Advice on a Multiple Bid Scenario - Buyer Side

[Ana Marie B.]

Hi BP Fam!  Have a question for any experienced investors out there.  How do you approach a multiple bid scenario in a competitive market like the SF Bay Area?  I've never encountered such low inventory in my life!  I can literally count on 2 hands the # of houses for sale in a given city.  My husband and I are looking for a new primary home, while adding our current house as another rental. 

Just this past weekend, we placed a bid on a fixer upper with termites, extensive water damage, dry rot,  you name it.  Current owner appears to be a pack rat.  The house is not worth its $1.2M price tag, but we went in anyway at above asking.  We're going with 20% down payment, 30-yr. fixed financing, and other niceties thrown in. Then low and behold, our agent calls and says someone placed an all-cash offer for $1.3M w/ no contingencies.... My jaw dropped.  There are also 2 other bidders, one of whom offered 25% down payment, but rest of offer was similar to ours. 

If this house was in decent condition, I wouldn't mind dropping contingencies, but in its current condition, I just can't logically remove inspection contingency. We're willing to increase our bid if we receive a counter, but we just feel this person can just as easily throw-in another $100k+ in cash....

Anyone have any good stories of how they stuck it to an all-cash buyer? :)