I want to kick things off with a good old-fashioned embarrassing story.
When I was 14 or 15, eBay was the “new big thing.” I was on eBay searching for some Ralph Lauren Polo shirts (also a big thing at the time) when I found a 3-pack of shirts. I put in a bid and it looked like I was going to get them, but at the last minute someone outbid me.
Not wanting to be outbid, I kept going higher and higher with my bids. I was in an all-out bidding war, and at that point, I had so much invested that I wasn’t willing to back down. It became more about “winning” than about the shirts I was actually bidding on.
And you know what? I won. I won the bidding war. But I also ended up paying way more for that 3-pack of shirts than necessary (I could have easily walked into a store and gotten three brand new polo shirts for less money). And the kicker? When the shirts arrived, they were faded, wrinkled, and about three sizes too big — so I never wore them. They sat in my closet for years, an expensive reminder of what happens when you get so focused on “winning” that you lose sight of what’s really important.
So why am I sharing that story with you? Because the same thing happens in real estate — especially in the DFW area.
It’s not uncommon for a great property to get multiple offers — and those multiple offers to start a bidding war. If you get sucked in, it’s easy to forget what’s important — buying a great property at a great price — while you focus on winning the bidding war.
Depending on the market, bidding wars are, in certain ways, inevitable. But there are ways you can avoid them — if you know the right strategies.
So, if you've find yourself googling things like “how to avoid bidding war house” or “common strategies to avoid bidding war real estate,” keep reading.
Move Fast
The first strategy for avoiding a bidding war? Move fast.
If you see a property that fits your criteria, don’t wait! Get in to see the property as soon as possible. The faster you move, the more likely you’ll be the first one who sees the property. And if you’re the first person to see the property and it has everything you’re looking for, you can make an offer on the spot — and potentially close the deal before anyone else can get in the door and start a bidding war frenzy.
Now, this strategy won’t give you a leg up if a property already has multiple offers on the table, but if you make it a habit to move fast on properties, you’re much more likely to get first looks on great properties — and much more likely to avoid bidding wars.
Buy Homes Off-Market
When an amazing property hits the market, it’s pretty much a certainty that it will result in a bidding war.
So if you want to avoid the bidding war, why not purchase the property before it hits the market?
Buying off-market properties is a great way to avoid the competition and bidding wars that result from listings. But most investors don’t even know it’s an option.
So how, exactly, do you buy properties off-market? There are a few different ways:
Build Relationships With Real Estate Agents
Real estate is, in large part, a relationship-based business. If you can form solid relationships with a network of real estate agents and realtors who specialize in investment properties in your area, they’ll often come to you with properties they think would be a fit before they go on the market.
It’s a win-win situation; the real estate agent gets to make a sale without doing a ton of leg work and you get access to great properties before they hit the market.
Scout Vacant Houses
If you notice a vacant home in a neighborhood you’ve been eyeing, chances are the owner might be willing to sell it. Send a letter of introduction and try to connect with the owner. If you make them a good offer, they might be willing to sell the house before listing it.
Get Creative With the MLS
The MLS is full of houses that are already on the market. But if you get creative, you can also use it to find off-market opportunities.
Search the MLS for expired listings; often, these are properties that owners wanted to sell but were unable to. If you reach out, chances are they’ll still be willing to sell.
Talk to Your Property Management Company
One great benefit of working with a property management company? They’re great leads for off-market opportunities. Because they manage so many properties, they’re the first to know if the owner will put that property on the market — and they can be a great resource for getting information on great properties before they hit the market.
Related Post: How Property Management Works (and What We Do for You)
Start With a Strong Offer
One of the ways to avoid a bidding war is to get your offer accepted the first time around. And the only way to do that is by starting with a strong offer.
If you know a property is likely to generate a lot of interest, you don’t want to start small. Go in with a strong offer that you know will grab the owner’s attention. If it’s a strong enough offer, the owner will accept it right away — and you’ll avoid a costly bidding war.
The key here is to make sure you present a strong offer without overbidding on a property. Get clear on your bottom line, know the max you can pay for a property and have it still be profitable, and use that as your offer. If it’s not enough, walk away — don’t let your emotions get the best of you and drag you into a bidding war that will leave you stuck with a property that isn’t the right investment for your portfolio.
Bidding wars are an inevitable part of today’s market. But with these strategies, you can find and purchase profitable investment properties — without ever getting caught up in the drama of trying to “win” a bidding war.
