I am being cautious or foolish?

Question

So, another Monday, another unsuccessful trip to the Sheriff's sale! I use an algorithm of multiple factors to determine my "buy" price for our properties. One example from today was a max bid of $100k, which I bumped to $105k. I bid up to that number, and the property sold for $106k. Knowing that there was no way to know if I had continued bidding where it would have ended up, am I being cautious or foolish?

JD Martin · Answer

Well, your bottom line number has to be your number. It should have some basis in reason and logic, but (using your example) if you can't make it work beyond 105 then 106 is too much. And there's no way to know if it would have ended up at 116 or 126.

But you have to make sure your numbers are reality. If you are looking to max out at 105 when that's the floor to get in, then you will be looking for unicorns.

Drew Nashmy · Answer

Todd, that is a fantastic idea. I have been thinking of reducing my sale comps to 90 days to get a more recent gauge. Side note, I lived in La Verne once upon a time! Small world . . .

Todd Rasmussen · Answer

@Drew Nashmy

I keep an excel file on properties I don't get.

Check in on it every couple weeks to see what ends up happening to it, based on how much it sells for or rents for down the road will give you some direction as to if your numbers are too conservative or if someone else was too aggressive.

Usually, this process just reinforces that I should stick to my max offer and let someone else overpay.