UPDATE: This post has been updated for 2016
Perhaps you know this situation all too well, you’ve been trying to acquire an investment in the Orlando area for quite some time now and you’ve placed offer after offer after offer but still nothing. You start to question your Realtor and/or perhaps even yourself. You’re a cash buyer, who wouldn’t want to take an offer from a cash buyer, right? Wrong. Let’s take a look at some of the main reasons why your offer’s are getting rejected on not just bank owned properties but other hot ticket properties.
The Market Is Stronger Than You Think
Maybe it’s you? . . . One of the biggest reasons I see investors losing out on fantastic houses everyday is because of their perception of the market. The have listened to too many friends or family members talking about how depressed the Florida real estate market is that they have formed this idea that they are going to fly down and have the prime selection at hundreds of houses that banks and residents are just desperate to unload.
Reality Check– This may have been true back in 2007 and 2008 but it’s now 2016 and the investment property market in Orlando (vacation homes and income properties) are the hottest commodity to foreign investors and just like you, they are also all cash buyers many of which are educated on what the market is really like. So when you place low ball cash offers on these properties your offer is sent in with about a dozen other cash offer by investors who are NOT lowballing.
Your Offers Are Weak. . . but Why?
Your offers are too weak and so is your investment strategy. If your goal is to actually secure a property sometime this year than you really need to evaluate your reasons as to why you keep lowballing on properties that are already undervalued. If you keep low-balling and missing out on amazing deals the only one who loses if you. The seller is going to get their asking price, if not more, and you’re not going to get a property. If you are low-balling because you can’t afford to pay full price in the budget you are looking in than you need to look at properties in a lower budget that you can afford to place full price, or higher, offers on and still be in your comfort zone.
Reality Check– If you now know that, on almost any given property that is in decent shape and in a decent location, you’ll be going up against at least a dozen other offers than you need to pony up your highest and best offer up front. If you’re trying to play the back and fourth game you missed the boat on that. You only get one shot to buy these homes in a multiple offer situation (which is usually always the case) so don’t fart around trying to play games. If you want to get something thousands under market value than you should consider buying directly from the courthouse. . . but remember you save money on the sale price but you inherit all the liens. Do your homework first.
Your Realtor is Not Presenting Your Offers
This is not a conspiracy theory, it really happens and it could be happening to you. Unfortunately, because of the nature of the market there are some Realtors who just don’t want to deal with the hassle of submitting your offer because they don’t think it will get accepted, you didn’t offer what they suggested, there was too much paperwork on the back end, they really want to buy it for themselves etc etc, . Not only is this unethical but it’s downright nasty and against the Realtor code of ethics. It’s so important in this market to be working with a Realtor you trust because it’s a cut throat market out there and Florida is full of wolves in sheep’s clothing.
Reality Check- If you suspect your Realtor isn’t submitting your offers you may have to do some legwork to find out but there is a way that you can find out for sure. You will need to track down the listing agent of the property and call to find out if your offer has truly been submitted. They will be able to verify for you if an offer was submitted matching your info. If you don’t want to have to take it that far, you can ask your agent for some type of email confirmation from the bank or listing agent that the offer was received. In all honesty, if you have to second guess your Realtor this much and go through this much effort to confirm suspicions than you probably aren’t working with the right agent to begin with.
Your Terms Are Not Attractive To The Sellers!
So maybe you are putting in full price, or over, cash offers and your Realtor is presenting them but you still keep getting outbid. It’s possible that the rest of the terms in your contract are just not attractive! Terms are things such as closings dates, inspection periods, seller concessions, home sale contingencies etc. All of these factors play a role in making your offer stronger or weaker. Cash is king but so is a quick closing, short inspection time frame and no requests for contributions from the seller.
Reality Check- From one investor to another, put your self in the sellers shoes every time you go to submit an offer. Pretend you have five contracts sitting in front of you and they are all 5 thousand over asking price. One can close in two weeks with a 5 day inspection time frame and the rest are 30-40 day closings with a 15 day inspection period. You know which one you would take. . . banks and sellers are no different. When buying from a bank, you are just a number to them. Your offer will get submitted into an automated system with dozens of others and the asset manager will select the highest and best and reject the others. It’s nothing personal so don’t ever take it personal if your offer gets rejected.
You Don’t Have All the Facts
This happens quite often and it’s usually not your fault. You’ve found a great house and you get so anxious to bid on it that you call your Realtor in a frenzy to get a contract typed up right away for full price. Your Realtor assumes you know the value of what you’re bidding on and gets it over to you. Lets stop right there; If you’re bidding on a house that is listed for 10% under what every other home in the neighborhood sold for, you need to know this because the home will sell for 10% more than the asking price!! The only way to know this is to make sure your review the comparable sales for the past six months in the community before settling on your offer price. Full price isn’t always full value and properties (unless they are trashed) are not selling under market value.
Reality Check– When reviewing comps and deciding what to offer, don’t offer the lowest amount of all the comps. You have no idea why that home sold for so much less, it could have been trashed, have mold, Chinese drywall, who knows! Good properties in this market will sell for the highest market value and sellers (banks especially) are educated on what that value is. It’s not worth losing out on good deals because you’re too busy trying to be cheap. Cheap investors never win in the end because they miss the boat and end up buying high, when it’s too late. Listen to the advice of your Realtor, it’s their job to do everything possible to help your offers get accepted and pushed through. If you don’t listen to their advice than you have only one person to blame when you miss out on a great property.
We hope to earn the opportunity of helping you achieve your investment property goals this year. To set up a free, no obligation investment property consultation with us please use our scheduling tool or contact us directly at 866-422-6191 and if you have enjoyed this article please consider subscribing to our blog and stay updated on future information.