Multiple Offers Declined: 5% in-comparison 20% Down

Buying & Selling Real Estate
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Multiple Offers Declined: 5% in-comparison 20% Down

Markus Jackson
Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes

Hello BP Family, my partner and I have been aggressively making an attempt to purchase an investment property in NJ, Jersey City area.

Our focus is/was a 2-3 multi family home that we plan to house hack for 1 year.

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We placed multiple offers either at ask price or above ask price and even removed some contingency’s to make our offer more attractive.

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Problem: We often have to compete with multiple offers that have 20 percent down, and the seller believes that we cannot close which is far from the truth.

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Are there any solutions or tips for this issue?

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Our position: 5% down property’s around 600k+ in aggressive market.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

Go through a pre underwriting process so you can close in say 10 days or so. Waive inspection. Use an aggressive escalation clause. Use an agent with good relationships in the market place.

[email protected]301-893-4635Podcast Guest on Show #192
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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Go through a pre underwriting process so you can close in say 10 days or so. Waive inspection. Use an aggressive escalation clause. Use an agent with good relationships in the market place.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    2Reply
  • Allan Szlafrok
    Rental Property Investor · Long Island, NY · Member since 2015 · 490 posts · 301 votes
    7y

    @Markus Jackson What part of the city are you looking in? I’m an investor in the area. And you will definitely want a pre approval as a seller I won’t consider offers without one especially in a sellers market like JC.

    0Reply
  • Michael Baker
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 55 posts · 21 votes
    7y

    @Markus Jackson where in jersey city are you looking?

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    In addition to providing a Preapproval, have your lender do/provide the Desk Underwriting (DU), provide that report and show your POF for the down payment/closing costs, hopefully showing reserves well above that needed.

    2Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Michael Baker

    JOURNAL SQUARE,

    And surrounding

    Bergan, West Bergan

    The Heights

    Marion

    0Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Allan Szlafrok

    Journal Square, Bergen, West Bergen, The Heights. Yes we are Pre approved

    0Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    My advice is, don't buy into a market with those characteristics.

    2Reply
  • Michael Baker
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 55 posts · 21 votes
    7y

    @Markus Jackson have you been bidding on new listings or houses that have been on for a while. I’m

    Thinking if you have a lot of multiple offer situations,, going after something that’s been sitting a while or needs rehab is a better choice. My wife and I were outbid 20x before getting a home in the Greenville section. We ended up buying a gut job that wasn’t everybody’s cup of tea.

    0Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Markus Jackson in addition, we removed inspection Contingency. We had our lender email the seller and stated DTI

    0Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Michael Baker How did the Gut renovation turn out? We are considering buying a SFR and converting into a duplex with a renovation loan. Or possibly just buying a house that needs some work in a desired area.

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    I’m and actively doing research on renovation Loans and understanding more about our possibilities and limitations.

    I am expanding my education on financing a renovation to rent out && hopefully cash flow.

    0Reply
  • Allan Szlafrok
    Rental Property Investor · Long Island, NY · Member since 2015 · 490 posts · 301 votes
    7y

    @Markus Jackson Good choices. there are still some good deals around especially for an owner occupant like you. I picked up a huge 2 fam in West Bergen Right by the light rail a couple months ago thats going to make a lot of sense for a house hacker. Appraisals should be be an issue for you relaitve ti purchase price as all of my appraisals in the area have been surprisingly high. maybe consider a house that needs work a lot of times only investors will be interested and they typically come in at lower offers.I also know some great brokers in the area if you are interested.

    0Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Allan Szlafrok that’s great Allan I am in the process of building a great team there while acquiring a property that needs some work. Ideally I would like to use a 203k or form of renovation Loan to fund this rehab.

    0Reply
  • Tanner Marsey
    Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
    7y

    It's all about ability to close. For every offer accepted that ends up not working out that costs the seller another mortgage payment. 20% or more down is a pretty good indicator the buyer is serious and has the ability to close. You can do all the other stuff in regards to pre approval, under writing, POF, etc. but the guy with 20% down probably has that, too. I would suggest getting a bigger down payment, offering above asking right off the bat, escalation clauses or getting creative. Look at homes that have been listed for a while, off market deals, different market, wait for the busy summer season to end, etc...

    1Reply
  • Jabari Long
    Real Estate Broker · Detroit, MI · Member since 2014 · 384 posts · 149 votes
    7y

    @Markus Jackson Keep making offers. 20% down will always be more attractive than 5% to any seller and their agent. Has your loan office spoken to the listing agents to reiterate the strength of your file? Also you can offer free occupancy or include an appraisal guarantee to sweeten your offer.

    0Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Tanner Marsey Good stuff Tanner thank you, working on saving for a larger downpayment the property’s were looking at are 600k+ so that 20% down was rather a lot for us. But we have to keep pushing!

    0Reply
  • Markus Jackson
    OP
    Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Jabari Long Thank you Jabari this is also very helpful !

    0Reply
  • Diana Tian
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
    7y

    @Marcus Maloney I also think your offer will be more competitive for a house that needs renovation. 

    For FHA loans, the appraisal process is more strict than traditional loans. Even though you could waive the inspection, the appraiser may still want a few things on the inspection report to be fixed before closing. At that point, sellers would have to do the repairs if they want the deal to go through.


    But if you go with 203k loan, the appraiser would factor in the work you wanted to get done and provide you an after repairing value. Any required repairing could be taken care of by you (rather than the seller) after closing.  

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