Whats the play when paying cash during a bidding war

Rental Property Investor · Greensboro, NC · Member since 2015 · 17 posts · 5 votes

I'm looking to purchase an investment property cash. At the price point it's sure to be bid up. How would you play this. Bid low, right at ask price, or a little higher. I'm a newbie, trying to figure out does offering hard cash give you any/more negotiating leverage over conventional loan offers?

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Christopher Brainard

Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes

10y

@Frank Closer

You bid at whatever price makes sense for your investment strategy, no more. Cash does give you a stronger offer than someone who is financing, some sellers understand that value, some do not. I do enjoy when a seller takes an offer conditional on financing and then I pick that property up 60 days later for less when it falls through escrow.

-Christopher

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Mary B.
Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
10y
Good question. I haven't had the luxury to be in one as of yet. A few options would be: to offer to close sooner, at full asking with fast closing, at your price with bigger down payment... figure out what the seller wants in addition to selling their property. However, as a newbie you need to be super sure that the numbers are in your favor whatever you offer PRIOR to making the offer.
Kudos,
Mary
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Dana WhickerPro Member
Investor · Fernandina Beach, FL · Member since 2014 · 557 posts · 374 votes
10y
Cash Is King!!!
What that means is if you are a seller and have two relatively equal offers on the table, and one of them is contingent upon financing and one of them is cash, the cash deal gets moved up a notch.
I can't tell you how much to offer on whatever deal you're talking about because I don't know your market.
Hope that helps.
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Christopher Brainard
Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
10y
@Frank Closer
You bid at whatever price makes sense for your investment strategy, no more. Cash does give you a stronger offer than someone who is financing, some sellers understand that value, some do not. I do enjoy when a seller takes an offer conditional on financing and then I pick that property up 60 days later for less when it falls through escrow.
-Christopher
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
@Frank Closer Good question...and the answer is it depends. About half the deals I do with my clients are all cash deals as that is the nature of DC. If the property is in DC, depending on the neighborhood, an escalation clause may be the strategy to acquiring the property. In many parts of the District, you will have multiple people using an escalation clause. Your agent should be able to advise you on the best strategy for the property in question though.
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Shurrone Jordan
Acworth, GA · Member since 2015 · 58 posts · 7 votes
10y

@Frank Closer
You bid at whatever price makes sense for your investment strategy, no more. Cash does give you a stronger offer than someone who is financing, some sellers understand that value, some do not. I do enjoy when a seller takes an offer conditional on financing and then I pick that property up 60 days later for less when it falls through escrow.

-Christopher
I can relate to your question Frank and a good one it is, also to your answer Christopher because for whatever reasons financing does not always work out and we as investors are in position to often times pick up the pieces and get a better deal in the end.
Sincerely,
Shurrone Jordan
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Linval T.
Investor · Bay Shore, NY · Member since 2014 · 1k+ posts · 688 votes
10y
@Frank Closer
Use cash as a weapon to acquire the property, but, be smart with this transaction. I have done this successfully many times. But, in these days there are multiple people using cash and of course don't forget the Hedge Funds buying in bulk.
I have been in several biddings with cash and have won some and lost many.
I always start below the asking price and move up if needed, but with an open eye on my bid ceiling.
You may get the call for best and final offer and don't panic, but, make your best and final offer that suits the deal in your estimation, as well as the depth of your pocket!
Don't get caught up in a bidding frenzy and most importantly, don't get attached to the property and feel that you have to outbid everyone to snatch it.....there will always be another property for sale and it might be better than the one you lost!
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