How to effectively compete against other investors

23 Replies

Make all cash offers with no contingencies, 10% EM and two week closing.  Make LOTS of offers.

Or, simply pay too much.  Its easy to get accepted contracts if you offer too much.

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@Jon Holdman pretty much describes how to win in my market as well. If you are well capitalized, then you may consider moving up in price point. I have found in my area that the hedge funds only buy homes up to a certain level. Everyone and their mom is bidding on homes <= $150k ARV in my areas and I routinely see homes selling for 95% ARV when you factor in repairs.

By landing I mean actually getting the property under contract.. All our offer are cash, 10% em, the thing is we keep ending up in those dreaded multiple counter offer situations...sometimes it seems like they're beating is by as little as $100, which leads me to believe they are getting extra info from the listing agent..

Excellent advice so far. I still get a few out of MLS, its not as heated as it was six months ago around here. Jon is spot on (of course)

When that happened to me I did two things, I started looking in other markets (one went well, one didn't), and I started buying things other people didn't want.  There's way less competition in 3/1, 2/1, 1/1 and $500k and up.  You just aren't going to win going up against hedge funds.  I also started marketing more to individuals, but that's a low percentage ball game around here, most people in distress dont have any equity and I dont like to play with the creative stuff as much as I used to.

Bottom line is you cant control the competition, you can only control your strategy. If your competition is buying dumb, you really shouldnt try to out dumb them! MLS has always been hyper competitive, most of my success there has been from buying when the listing was messed up somehow- got one that was 1400 ft when taxes said 1100 and everyone valued it wrong. Bought 3 bedrooms that were listed as 2 too. I was making about 40 offers a month last year and didn't get any- my agent got laughed at more than once, too. My offers were at 70% less repairs and they were going for way more than that. I'd get some making that many offers now, it seems the investor market is slowing some around here. Probably the big guys slowing down more than anything.

@Isaac Figueroa  It sounds like to me you should find another agent/broker or these hedges have all of them in their back pocket one!! That or the agent is buying them. There is no way $100 should consistently beat you out of getting houses. Anyone could tell you to overpay for houses and you will get them but to me that's ridiculous!!! 

It all boils down to money right??? YES IT DOES!!!  Fax every brokerage in town that you are paying a $1000 bonus on top of the commission on deals you buy and I bet your offers get accepted at a cheaper price and faster, well enough to make up the $1000!!!! You will be the new inside man!!!!

There's more than one way to skin a cat!!!!!!!!!!

All cash, quick close & no contingiemcies. 

If you want the cheapest prices you need to act quick and aggressive.

Originally posted by @Jared Kemper:

@Isaac Figueroa  It sounds like to me you should find another agent/broker or these hedges have all of them in their back pocket one!! That or the agent is buying them. There is no way $100 should consistently beat you out of getting houses. Anyone could tell you to overpay for houses and you will get them but to me that's ridiculous!!! 

It all boils down to money right??? YES IT DOES!!!  Fax every brokerage in town that you are paying a $1000 bonus on top of the commission on deals you buy and I bet your offers get accepted at a cheaper price and faster, well enough to make up the $1000!!!! You will be the new inside man!!!!

There's more than one way to skin a cat!!!!!!!!!!

Not practical.

This will only work until someone makes a higher cash offer that is declined and informs either the asset managers, owners or RE commission.

@James Wise   Yes I meant all cash etc and the typical tactics as well but there is nothing wrong at all with offering $1000 bonus to buy properties just as sellers offer an extra $1000 selling bonus commission if sold before a certain date. If its lawful for a selling agent there should be no difference for a buyers agent. It happens all over the country every day so what's to report?? Lots of people make offers this way. I bet he gets more deals!!  

Originally posted by @Jared Kemper:

@James Wise  Yes I meant all cash etc and the typical tactics as well but there is nothing wrong at all with offering $1000 bonus to buy properties just as sellers offer an extra $1000 selling bonus commission if sold before a certain date. If its lawful for a selling agent there should be no difference for a buyers agent. It happens all over the country every day so what's to report?? Lots of people make offers this way. I bet he gets more deals!!  

 your Original advise implies that the listing agent would be motivated to submit your offer and not submit others (because agent makes an extra 1k) so the owner would accept your offer.

Am I misinterpreting?

If another buyer put in a 60k offer and later saw a 57k offer was accepted & then informed owner about his offer the owner would be pretty upset about not getting that 60k offer.

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@James Wise I see how you might read it that way but that's not what I meant. If you offer the agents an incentive to bring you more deals they will and they will be more motivated to rush to the office and put your offer through instead of letting it set around before submitting it to the bank later that day or the next. If they submit it sooner, get on the phone and work it harder then your chances of an accepted offer before the competition is greater plus you will know about deals before they hit the MLS most likely. The agents will work harder to get the deal done and fast to get that bonus!!!

If he is missing out on deals by $100 then someone is getting a hint on what to offer or something so this is the only legit suggestion I could offer b/c someone is getting put on the back burner. It really sounds like things are crooked in his situation so this is the only creative thing I have heard works.

Another idea: He might also start structuring his offers with an extra $125 to the price so he trumps the competitions sneaky tactics. For example offer $100,125 just in case someone else if offering $100,100 to beat him out of deals. This way his offer is $25 higher.

Originally posted by @Jared Kemper:

@James Wise I see how you might read it that way but that's not what I meant. If you offer the agents an incentive to bring you more deals they will and they will be more motivated to rush to the office and put your offer through instead of letting it set around before submitting it to the bank later that day or the next. If they submit it sooner, get on the phone and work it harder then your chances of an accepted offer before the competition is greater plus you will know about deals before they hit the MLS most likely. The agents will work harder to get the deal done and fast to get that bonus!!!

If he is missing out on deals by $100 then someone is getting a hint on what to offer or something so this is the only legit suggestion I could offer b/c someone is getting put on the back burner. It really sounds like things are crooked in his situation so this is the only creative thing I have heard works.

Another idea: He might also start structuring his offers with an extra $125 to the price so he trumps the competitions sneaky tactics. For example offer $100,125 just in case someone else if offering $100,100 to beat him out of deals. This way his offer is $25 higher.

 Your looking to deep into this. 

There is no conspiracy theory. The majority of the good deals on the MLS are the Fannie Mae & HUD properties. All of which have the owner occupied non profit bidding period of 15-21 days.

Buyer agent waits the 21 day MLS exposure and then submits an offer its still going to take days before the asset manager reviews and makes a decision.

Make strong all cash no contingency offers as soon as you can. It's that simple. If you loose the property it's because someone made a stronger offer. 

@Isaac Figueroa I went through this same thing when I first got started. I was making offers, but couldn't get anything bought because other investors were offers more than I could. At that time a little light went on in my head - If I wanted to have success at this, I needed a competitive advantage (or multiple advantages). And I needed to be able and willing to do what others were not or could not do. Part of that solution for me was to become a Realtor myself. This give me better and faster access and also saved me money on both ends. And like others have said, I started making very strong cash offers with no contingencies, proof of funds, and larger than normal em checks. After a few years of hunting and searching the MLS, I also learned so methods to find "hidden MLS deals" (that's what I call them anyway). These are deals that most investors and Realtors either don't know about, or they don't pursue. On example is a 2-bed house that can be converted to a 3-bed.

@James Wise Reading too deep?? We are not discussing Fannie Mae & HUD properties specifically. Sorry you may not understand.

@Isaac Figueroa    POSTED: Does anyone here have any general info about the best way to compete against other investors in regards to landing houses on the  for rehabbing and selling?

I offered a solution that I have heard works in this scenario. It is not illegal and the discussion wasn't Fanny Mae & HUD specific either. Isaac stated houses on the MLS, not specific to Fannie Mae & HUD properties, which may be the only good deals in your area but maybe not the same for his area. Regular people list fixer uppers too or properties that could just use updated and landscaped to make some $$ on the property. In these areas where the competition is fierce, properties rapidly appreciate, and selling for top dollar this is common.

The question was asking for solutions and that's what I have attempted to offer here besides "offer more $ and if you loose you loose", pretty sure he already knows that thus he posted this question looking for ideas.

Isaac: As I stated before adding $125 to your offers on properties (OF ALL ORIGIN) will help you land more deals period. Here in the real world where I live agents and brokers alike will pass deals under the table to the guy who is paying them a bonus and that's a fact. It may not be ethical for agents to do it but that's what happens all over the country every day. I have seen deals that popped on the MLS to only be gone in minutes that were NEVER even advertised before and it didn't matter who was selling them either. They shopped it to their investors, sold it before they even listed it and then changed the listing it as sold right after, happens every day. So, the only way to insure that deals get passed to you is to offer a $1000 bonus to the agent if you buy a deal. Some of the others wont even know about the deals and if they do make an offer then I bet yours gets an earlier date or earlier time before it gets turned in than the other guys. Its a sad truth that things like this happen but they do so I offered you a way to offset that.

Hope this clarification helps!!!!

Agree with @Darrell Shepherd - try to find a niche or two that's less competitive. In my market I can rarely buy 3 bedrooms off the MLS - i'm in a military town with lots of landlords willing to pay a premium for 3 bedrooms, which makes it impossible for a rehabber to compete. BUT, I can buy 2 bedrooms off the MLS, because there's a lot less landlord competition for those.

Don't get caught in bidding wars; often, the selling agent will ask for highest and best, and you're sometimes only bidding against yourself. We usually waive inspections on our condo offers, after my contractor already goes through the place and knows 90% of what it needs. That's reflected in our offers. Same as others have said too, with a higher EM payment and all cash, although we recently went under contract with a financing contingency.

And sometimes other accepted offers fall through for whatever reason. If your offer was strong, you may get a call back.

Originally posted by @James Wise :
Originally posted by @Jared Kemper:

@James Wise

There is no conspiracy theory. The majority of the good deals on the MLS are the Fannie Mae & HUD properties. All of which have the owner occupied non profit bidding period of 15-21 days.

 James, can you elaborate on the "owner occupied non profit bidding period of 15-21 days"

I am not familiar with this and it sounds important.

Thanks.