How to win a property bidding war

Q: I want to buy another investment property but I find I am constantly facing bidding wars. Are there any strategies that you would recommend I use when trying to negotiate?

Mitch Collins: This question assumes that you're constantly fighting with other potential buyers to get a property and, right of the bat, you're losing all your negotiating power. What I've found to be more affective is to be proactive and creative in this process.

1. Expand your MLS search. Ask your Realtor to connect you with all of the other Realtors in your target area should a property that meets your criteria becomes available.

2. Scour all the sites and ads. These might include the local FSBO sites, newspaper ads, local online ads, and local spots where people post paper ads. There are often sellers who aren't savvy at advertising and you can often connect with them before every other buyer in your area does the same.

3. Word of mouth. Turn your conversations with people you meet into real estate conversations. Tell people exactly what kind of property you are looking to purchase. If someone finds a deal for you that you otherwise wouldn’t have gotten, offer them a finder’s fee. If they saved you $10,000 or more by staying out of a bidding war, perhaps paying them $1,500 would be a great win-win. This is a very powerful strategy when you are focused on a specific neighbourhood and know exactly the type of property you're looking for.

4. Advertise personally. Put out ‘I Buy Houses’ flyers, advertise in the newspaper, local websites and more. You never know when a motivated seller might see your ad and respond to you directly.

5. Negotiate face-to-face whenever possible. If all else fails and you end up in a multiple offer situation with your Realtor, or even privately, do whatever it takes to present your case face-to-face with the seller. To stack the odds in your favour, go armed with supporting documentation, such as pre-approval positioning from a lender, to give the seller a comfort level that can help you smoothly close the deal.

6. Always include a cover letter with your offer in a really hot market. This should indicate how you arrived at your offer, why the seller should accept your offer, how your offer fits their needs, and finally, to thank them for their consideration.

It's also critical that you uncover the seller’s motivation to sell. When you first make contact, ask a lot of open-ended questions, such as why they're selling, would they consider holding any financing, etc.You can find out the seller’s motivation and figure out how you can meet their needs in a win-win situation as part of your offer.

Mitch Collins is a real estate agent with Century 21 Energy Results. Contact him at mitch@mitchcollins.com.

This article was originally published in the August 2014 issue of CREW
 

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COMMENTS

  • by Mart 2015-04-21 1:11:21 PM

    I think this article is a stretch, I suggest to do 10% effort to get 95% of the market inventory in your hands by simply using mls.

    Why put 100% effort and time and lots of work no one has time for just to go from 95% coverage to 99% coverage of what is available in the world. MLS is your best source and hardly any effort.

  • by Omer Quenneville 2015-04-21 1:22:30 PM

    You should deal with an agent that is familiar with the area you want to buy in. A lot of properties are sold through networking and are already sold the day they go on mls. Dozens of agent call me asking for insight into my future listings in my areas and more often than not, we will put together a deal the same day we post on mls. I can't stress enough the importance of dealing with an agent from the area you want to buy in and dealing with an agent that works in your area when you want to sell. It doesn't cost you more to have two agents. Then once you found a property you like, bully your way in with an offer, don't wait for the offer date.

  • by Alex 2015-04-21 4:24:23 PM

    Mart, your suggestion is intriguing. Are you saying all that it takes to find a fair priced home in a desirable neighbourhood is check on mls? And here I was thinking that in order to compete, one might be well advised not to do what a majority of the competition is doing. You're right, what does this article know?

    Har har, sarcasm. But is it a waste of time to avoid bidding wars by building relationships? Is it stupid to do what the majority won't to find what they miss? Is it wise to limit your role as the one in charge of your financial future?

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