How long to stay on the market.....

Question

Hey Everyone,

I just completed renovation on my first flip and went on the market a week ago.  Within the first day we received 2 offers for about $20,000 below our asking price and after another 2 days we received a full price offer that also included an additional $5,000 towards the buyers closing costs.  We countered back at $2,500 towards closing and the deal was accepted.  One day afte going into escrow we received another offer which was essentially $5,000 more than the one we accepted :(

We're going to do well on this flip, so I'm definitely not complaining about my situation but for future reference I would like to ask the more experiened investors on BP the following question:

Do you think I should have held off on accepting the full price offer and let the property stay on the market for a little longer?

Account Closed · Answer

Focus on the deal under contract and hope it closes without an issue. There is always an opportunity cost with waiting or trying to gamble.

Jason Pritchard · Answer

Account Closed thanks for the feedback.

I agree with your advice 100% and am currently focused on closing the deal that we accepted.  I really just wanted to play devils advocate and see if there were/are other options that I overlooked.

Rick Baggenstoss · Answer

@Jason Pritchard What a great problem to have!   Frequently, I see the same thing ... one/two, instant lowball offers.  Here in Atlanta, these frequently come from the hedge funds.   I play these up to everyone touring the house and let them know I have offers already.  If another offer comes in that's good, I start negotiating with them very slowly hoping to get a bidding war started.  As the weekend or tours wrap, my agent calls everyone to get their feedback and ask for more offers and continue to advise them it's a multiple offer situation.  Sometimes, best and final works.  I'd prefer to pick my favorite and pull them to where I'd like to be.

Margaret B. · Answer

@Jason Pritchard Let me begin by saying I do not know how good your market is, but my grandmother's famous motto:  A bird in the hand is worth two in the bush!"  In Houston and in Atlanta, there is a shortage in good areas, there have been multiple offers submitted on days of open houses.  What if you held off, the second offer never materialized and the first buyer found something else which fit his needs ... where would you be then?

Jason Pritchard · Answer

There are some inspections/certifications that need to be completed on the well and spetic systems but besides that there are no other contingencies.

We have already accepted that offer as a back-up in case the first offer falls through.

There are no contingencies on the appraisal but that is something that I am interested in seeing.  The area that we are in does not have a lot of inventory/sold comps and only 2 recent comps that I can see that support our price.  Our agent feels like we are in the ballpark but as this is my first flip I'm unsure where the appraisal is going to come in at this point.

Overall I'm very happy with the offer we accepted and obviously it's easy to look back in hindsight now that there is a better offer on the table.  My personality is one where I am always looking to maximize productivity/efficiency/profit and I want to use this as a learning oppurtunity for future projects.

Jesse T. · Answer

Are there any contingencies on your accepted offer?

Would the later offer be interested in being accepted as a back-up offer?

In hot markets a financing appraisal/contingency can be a sticking point if the appraisal doesn't full reflect the current market state.

In general, especially on a flip I would be happy with a full price offer that can close quickly.  If you end up dropping out of contract chasing that extra 1 or 2% can really backfire.