It's been a while since I have posted anything worth a darn, so I thought I'd give it a try. Something I stumbled on, it may or may not work, but the concept I feel is somewhat solid.
I took a real estate class a while ago, (like two decades ago!) that class taught me a lot. One of the biggest things that it taught me is that you can get out of a real estate contract (if written properly) very easily during the first few days, even weeks. Therefore, throw bids out there like spaghetti on a wall and see what sticks! I did this approach in 2007, 8 and 9 and it worked incredibly well! The reason it worked so well is that it was a buyers market. People were unloading homes like it was going out of style, so some were taking outrageous bids just to get rid of the property. My poor real estate agent I bet was writing three bids a month! I hardly won a thing, but when I did it was a steal! You miss every shot you don't take!
Don't get me wrong I'm no Real Estate Mogul though I wish I were! I have a couple of rental properties that I was fortunate to pick up, there were also many, and I mean MANY missed opportunities, what they wanted me to have money? Geez, here I thought we were a nation of unlimited credit! Well I was wrong I pushed too hard and started getting denied, I even went after friends and family for money, rejected. Harsh lessons learned but learned none the less. And that brings me full circle, during all of those bids and wins' and loss' of bids I lost ONE escrow ONCE to the government. $1000 if I remember correctly, I was outraged at the time but hindsight is 20/20, and one thing is for certain, $1000 was one low cost for my great real estate investments. Markets, however, have changed dramatically, today you are lucky if you even get to look at the place before it is under contract, a sellers market for sure. The rule still applies. However, it applies differently. Allow me to explain.
My explanation is really in the second part of the transaction. You have to be willing to bid on a place you are certain you want, sight unseen. As an example if there is a neighborhood you have been dying to get into, put blanket bids on every house for sale, full price. Get under contract, then, have one heck of an inspector find everything possibly wrong with the place. There is a cost to this 300-500 bucks a pop! You must be willing to pay the price you offered, if the home is immaculate, however, more than likely you won't have to.
This is where you use big brother to your advantage, code. Yup, if you have ever worked with code enforcement officer of any city you know, code is ridiculous! Code is like every curse word slung into one if you are a DIY type guy. OR if you are a home flipper, or remodeler, or pretty much if you are ever going to sell a home. Code is a four letter word! So code is so ridiculous, that if you were to code three years ago, you are now out of code. And guess what seems to be the biggest code breakers, plumbing and electrical. Guess what costs an arm and a leg?! YOU GOT IT! Here is where it gets borderline evil. You come at the seller with a hellacious list of "out of code" repairs that must be done before you buying the place.
Now take a look at this strategy from the sellers perspective. You are high as a kite because in one day you just got a full price offer. The buyer stated that you must have an answer in 24 hours and that they are unwilling to go into a bidding war. Well, a bird in the hand is two in the bush you accept, and you are pumped! Your fingers are crossed for the inspection, then NIGHTMARE! Bring the home up to code! Hmmm, ok if I do all the repairs, $13,000, if I deny them and put it back on the market, then I have to explain why it didn't sell the first time, I probably won't get a full price offer because I have to put it back on. Rock and a hard place. You don't want to deal with the repairs and code officers so, you offer 13K either in escrow or off the property.
Buyer, you just got your place for 13K less than asking price in one of the most competitive markets ever seen! Nice work!
I took a real estate class a while ago, (like two decades ago!) that class taught me a lot. One of the biggest things that it taught me is that you can get out of a real estate contract (if written properly) very easily during the first few days, even weeks. Therefore, throw bids out there like spaghetti on a wall and see what sticks! I did this approach in 2007, 8 and 9 and it worked incredibly well! The reason it worked so well is that it was a buyers market. People were unloading homes like it was going out of style, so some were taking outrageous bids just to get rid of the property. My poor real estate agent I bet was writing three bids a month! I hardly won a thing, but when I did it was a steal! You miss every shot you don't take!
Don't get me wrong I'm no Real Estate Mogul though I wish I were! I have a couple of rental properties that I was fortunate to pick up, there were also many, and I mean MANY missed opportunities, what they wanted me to have money? Geez, here I thought we were a nation of unlimited credit! Well I was wrong I pushed too hard and started getting denied, I even went after friends and family for money, rejected. Harsh lessons learned but learned none the less. And that brings me full circle, during all of those bids and wins' and loss' of bids I lost ONE escrow ONCE to the government. $1000 if I remember correctly, I was outraged at the time but hindsight is 20/20, and one thing is for certain, $1000 was one low cost for my great real estate investments. Markets, however, have changed dramatically, today you are lucky if you even get to look at the place before it is under contract, a sellers market for sure. The rule still applies. However, it applies differently. Allow me to explain.
My explanation is really in the second part of the transaction. You have to be willing to bid on a place you are certain you want, sight unseen. As an example if there is a neighborhood you have been dying to get into, put blanket bids on every house for sale, full price. Get under contract, then, have one heck of an inspector find everything possibly wrong with the place. There is a cost to this 300-500 bucks a pop! You must be willing to pay the price you offered, if the home is immaculate, however, more than likely you won't have to.
This is where you use big brother to your advantage, code. Yup, if you have ever worked with code enforcement officer of any city you know, code is ridiculous! Code is like every curse word slung into one if you are a DIY type guy. OR if you are a home flipper, or remodeler, or pretty much if you are ever going to sell a home. Code is a four letter word! So code is so ridiculous, that if you were to code three years ago, you are now out of code. And guess what seems to be the biggest code breakers, plumbing and electrical. Guess what costs an arm and a leg?! YOU GOT IT! Here is where it gets borderline evil. You come at the seller with a hellacious list of "out of code" repairs that must be done before you buying the place.
Now take a look at this strategy from the sellers perspective. You are high as a kite because in one day you just got a full price offer. The buyer stated that you must have an answer in 24 hours and that they are unwilling to go into a bidding war. Well, a bird in the hand is two in the bush you accept, and you are pumped! Your fingers are crossed for the inspection, then NIGHTMARE! Bring the home up to code! Hmmm, ok if I do all the repairs, $13,000, if I deny them and put it back on the market, then I have to explain why it didn't sell the first time, I probably won't get a full price offer because I have to put it back on. Rock and a hard place. You don't want to deal with the repairs and code officers so, you offer 13K either in escrow or off the property.
Buyer, you just got your place for 13K less than asking price in one of the most competitive markets ever seen! Nice work!
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