All investors go into a deal with every intention of sticking to the maximum price that they are "willing" to pay for a investment property.
Unfortunately the competitive nature in all of us has a way of changing that intention in a auction or bidding situation.
Auctions can be the most likely scenario for overbidding on a property.
You can physically see the other investors and how they are reacting to your bids.
It is very easy to think that just one more bid will land the property.
The problem is that if you do this to many times you may be far over your original top bid.
It is at that moment that the bidders stop bidding and you realize that you are the last bid.
All of the sudden you just bought yourself a new investment property for more than you originally wanted to pay.
Then a shadow of doubt comes over you and you begin to frantically crunch numbers in your head trying to justify the deal to yourself.
Another common bidding situation that a investor runs into is the open house "bid taking hour.
" Most good investments are fast selling properties that sell very quickly.
A lot of times these properties sell for more than the asking price.
In a lot of cases like this a agent will be working with a bank or a private owner who is motivated to sell a property that has been badly neglected.
Instead of going through a formal listing process the agent will let a group of investors know about the property.
Then they will arrange a showing over a one day period and the following day they will submit the offers to the property owner.
This time period could range from a one day to a weekend.
One house that I bought actually had a one hour showing, and that was all there was going to be for that property.
The point here is that the offer has to be fast and accurate on the part of the investor.
It is at this point where a good investment plan works in the investors favor.
A investment plan is basically doing your homework before you ever get to the auction and staying disciplined in your bidding.
There is no substitute for preparation in a hurried situation like this.
Preparation takes the doubt and guess work out of the equation.
That preparation should include checklists complete with pricing data for all of the potential repairs that this, or any, property may need.
A good investor can go over a house and get a very detailed cost analysis of the property in a very short amount of time.
Gathering pricing data is essential for a good overall cost estimate.
It is a good idea to put together room packages, that you know the total cost for, and check them off.
For example a bathroom remodel package would consist of a tub, toilet, paint, flooring, plumbing, electrical, misc, and anything else that you might need to complete a bathroom.
You would know quickly what it would cost to make the bathroom brand new.
In a hurried situation a investor could go room to room with a checklist and get a very accurate estimate in a very short period of time.
In summary, being prepared may just be the competitive advantage that makes a good investor great.
Checklists speed up time and reduce mistakes that could be made in a hurried situation.