Investor · Capitola, CA · Member since 2020 · 52 posts · 19 votes
Hello All,
I found a SFH that fits the formula I have for buying property and the asking price is good. Unfortunately since it's in a hot market, there are already multiple offers. I dont want to dramatically over pay and win, or underpay and lose. Last time I was in one I know I overpaid so I dont want avoid that. I am hoping you'll might know some rules of thumbs or guidelines for how much over asking price you are willing to pay?
Right now there are 4 offers and they close offers and pick tomorrow at noon. Thanks!
I found a SFH that fits the formula I have for buying property and the asking price is good. Unfortunately since it's in a hot market, there are already multiple offers. I dont want to dramatically over pay and win, or underpay and lose. Last time I was in one I know I overpaid so I dont want avoid that. I am hoping you'll might know some rules of thumbs or guidelines for how much over asking price you are willing to pay?
Right now there are 4 offers and they close offers and pick tomorrow at noon. Thanks!
Neil
You're realtor should guide you, but: Escalation Clause, Waive Inspection, remove appraisal contingency, provide the best possible financing/waive mortgage contingency, Make Deposit nonrefundable, higher than average deposit, as few contingencies as possible, quick closing, and a few other things, but basically just think about everything that reduces risk to the seller and put those in your agreement. It's not always just the highest price.
Investor · Capitola, CA · Member since 2020 · 52 posts · 19 votes
5y
Here are the details of my deal in Austin to see if bidding made sense.
"Recently remodeled home + guest apartment on oversized corner cul-de-sac lot! In the main home, you'll find 3 beds/2 full baths (approx. 1655 sf). Guest apartment at back of house was built in 2018, adding the kitchen + living room, bedroom + full bath (total apartment approx. 475 SF)." Since its a corner lot the guest house has it's own entrance on the other street.
Price $395,000 (priced a bit low prob to start bidding war). 25% down for lowest conventional financing rate. Rents are estimated to be about 2600 (1700 main house + 900 guest unit) and after expenses, including PM, it will be about $500 net.
We bid $446K and they wanted to rent it back, so we offered a low rate of $30 a day for that and flexibility if they needed to extend. We also waived the appreciation protection with the higher price, so a risk of me needing to pay more cash out to cover any difference in value. The numbers still worked at 446 for me, so i made my bid and won. Through not the highest bid, we offered the best overall value for them.
Austin is appreciating market with many tech companies to provide high paying jobs and growth. Also, a university and mild weather. The goal is appreciation with a protective positive cash flow.
It just had a clean inspection and the deal is moving forward and it feels nice to be in the game again, Thanks
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
5y
@Neil PolehnWe all have a return on our time and our money that we are looking for to make this business worth it for us. Based on that it should be fairly easy for you to come up with what your maximum offer is all things considered.
How should you bid? I like to keep things simple. If someone offers $1 more then you and gets the property because of it, are you ok with that? If not, raise your offer and if so roll with that offer. I’ve lost properties over $500-$700 and its a terrible feeling when you know you would have went higher.
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
5y
@Neil Polehn run your numbers and stick to your maximum price! Don’t feel you need to stretch just because there are multiple offers. There will always be other properties available
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
5y
@Neil Polehn
Keep your emotions out of it!
It does not matter what someone else is willing to pay and it does not matter what they’re asking, it only matters what number works for you as the investor/buyer.
As a seller I love when people get emotional about a property because that means I’m going to have a great payday, but I leave my emotions at home when I’m buying.
Sorry that it’s not so profound,But that’s the best advice I can give.