Need Advice Fast - Bidding-Up Situation

[Alison M.]

Hi all, I could use some advice from those who have been in this situation.

I am trying to get a particular parcel under contract with an out of town seller. My goal with it is to wholesale it to a developer in the same town who I already know.

I find myself in a bidding contest with one other entity, and I have good reason to strongly suspect it's the developer I want to wholesale to! I am sure the seller doesn't know we know each other, and I don't think the developer knows I'm the competition. Everyone is acting in good faith so far, as best I can tell.

So - what would you do in this situation? My thoughts are that I can:

1. Keep bidding and hope to be the last person standing, then wholesale to someone else since I will have beaten my client out of the deal;

2. Contact the developer (who I want to work with in the future) and clarify if it's him, and if so negotiate a finder's fee to get out of the way so he can get the lot before the price gets higher;

3. ????

Thanks!

[Jerry W.]

Wow my initial advice is yes definitely find out if the person you are bidding against is your end target buyer. If not find out what he would pay for the property or even see if he will give you a bird dog fee and let him bid to find it.

If it is the person who you intend to sell to, you need to consider first if you can still make money by out bidding him. He will know his market and at what point a reasonable profit can be made.The Buyer is entitled to a fair price as well. I WOULD NOT ASK FOR A FEE TO STOP BIDDING AGAINST HIM. I know it may sound fair to you now, but it sounds like fraud and blackmail to me. You are asking for money to help artificially keep a buyer from receiving a fair price. That is entirely different from getting a good deal. Price fixing is illegal in many states, and it may run afoul of some federal regulations.

I know your intentions are meant well or you would not have posted, and I am sure after thinking about it you would have reached the same conclusion, but I thought I should point this out to you. Good luck on this.