One of the common excuses made by investors, as to why they are not getting more deals, is that their market is too crowded. They claim that low inventory levels are forcing investors to acquire a property as soon as it hits the market. Essentially, they say it is increasingly difficult to get a deal because they are fewer and far between. That may be the case for some properties, but certainly not all of them. Instead of making excuses or looking to point fingers, the real reason may be with the individual investor. The reason deals are going to other investors is because they are more prepared to make offers. Therefore, it is up to you to be prepared to make an offer in any market, regardless of the conditions.
When working in a tight market, you need to be ready to act quickly. Your decisions have to be made faster and more decisive. All of your documents have to be updated and in order. If you hesitate, even for a day, you will see your deal go to someone else. In other markets, you may be able to wait a few days and play the market, but where there is high demand, you need to have everything in line prior to learning of the deal.
In regards to financing, make sure your approval and pre-qualifications are current. Every few weeks or so, you should check in with your broker or lender to see if there are any program changes or changes in guidelines that would affect your approval. Your prequal letter needs to have the current date and as much information as possible. You may be competing against cash offers and already behind the eight ball. If your financing is not perfect, you will not be considered. If you are paying cash, your proof of funds letter still needs to be updated with any current account information or balances available. Trying to do this after you see a property may not leave you enough time.
When you make your offer, you need to think about what the seller is looking for and write up your offer accordingly. If you are asking for contingencies and a sixty day closing, you are most likely wasting your time. Your offer should be cleaned, signed and offer the path of least resistance. What you offer is important too. You may be competing with other offers. While you should never exceed your maximum price, you should think about what you would be willing to pay for the property and offer that amount. By trying to get the best possible deal, you may be overlooking the big picture. You will find you may lose the property over a few thousand dollars. When you find out what the property eventually sold for, you may kick yourself after you didn’t offer that amount when you could have. There is no room for greed in this industry.
Time is of the essence with most offers, but especially in areas with high demand and low supply. If you have down time between deals, you should be updating your documents and getting ready to make an offer. You want to be prepared to act immediately. Those who hesitate usually lose properties.