You finally found it.
It’s the perfect house for you to buy. It’s a perfect flip, buy-and-hold or even medium-term flip.
Your long search through MLS, hundreds of direct mailings, phone calls to absentee owners and even driving for dollars – all that work has finally paid off.
It’s awesome. The asking price is even below your MAO (Maximum Allowable Offer.) You can’t believe your good fortune.
Except there’s one problem…
You’re not the only one who’s interested in this magnificent piece of real estate.
As it turns out, there’s no less than a dozen other investors all vying for the same property. You enter your first offer and it’s quickly rejected. You feel like you are on the brink of a bidding war.
So what can you do?
Unconventional Offer Strategies
When you’re the only one bidding on a piece of property, it’s an ideal situation. If you’ve done a lot of direct-mail marketing and have contacted absentee owners who are willing to sell, chances are you’re the only one who’s bidding on the property.
In this case, you can influence the seller to meet your own needs. But when there’s multiple bidders on the same house, you don’t have that luxury.
This is when you need to think and offer unconventionally…here’s a few tips on how to do just that.
1. All Cash Offers
When you’re selling a property after the rehab is complete, a cash offer is often more appealing than a finance offer – no need to worry about financing contingencies, banks and all that. Cash offers are king!
The same hold true here as well. If the seller wants to accept an offer that has a higher likelihood of not falling through, all cash offers are the best.
If you are flipping houses with no money, then your cash offer comes from your private lender or hard money guy. You are financing the purchase but not through traditional means.
To learn how to flip houses with no money, click here.
2. Offer Above The Asking Price
Sounds crazy right? Not really. But it does to most traditional buyers because most other real estate investors never think of this – let alone any regular home buyers.
Typically, the reason that you have a lot of competition when buying the house in the first place is because the listing price is so low. If it weren’t so low, there wouldn’t be as many bidders.
This might seem counter-intuitive because the lower your by price, the greater your profits, right?
You know there are multiple bidders in the list price at or below your MAO, play coy and offer a lower price, is very little chance you’ll get the property. Although every circumstance is different, eliminate the competition so to speak by offering above the asking price – provided you have done all your house flipping math.
This is all dependent on good numbers to begin with and excellent analysis. However, we’ve acquired many properties by using this tactic – but before we do we analyze and reanalyze the deal to make sure our numbers are 100% correct.
To learn more about house flipping math, click here.
3. Offer a Super-Fast Closing
For every day a house stays on the market, the seller is losing money. Usually the reason that the property is listed for such a low price is because the seller wants to unload it quickly. You can capitalize on this need by offering a super-fast closing.
This doesn’t take a lot of skill to do but you do need to get your inspections, financing and documentation in place in a short period of time. If you know you can do this, you can say this to the seller with conviction.
Simply start by telling the seller that you are willing to close within two weeks or less. Chances that the seller will need more time anyway, but offered to do this tells them that you mean business.
4. Cater To Your Seller’s Needs
All sellers are different. Each has his or her own agenda, motivation, and desires. Some people are selling their own property meaning that they are less experienced and more easily influenced. Maybe the seller has just suffered from a divorce and is more eager to get rid of the property than anything. In this case, speed might be better than a high offer.
You need to show a level of professionalism and transparency to pique their interest.
Get to know your seller by asking your real estate agent or other people what their personal situation is. The more you know, the better you can make your offer. Don’t beat the cards, beat the player.
5. Waive The Inspection
In a typical offer, there is a clause that states that the sale will be finalized if and only if the house passes inspection. If for any reason, the house isn’t in ideal condition, the buyer can opt out of the purchase. If this were to happen, the seller would have to start all over and re-market the house.
Waving the home inspection is a very effective tool that we oftentimes use to entice sellers to accept our offers. Usually when you place an offer on a property, you plunk down $500 or $1,000 depending on the kind of property it is.
If you waive the right to an inspection, then all you have to lose is your offer deposit. So if you make your offer without an inspection clause, you’re still covered at this point.
But let’s say your offer is accepted and you found you need to replace the septic system – a considerable expense – in our market this typically runs $20,000 or more in some cases. Within accepted offer, and maybe some combination of some of the tips above, you can either renegotiate the price, keep the offer as is (provided it doesn’t conflict with your house flipping math) or you can drop out of the deal.
For newer investors, you should most likely get an inspection – as this helps reduce your downside and does serve to protect you should things go south – so bear in mind that this is more of an advanced strategy.
After your offer is accepted, get your contractor in the house as soon as possible and have him rip apart the home and tell you in precise detail what needs to be done in the renovation. If he finds some incredibly expensive costs in the renovation that will blow your numbers and your profit, like we said; renegotiate or drop out entirely.
If you’ve made it this far, please leave a comment below! What other techniques have you used to get your offers accepted? Leave a comment below and let me know!