How to make the highest bid and still get a good price

There was that time I out-bid a more experienced cash buyer.

And bought the property below the list price.

How?

Buy Your Place in Line

It's important to understand the rules of initial purchase offers, and the opportunities for exit. In Oregon, all offers are subject to interior inspection, so the initial offer can be a place holder.  I'm not advocating that you not make an offer in good faith.  But when there is competition, making a competitive offer with an escalation clause can be a way to buy yourself the winning bid.

In my situation, that is what I did.  We raised our initial offer above the list price with an escalation clause up to 50% above the list price.  The listing agent called our lender to verify our eligibility, and once that was settled, we were good to go.

Find the Warts

It's always a good idea to get to know a property and its neighborhood inside and out.

Once the seller is made aware of any issues, they cannot (ethically), not disclose this information to the next buyer. So, unless you as the buyer are requesting unreasonable compensation for any valid issues the buyer cannot expect another buyer to not raise the same issues.

In my situation, the property had a number of issues.  Most notably serious fire damage in the roof structure that had been covered up and not disclosed by the seller.  By doing our research and providing a detailed list of valid concerns and necessary repairs to the property, we were able to negotiate a fair price for the property, which was well below the original offer price.

It's a marathon

Due diligence takes time.  The more issues with a building, the longer the due diligence period can extend.  A multitude of property problems can translate into complex, and long negotiations. 

In our case, it took nearly four months from our initial offer to a final, mutually-agreed upon sale agreement. It was tiring and tedious, but we settled on a fair price and now hold a great property.

A diligent broker is necessary to protect your interests as a buyer, and not expose you to risk of losing your earnest money.