Winning the Bid: 6 Tips for Real Estate Investing in a Competitive Market

Posted by Chris Clothier on Sat, May 27, 2017

investinginrealestate-financialstrategies-realestatemarket.jpgInvesting in real estate can be a fast-paced, heart-pounding experience, even for passive real estate investors. Depending on where you invest, certain real estate markets can get heated and competitive. You might find yourself up against a bustling market of homebuyers, a cutthroat group of international investors, or even just tight inventory.

No matter what your situation, getting from the beginning of a deal to closing on a new investment property and having it generate positive cash flow can be a hassle—particularly if you have to contend with a competitive market.

If you want to ensure that your offer is the most attractive one on the table and increase the chances of having your bid accepted in any given situation, these tips will help you out.


6 Tips on Making the Best Offer in a Competitive Market

Make an All-Cash Offer

An all-cash offer still stands out to a lot of sellers, particularly in ultra-competitive markets. Cash says you mean business and it’s one of the surest ways to win a bid. Naturally, not everyone is able to make all-cash offers, or make them every time they want to purchase an investment property. An alternative is to increase your down payment—more than the traditional 20%—which will be a considerable advantage for the seller.  

Get Pre-approval

Not making an all-cash offer? In that case, one of the valuable things you can do is to line everything up with the bank in advance. Get pre-approval from your financier so that you’ll be ready to go and that the deal can move along quickly. Not only does it show the seller that your offer is serious, but it allows the offer not to get held up by the bank and eases concerns the seller may have.

Understand the Seller

Too many times we can get wrapped up in wanting to win a bid and wanting to get going with a new property that we don’t give the seller the considerations they deserve. Just as you have reasons for buying the property for your investments, the seller will have unique motivations for wanting to sell. You may be able to use these to your advantage when making a bid!

For example, an estate sale after a loved one has passed on may prove to be a sensitive time—being particularly respectful and courteous, both in your demeanor and in your offer, will go a long way with the seller.

Is the seller really interested in selling fast? Are they having financial problems? Try to find out why they want to sell. Remember, you’re in a position to help them as much as they can help you.

Be Personable

On top of focusing on the financial strategy side of winning a bid, real estate investors needn’t neglect the personal side of things, either. No, you don’t need to be the seller’s friend per se, but there does need to be a some kind of positive connection between buyer and seller than helps foster good will that money can’t buy.

Remember, sellers of single-family properties are usually homeowners—sometimes with decades of history with their home. Be considerate of that attachment. Be friendly, courteous, and compassionate with your offer and correspondence and especially with your first impression. A firm handshake, good eye contact, and a pleasant demeanor are everything.

Also, be upfront with your intentions—yes, a lot of sellers favor emotional stories about young couples looking for their “forever home,” but you don’t need to hide the fact that you’re a real estate investor. You’re trying to do something positive for your future and your family, too. Plus, you’ll be taking good care of their home!

Be Efficient, Organized & Quick

Having your documents in order and being agile with your deals is going to work to your advantage. While you don’t need to be the one pestering the seller, you need to be ready to move whenever you need to. That means being well organized—having inspections lined up, the lender ready to move on the appraisal, and any documents on hand and ready to go.

Be Willing to Budge

Not every deal is going to be, well...a deal. There’s going to be negotiation involved. Sometimes you may end up paying more for a property you really want, or you may be giving up on some contingencies. It might be moving on entirely because a deal just isn’t right.

If you’re too rigid with your bidding strategy—only going for the lowest bids, never bending to give the seller any kind of incentive to pick your bid over others—you’re going to find yourself with a lot of rejected offers. Be willing to have some wiggle room. If you don’t give the seller anything to work with, you’re probably not going to get very far.

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Topics: investing in real estate, buying a property