There are bidding wars going on in many markets all over the U.S. with a new round of buyers bidding up the prices of real estate over the asking prices. Most of my repeat real estate investor borrowers are all complaining about the same things: inventory is tight, margins are thinner, and everyone is paying over the asking price on real estate. But how do you prevent yourself from paying too much on a property in a bidding war? Here are 3 tips to avoid paying too much:
Determine Your Max Offer Price and Stick with it: Decide what your max offer price will be and stick with it. Many times agents will encourage their buyers to offer way over the asking price in order to win the bidding war. Don’t cave in from the pressure.
Keep Your Comparables in Hand: A real estate agent will provide you with comparables but do your own homework. How far away from your property are the comps? Are they similar properties with an equal number of bedrooms, bathrooms, square footage, and upgrades? A finished basement or a detached garage are examples of things that can throw off the comps, so ask the hard questions and make sure your comps are accurate. Don’t allow incorrect comps to make you overpay for a property.
Determine the Repairs Before You Bid: Get inside the property and make a punch list of repair items and upgrades that will be needed. What will be the cost and does the deal make sense once you factor these in?
These are 3 common tips for not paying too much.