
  • Kyle McKnett
    Real Estate Agent · West Chester, PA · Member since 2018 · 63 posts · 46 votes
    7y
    Removing inspection contingencies would definitely help as well. Really depends on how comfortable you are doing that. I’m not a fan of waiving inspections for clients but it is sometimes required on a hot property or in a hot market.
    0Reply
  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
    7y
    @Brad Braun Not sure how things are in your market but here in Minnesota a full price cash offer often does not get you the deal. I have made many of those over the past two years that were not accepted because of multiple offers.
    0Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    I would for sure offer the most you are willing to pay.  While i think escalator clauses sound great, an uninformed seller may pass do to the “complexity” 

    Also, it never hurts to write the seller a letter. 

    0Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    Put in your best and highest offer. If someone else pays more, so be it.

    2Reply
  • Brad Braun
    Realtor · Charleston, SC · Member since 2018 · 84 posts · 51 votes
    7y
    Originally posted by @Mark S.:
    @Brad Braun Not sure how things are in your market but here in Minnesota a full price cash offer often does not get you the deal. I have made many of those over the past two years that were not accepted because of multiple offers.
    0Reply
  • Brad Braun
    Realtor · Charleston, SC · Member since 2018 · 84 posts · 51 votes
    7y

    We are in one of the hottest markets in the US. Anything under 250k will typically have 10+ competing offers in the first day of the listing. This doesnt deter me from offering what the home is worth or at least advising the potential buyer of what its worth. We always go in to win, we typically use an escalation clause when offering, but not always. Theres been many times Ive lost bids to competition. What I WONT do is advise my clients to over bid what the home is worth with the hope it wont appraise. Thats a cheap tactic that is flying around town on competitive listings. Of course I'll offer what they tell me to offer, but Id never advise soneone overpay for a home unless they are set on winning it at all costs.

    0Reply
  • Dan Tyson
    Member since 2018 · 4 posts · 2 votes
    7y
    @Brian Zaug I like to use an escalation clause for this, keeps you from losing the property over a few 1,000. You can also request a response deadline within 24 hours or it's off the table. But it sounds slightly under market value to begin with so this may not be a threat knowing another offer is sure to come. I'd stick to escalation!
    1Reply
  • John Semanchuk
    Charleston, SC · Member since 2013 · 380 posts · 157 votes
    7y

    For the escalation clause, the "maximum price" should be whatever you're willing to pay for the house to begin with, no more and no less.   It shouldn't have much to do with the ask price which might be far off from actual value.   How much to top the next highest competing bid by depends on how the buyer wants to play that game and how much the property is worth to begin with.   $100 wouldn't convince many sellers to choose one bid over another in my view.   I'd use $1,000 minimum in most cases.  Higher on higher priced properties.

    Not all sellers will accept escalation clauses so you should ask first before submitting.  I think it's a bad idea for the seller most of the time.   I had a house listed earlier this year that we had multiple offers on.  All of the offers were substantially below ask price until the 11th hour when an offer came in $5,000 above ask.   If that offer were an escalation clause and the sellers had accepted it, they would have ended up selling the house for considerably less than they did.   With an escalation clause, all the seller stands to gain is the extra $1000 or whatever the amount offered over the next highest bid is, but they stand to lose much more with uneven bidding results.   

    The buyer uses the escalation clause to try to save some on their final price and it makes sense for them.  Not so much for the seller.

    0Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Brian Zaug:

    So this property popped up on the MLS the other day and my agent and I went to see it yesterday. I knew it was a sweet deal as soon as we walked through it so we put in a cash offer for full asking price (135K). So few hours later, my agent calls me and tells me the house has 15 showings scheduled this weekend and the seller will make his/her decision Monday. ugh.

    Well, I really want this property so my question for you all,  is there anything I can do to improve my chances at this point? Any tips or tricks?   I was thinking of upping my offer by 2K and hoping no one else goes above asking price..The numbers still are great at this price.  Do cash buyers typically go above asking price?   Thanks for any help with this..

     I face this all the time. I go in strong with my terms. Can you close cash? Go $50k hard day 1. Close in 7 days. If you can’t close cash and it’s that competitive that leaves being the highest price and hoping a cash buyer (like me) doesn’t snake it due to better terms. 

    If you don’t have the cash, and want to risk, do a “cash like” offer. Say, $20k hard day 1. Tell them you need 30-40 days to close BUT no financing contingency.  Risky but it helps get the deal without having. To be the very highest guy (which still won’t work with some sellers) 

    1Reply
  • Chad Eisenhart
    Rental Property Investor · York PA · Member since 2018 · 18 posts · 9 votes
    7y

    I would include a large down payment, like $20,000-$25,000 or more with the offer for more than the asking price.

    What do you have to loose with the higher downpayment, they are not cashing the check. Assuming you have the funds actually in the account.

    Also offer to show proof of funds in the account to give the seller total assurance you are a safe choice.

    I encountered the same situation before. The property was listed for $33,000 and my offer included a check for $10,000 down an offer higher than asking price. It worked. @Brian Zaug

    1Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    7y

    When my daughter sold hers in August 2018, the agents had a 1st & best 3 days after their first showing. It went for asking (CASH, no inspection) plus $13,000 that the buyer had preplanned as his WIFE wanted it. This home literally sold for 2x what we paid in 2010 & rehab was about $25k.

    0Reply
  • Anna French
    Rental Property Investor · Asheville, NC · Member since 2018 · 1 post · 0 votes
    7y
    @John Semanchuk If the seller accepts the Escalation Clause of $1000+ over highest offer, how does that equal a loss to them?
    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    can you give us an idea just how hot this property really is?

    0Reply
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