Deal Velocity: Why Your Speed to Offer Determines Your ROI

Time is money isn’t a cliché in real estate investing; it’s an everyday reality. How fast you react determines everything. The speed at which you act from identifying a potential property to submitting an offer is known as “deal velocity” and is one of the most important factors to success as a real estate investor. Act too fast and you might be overpaying. Being too slow might cost you a potentially lucrative deal.

Finding the right deal velocity isn’t easy. With the real estate market becoming increasingly competitive, the biggest challenge investors face is the time crunch in securing a deal. Speed doesn’t just determine whether you can make a deal. It’s one of the biggest factors impacting profitability.

Fast deal velocity avoids bidding wars, reduces holding costs, and improves cash flow to make your portfolio more agile. Getting in early with an initial offer makes you more likely to negotiate favorable terms, while a faster deal velocity in hot markets can give you added confidence by locking in a deal before comps change.

At Privy, we automate the slowest parts of your investing, from sourcing to deal evaluation, allowing you to make informed decisions in just minutes. Speed wins in real estate, and Privy gives you the confidence to act quickly and decisively. Read on to find out more about deal velocity and how it positively impacts your return on investment (ROI). 

What Is Deal Velocity?

Deal velocity is the timeline during which investors identify and execute potential deals. It’s an important metric for investors, determining how many deals they can complete in a timeframe. Deal velocity essentially tracks the progress of your investment from concept to contract. The faster your deal velocity, the more opportunities you have to expand your portfolio.

Deal Velocity vs. Market Velocity

As a real estate investor, you’re also likely to come across the term “market velocity”. It’s important to distinguish between deal vs. market velocity from an investor’s point of view.

Market velocity is the average timeline for property sales in a specific area, usually tracked by the days on market (DOM). If an area has a low average DOM, it has higher velocity, meaning properties are sold within a few days or weeks of being listed. By comparison, deal velocity focuses on how fast the investor moves from identifying a potential lead to closing the purchase transaction.

The impact of deal velocity is based on the simple theory that moving faster means more profitability. A faster timeline with less friction can boost your ROI by:

• Enabling you to close more deals quarterly or annually by freeing up resources and capital.
• Reduce holding costs by accelerating expensive parts of the investment process.
• Giving a competitive advantage by allowing investors to act faster than their competition, providing them with added negotiating power by making an early offer. 

Improving your deal velocity by using tools like Privy’s LiveCMA™ gives you a competitive advantage in an industry where time is money. 

Why Speed to Offer Directly Impacts ROI

The speed with which you make an offer directly impacts your ROI, as acting quickly enables investors to lock in potential deals before the competition can make an offer. Fast investors have negotiating power and often make below-asking offers work for distressed listings. 

Any delay can change your comps and budgeting, especially in today’s economic and geopolitical climate. Delaying your timeline by even a few days could create an opening for other investors to make an offer.

Properties with the best investment potential often go off the market in the blink of an eye. If you show up late to a deal, you’re more likely to enter a bidding war than to be able to leverage your negotiating power for lower pricing. Investors with a faster deal velocity can get an offer in before other investors can start bidding, closing the deal with accurate, real-time comps.

On the flipside, delays can kill deals and bulldoze your profit margins. Every day you delay increases the probability of other investors bidding, a cash buyer snatching a deal, or the listing being repriced or modified. Delaying your deal velocity can also hurt your bottom-line during repairs and renovations if a short delay results in less favorable construction prices or labor availability.

A faster deal velocity means quicker acquisitions and a lower exposure to external risks, such as market volatility and construction delays. 

The Benefit of Compounded Returns

If real estate investing is your full-time job, the compounded returns from faster deals can have a major impact on your ROI. Slower investors may close a couple of projects per year, from the initial purchase to flipping the property. Smart investors with a faster deal velocity can use the compounded returns from their investments to complete more deals annually.

Reacting faster means you can cycle through more deals in a shorter time frame, while using this higher deal volume to negotiate better terms with lenders, contractors, and agents. Closing more deals means you can secure a better overall ROI with less pressure. 4 deals a year with a 23% ROI give you more profit than 1 deal with a 45% ROI.

Reduces Exposure to Shifting Markets

Things change quickly in the world of real estate. The numbers you have today might be out of date by next week. Local demand, mortgage rates, and comps can change almost overnight in hot markets. The faster you act, the lower your exposure to shifting markets. A quicker deal velocity makes your original exit strategy more probable by preserving the calculations that made the deal evaluation attractive initially.

The Costs of Moving Too Slowly

A slow deal velocity is risky, creating opportunities for your competition, introducing the potential for market volatility, and minimizing your potential leverage. Investors, particularly those early in their journey, often find themselves tackling analysis paralysis, spending too long crunching the numbers and analyzing a potential deal, so that they miss the most lucrative window to make a deal.

Slower deal cycles lower your annual ROI by reducing the number of deals you can make annually. If you’re waiting for a traditional appraisal, instead of using investor-focused comp data through a platform like Privy, another investor is likely to have an offer accepted while you sit around waiting for your valuation. 

Cash buyers can move quickly, especially in hot markets, while wholesalers typically close deals in just hours. Privy gives you the tools to never miss a deal with an instant notifications when a potential deal that matches your investor profile goes live on the MLS. With Privy, you’ll never miss an opportunity to make a deal on day one.

Here are some common costs of moving too slowly in real estate:

• Delayed renovation start times can have a ripple effect if material costs rise and if seasonal availability impacts your exit strategy or contractor availability.
• Moving too slowly can lead to longer project timelines, higher holding costs, and tougher resale conditions that can negatively impact your exit strategy. 
• Having your capital tied up in a slow-moving deal reduces your capital rotation and portfolio efficiency, meaning you’ll close fewer deals annually with a lower ROI.
• Potential market shifts can drastically reduce your initial profit estimates if there are changes in interest rates or if more favorable market conditions lead to more competition and a potential bidding war.

The Relationship Between Deal Volume and Profitability

Deal velocity is important because it determines how many deals you can close annually. Investors can’t underestimate the relationship between deal volume and profitability, as closing more deals helps establish stronger relationships with contractors and agents, leading to more competitive pricing and better negotiating terms.

A higher deal volume creates operational efficiency for your project management. Instead of starting from scratch after every deal, you’re able to quickly re-establish your workflow for compound efficiency. 

Your contractor is more likely to prioritize your work and pass on potential savings, while agents can bring you pre-market deals if they know you can make a fast offer. Repeated deals help standardize your repair and renovation timelines, streamlining the process.

Investors who have a higher deal volume have more negotiation leverage. Private lenders may offer better rates, while hard money lenders can waive upfront fees or offer pre-approvals. These benefits reduce transaction costs, boosting your ROI by improving your bottom line. 

How Privy Enhances Your Deal Velocity

Privy’s direct-to-MLS data enables you to see listings as soon as they hit the market for instant comp-based analysis. Our investor-focused data makes it easier to pre-analyze deals with market insights that support faster decision-making. Investors who can analyze quickly and leverage data can make faster deals than competing buyers.

Moving quickly doesn’t mean that investors have to cut corners or overlook due diligence. Privy supports smart decisions and faster deal velocity by automating the slowest aspects of deal-making.

Real-Time MLS Integration

Our real-time MLS integration gives investors instant visibility, letting the know the moment the clock starts ticking on a potential deal. Identifying deals early puts you ahead of the competition, giving you time to analyze data and do your due diligence before other investors have had a chance to look at the listings. 

Privy drastically reduces the timeline for making comp-based analysis by automatically pulling real-time data, calculating ARV, and the profitability of different exit strategies. Having access to automated comp-based analysis reduces the potential for analysis paralysis, allowing you to decide about pursuing potential deals in just minutes. 

Mimic Proven Investor Strategies

By tracking investor data, Privy makes it easy to mimic proven investor strategies for added confidence. You can navigate markets like a local with real-time insights to track deals in real time. 

Privy’s LiveCMA™ analyzes investments, including all existing home sales, completed listings, and rental comps, which update in real time to reflect the latest real estate market conditions. These insights show you exactly where to look for profitable deals and which deal types perform best. 

Customizable Alerts

Privy is your partner in securing profitable real estate deals faster. Set customizable alerts using smart filters that align with your portfolio priorities, including property type, investor activity, and neighborhood. 

You’ll receive an instant notification once a new listing is live that matches your smart filters. Privy does the property hunting for you, bringing the deals directly to your inbox.

Reduced Risk Leads to Faster Action

Many investors get analysis paralysis because they doubt their research or worry about making a bad financial decision. Privy gives you the confidence to move quickly, validating your investment strategy with comprehensive data you can trust. By showcasing proven investor strategies in the local area, you can compare your potential deal with recently sold properties, off-market deals, and pocket listings. 

Privy helps you avoid second-guessing, allowing you to make better deal evaluations and move faster to boost your ROI.

Leverage Privy’s Real-Time Data to Close More Deals Faster

In low-inventory markets, speed isn’t just about beating the competition, it’s crucial for keeping your portfolio alive. Securing deals in today’s market relies on fast execution. Across every market type, the faster you move, the more deals you’ll close and the higher your earnings will be. Privy’s real-time data takes investors from being reactive to proactive with faster deal velocity. 

Acting quickly doesn’t mean you’re being reckless. Moving fast gives you more control over everything from purchase price to exit timelines and overall profitability. With Privy, you don’t have to choose between speed and accuracy. Our direct-to-MLS data enables investors to deliver consistent returns by closing more deals annually.

Privy helps you win deals faster in an industry where speed means everything. By automating the slowest parts of the acquisition process, Privy empowers investors to make smarter, data-backed decisions in just hours.

Ready to improve your deal velocity? Attend an on-demand demo to see Privy’s comprehensive data in action and for a guided tour of Privy’s features, showing you how to leverage our real-time data for smarter deal evaluation and optimized profit margins.