How to get a deal in a bidding world
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
10yYou need to locate off market properties that are not exposed to the market where you are dealing with the seller one on one.
Might have to spend money on mailers to achieve that. Also call around lots of brokers and agents looking for off market properties. Show proof of funds and that you are serious and will be a slam dunk for the broker/agent.
11 Replies
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
You need to locate off market properties that are not exposed to the market where you are dealing with the seller one on one.
Might have to spend money on mailers to achieve that. Also call around lots of brokers and agents looking for off market properties. Show proof of funds and that you are serious and will be a slam dunk for the broker/agent.
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes10y
If you do choose to put a bid on a home in the open market that is very competitive, run your numbers and determine the price you would pay, put in that bid as your firm and final offer ... if they take it, great ... if they don't walk. Not saying you will get a deal this way, but at least you won't get worked up in the bidding war and over pay.
I agree with Joel that going off market may be your best bet to get a deal, though financing such a deal (as opposed to paying all cash) may prove challenging. When you call around asking brokers and agents for off market deals, make sure they know that you will put the offer in through them ... you want a deal and they want to double end their pocket listings, give them what they want to get what you want.
Either way, it is likely a numbers game ... the more you market/search, the more properties you find to offer on, the more offers you make, the more deals you get. Just be sure to stay true to your numbers and don't give up. Depending on if you plan to buy-and-hold or flip will determine how you run your numbers (cash flow or value add) ... I like to run both and have both sets of numbers work (one for plan A and one for plan B), combine them both in an IRR analysis and tweak parameters to optimize the strategy.
- Portsmouth, VA · Member since 2015 · 330 posts · 191 votes10y
I found a great source to find off market deals. I started calling handyman businesses first to get quotes for work I needed to get done. Then it dawned on me to start asking them for possible people that may be ready to sell thier homes. Guess what? I found a good deal in Portsmouth , Virginia where I have recently moved. I just bought a house that was going to be in probate from a family member that lived out of town. They had called this handyman to get some work down. I went to the house with him one morning and he introduced me to the family member. I looked over the house and made them an offer that got accepted.
The house was way out of date with old appliances, old bathroom with the 5 gallon toilet, broken garage door, bad smelly carpeting, interior with dark color paint, 1400 square foot house, 3 bedrooms, one bath, etc.. I paid $44,000 and the tax assessment is $156,000. The house next door, a 2 story, recently renovated, sold for $145,000. The house 7 doors in the opposite direction, also a 2 story and rehabbed, sold in April for $148,000.
I expect to put in $20,000 in renovations plus another $3,000 clearing the lot and landscaping. The property hasn't been mowed in over a year with lots of overgrowth. Basically the house needs painting, flooring and simple updated of the bath and kitchen.
- 10yLian ShiAberdeen, MD · Member since 2015 · 78 posts · 9 votesOP
Hi Mike, that 's a great deal and thank you very much for sharing it. It is a very good strategy and we will definitely practice it. Good luck with the renovation and please keep us posted.
Originally posted by @Mike Sedlacek:
I found a great source to find off market deals. I started calling handyman businesses first to get quotes for work I needed to get done. Then it dawned on me to start asking them for possible people that may be ready to sell thier homes. Guess what? I found a good deal in Portsmouth , Virginia where I have recently moved. I just bought a house that was going to be in probate from a family member that lived out of town. They had called this handyman to get some work down. I went to the house with him one morning and he introduced me to the family member. I looked over the house and made them an offer that got accepted.
The house was way out of date with old appliances, old bathroom with the 5 gallon toilet, broken garage door, bad smelly carpeting, interior with dark color paint, 1400 square foot house, 3 bedrooms, one bath, etc.. I paid $44,000 and the tax assessment is $156,000. The house next door, a 2 story, recently renovated, sold for $145,000. The house 7 doors in the opposite direction, also a 2 story and rehabbed, sold in April for $148,000.
I expect to put in $20,000 in renovations plus another $3,000 clearing the lot and landscaping. The property hasn't been mowed in over a year with lots of overgrowth. Basically the house needs painting, flooring and simple updated of the bath and kitchen.
- 10yLian ShiAberdeen, MD · Member since 2015 · 78 posts · 9 votesOPhi David and Joel,
Thank you very much for your input which is very inspiring and encouraging. We have been working with an agent who brings us those off market deals but each time those deals was also exposed to other buyers. I know one agent can't represent another buyer. So these "off market " deals are actually just "off mris" and available for investors. I guess my agent got these wholesale deals from his sources like anyone else does
We only look for flipping right now so the numbers are very important for us as we can't afford to lose money. But as David sugguested that we should come in with the firm and highest offer and stay with it. We may get something like that so that we have more chance to lock it out instead of losing it in the bidding world. We should also do more marketing so that we may get deals directly from the sellers. So far we rely on the agent and a group of wholesalers and REO listed in mris.
Thank you very much again.
Originally posted by @David Faulkner:
If you do choose to put a bid on a home in the open market that is very competitive, run your numbers and determine the price you would pay, put in that bid as your firm and final offer ... if they take it, great ... if they don't walk. Not saying you will get a deal this way, but at least you won't get worked up in the bidding war and over pay.
I agree with Joel that going off market may be your best bet to get a deal, though financing such a deal (as opposed to paying all cash) may prove challenging. When you call around asking brokers and agents for off market deals, make sure they know that you will put the offer in through them ... you want a deal and they want to double end their pocket listings, give them what they want to get what you want.
Either way, it is likely a numbers game ... the more you market/search, the more properties you find to offer on, the more offers you make, the more deals you get. Just be sure to stay true to your numbers and don't give up. Depending on if you plan to buy-and-hold or flip will determine how you run your numbers (cash flow or value add) ... I like to run both and have both sets of numbers work (one for plan A and one for plan B), combine them both in an IRR analysis and tweak parameters to optimize the strategy.
- Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes10y
What bad is good and what good is bad.
By this I mean that, with the proliferation of access to information that affects markets, properties that are listed through traditional sales channels, I.e. brokers/agents, are instantly available to other agents and their buyers. This maximizes exposure to other buyers.
This brings listed properties closer to the 'perfect market' our economics professors talked about. However, fewer gaps exist that allow a super-bargain.
Even buyers at foreclosure auctions see such robust activity that new investors are finding few 'deals' in the historically lucrative distressed sale niche.
I've preached for years that in my niche, probate, the deals are made not by buying on the cheap but negotiating seller financed opportunities that favor a mid-or long-term buy and hold model, not a quick fix and flip.
Off market opportunities are out there, but as more and more people buy off-the-shelf marketing and data, for instance absentee owner lists and yellow letters and postcards, property owners are being pounded with mail that only seems to serve to desensitize them, leave them numb and unresponsive.
Today's successful investors utilize smart marketing strategies to identify off-market opportunities and multiple media (mail, call, knock) to reach and convert prospective sellers.
- Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes10y
I am in Baltimore and have found that there are lots of potential good deals here. You may want to attend public auctions. We do several hundred auctions a year, we have some coming up tomorrow, find my website and stop by.
I'd be glad to give you some ideas or put you on our mailing lists.
Charles
- Investor · San Francisco, CA · Member since 2016 · 1 post · 0 votes10y
Hi Lian!
What type of property are you looking for exactly? Single unit? Multi? Also, how are you finding the listings? MLS? Something else?
Don't give up hope!
Scott
- Investor · Baltimore, MD · Member since 2014 · 398 posts · 156 votes10y
Hello Lian, I am a wholsaler and buy & hold investor in the Baltimore arena. In order to keep leads coming in we market directly to sellers via direct mailing campings, word of mouth and signs. We get deals consistently. You may what to analyze the spread you are looking for and the feasibility of that spread in certain markets. Baltimore can be a very interesting market the varies block to block. What I mean by this is in certain areas 2 blocks can distinguish 250k houses from 30k homes. We specialize in working with new investors and over deliver when it comes to analytics and assistance. In most cases we give preferred GC S.O.W quotes with references on rehabs as well as active MLS list of Comps just to name a few. Private message me your email to join our mailing list. We just received a property recently that has yet to hit the market that promises great returns based on our analyses. Whatever you do stay encouraged!
Prosperous Investing to you!
- 10yLian ShiAberdeen, MD · Member since 2015 · 78 posts · 9 votesOP
hi Charles,
We just got our first newborn on 6th. We are enjoying new experience now.
Thank you very much and we will deginitely check your website. We have never been to any public auctions. Please put me in your mailing lists. I would greatly appreciate if you could give us some ideas.
Originally posted by @Account Closed:
I am in Baltimore and have found that there are lots of potential good deals here. You may want to attend public auctions. We do several hundred auctions a year, we have some coming up tomorrow, find my website and stop by.
I'd be glad to give you some ideas or put you on our mailing lists.
Charles
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