Bidding against flippers

[Anonymous]

We prefer to update houses ourselves rather than pay for a picture perfect house. I suspect this means we may bid against flippers. Should this impact the bid or process in any way?

[Anonymous]

Well, they will most likely have cash and not need inspections, appraisals or financing contingencies. How do you think that will affect the process?

[Anonymous]

In my neighborhood it seems that flippers go for the homes that need a complete gut. The homes that need "some work" but are in reasonable shape are more likely purchased by folks planning to live there. So unless you are going for the house in need of a complete overhaul - I would think you may not be bidding with flippers.

[Anonymous]

I agree with the PP, we are like you and had to make our offers really competitive.

There are also a very few houses in the sweet spot of not being cheap and needing to be gutted (and therefore not very attractive to flippers) and also not being gorgeously renovated (and therefore attractive to less buyers). That's what we ended up with. A decent, but not gorgeous, house that had been updated about 15 years ago.

[Realtor4you]

Put forth your best offer. Most flippers will not go as high as owner occupants because they are watching their profit margins. Ensure your financing is strong.

[Anonymous]

Flippers don't need to secure financing based on the home's value (they usually have a line of credit and effectively pay cash). Regardless, the person offering the highest price with the highest likelihood of closing is going to win in any instance. Put forth your best offer and cross your fingers.

[Anonymous]

All cash, no contingencies, escalation clauses. This is what we had to do. We got lucky because the relatives selling the house (it was a group of 5 sisters) wanted a family to live in the house rather than see it torn down. Of course, we still had to may the premium price. Good luck.

[Anonymous]

I think it really depends on the house. Not sure if you mean flippers who will fix up the house and resell, versus builders who will tear the house down, but we felt like our budget put us in competition with either. Remember, though, that for a builder they will need a specific lot size, location, and layout for it to be a worthwhile investment so not every property will appeal to them. We bought a place which needed (and still needs) a good amount of fixing up but we did not waive any contingencies and would not have been comfortable doing so. It does not always take those extremes. Good luck, OP!

[AroundTheBlock]

My company flips about 3-4 residential properties a year. Our main focus is commercial development, but we do residential flips if the market is there.

The first thing you need to realize is most people/companies who flip houses are paying all cash, and most of the time it's their own money (not loan/line of credit).

Secondly, for homeowners it's very difficult because most investors can inspect a house themselves without requiring a home inspection. This means their offer normally comes with no contingencies (huge plus to the seller).

Lastly, if you are looking for a house that you can work on find ones in areas where the price of the house is close to the selling price of surrounding properties. If neighborhood A has houses selling for around $350k, look for houses that are selling around $300k. Most investors look to make a net profit of around $30-50k on a flip (or often times more).

It is difficult to compete with investors because normally they have a set crew of contractors who give them better prices on labor, etc.

GL

[Anonymous]

this might be helpful -
http://news.yahoo.com/competing-cash-buyers-tight-housing-market-185647148.html