The Austin Property Investor’s Guide to Bidding Wars

The commercial real estate market in Austin, TX offers a number of revenue-generating opportunities for local property investors. However, anyone who has spent any amount of time lining up property acquisitions in Austin has encountered a bidding war at one point or another.

Don’t Let Pride Exceed Your Budget

Austin property investors should start out with a budget that takes into account the amount needed to purchase real estate, closing costs, renovations, and a buffer for any delays or unexpected expenses. The second a bidding war starts, any increased offers will eat into that budget. It is important to understand this, especially when flipping houses, because less money means the finished product will not attract as many potential buyers, and the property could end up lingering on the market for a long time. There comes a point in a bidding war where Austin property investors are making offers to one-up the other parties involved, and “winning” becomes a matter of pride instead of smart business.

There’s Only One Winner in a Bidding War

Sellers love bidding wars. Even if a buyer has successfully trounced everyone else in the bidding war, the buyer is the only true victor. Knowing when to walk away is the key to coming out on top in a bidding war. Let everyone else cut into their own budgets to secure the purchase of a property that is going well above its estimated value and decreasing the return with each new offer.

Strategies for Bidding Wars

There is a sound strategy that Austin property investors can use to come out on top and sidestep the pressure of bidding wars. First, line up multiple properties. Work with wholesalers and network with others so that if one prospect falls through or ends up embroiled in a bidding war, you can focus on other potential transactions. Second, nothing keeps a bidding war from starting like offering cash for the agreed upon price of the property. Bidding wars start based on promises. When Austin property investors can provide cash for real estate, sellers are likely to finalize the sale instead of holding out for higher offers.

Wexum provides the financing you need for property acquisitions in Austin. Don’t get caught in the bidding war trap, and the get the funding necessary to get the properties you want. Contact our offices today to learn more.

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