Atif Afzal bought his first property in Monroe, New York in 2019. He liked the town because of its proximity to New York City: It's about 50 miles north of the metropolis and an easy commute in and out of Manhattan.
When the COVID-19 pandemic hit in 2020, prompting people to flee the city and head toward more suburban areas like upstate New York, the real-estate market started taking off in his area and he saw tremendous appreciation.
It has become increasingly more competitive to buy in Monroe, said Afzal, who owns five properties, including four long-term rentals and a primary home. Business Insider verified his portfolio by looking at his tax cards and mortgage records.
Over the past couple of years, buyers have been making offers up to $100,000 over asking, said Afzal, who acquired his most recent property, a single-family home that he now lives in, in 2023. He had to go over the asking price by about $25,000, but "it wasn't that high compared to how the market has been behaving," he said.
One strategy that set him apart from the competition was offering what's called a leaseback, which is when the seller leases the home back from the buyer for a set period of time. This typically happens when a seller isn't prepared to move out immediately because they need time to find and/or renovate their next home.
"They wanted a six-month grace, in case one of the deals fell apart," said Afzal. "So I bought it off them and they rented it back from me for about four or five months before I could finally move in."
He was able to offer a leaseback because he was planning on turning the home he was living in at the time into a rental property. When he eventually moved into the single-family, he filled the other home with a tenant.
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Afzal also doesn't shy away from reaching out to the seller. "Most people that I know would just put in an offer and sit tight," he said. "But when I put in an offer, I present whatever credibility I can to help them understand that I have a credible income source, this is my credit report, I have this, I have that. It's an amalgamation of all these factors that helps."
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Other ways to win bids: 'pre-underwriting' and writing letters
There are other strategies that can give you a leg up on other buyers in a competitive environment.
Real-estate agent and investor Dana Bull, who does deals in Boston, has experience helping clients win bids. A lesser-known strategy she recommends is called "pre-underwriting."
Typically, the underwriting process (which is when a lender looks at your creditworthiness before approving you for a loan) happens after you put a home under agreement. But with pre-underwriting, a mortgage lender will evaluate you before you submit on a home.
The main advantage is that the everyday buyer can close quickly, which used to only be a luxury for all-cash buyers who didn't have to worry about securing financing.
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"In situations where the seller wants a quick close, now you're really cooking with gas if you can close in 10 days," said Bull. "Usually, with sellers, they've been prepping their house, accommodating showings, and it's been in the works for many, many months, sometimes many, many years. If you can say, 'We're going to make all this go away in 10 days,' that very much speaks to people."
Similar to what Afzal does, you could also write a personal letter to the seller. While some realtors advise against writing letters, as it could violate fair housing laws and lead to discrimination, Bull believes that if you craft the letter the right way, it can give you an edge. The key is to focus on the property — the specific things that you like about it — rather than you the buyer.
"Talk about the property and why you are submitting a price at a certain price point and any other advantageous terms, like that you can close quickly," she said. "I still think that the offers with letters show that you've gone the extra mile. You just need to make it more about the property and less about the people."
