The Deal the Realtor Left to Rot
Once upon a time there was this 3 bedroom, 1 bathroom rancher set back from a busy road in an extremely desirable area of town. The home, purchased for $289,000 two years before at the peak of the market, was barely worth what the owners had paid for it. But the owners, a lovely husband and wife, had found themselves having to move away and sell the home.
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The realtor, wanting her clients to come out ahead on the deal after they paid her commission initially listed the home for $329,000 at the start of 2010.
This home, with its striking red door, caught our attention the minute the “For Sale” sign went up but we didn’t pay much attention to it until a few months later we noticed the sign said “Price Reduced!”.
We pulled over so I could call the realtor. The realtor explained that the property was now reduced to $319,000. We made arrangements to see the property the next morning.
We went and viewed the home, and while it is in good condition, showed very well and was one of the lowest priced homes in the area, it’s only a 3 bedroom and 1 bathroom home. Having a second bathroom is pretty important in this market. But the price, for that area, was interesting. I asked a lot of questions and discovered that the sellers would probably go to $305,000 because the realtor had agreed to cut her commission so they could still make money on the deal. Turns out, she’s the one that sold them the home at the peak of the market.
I told the realtor we could probably do something around the $300,000 mark – maybe $305,000 – if the seller would be willing to carry a second mortgage on the property for us.
After a long chat, we left, and she agreed to contact me about the second mortgage option.
A few days later, I actually sent HER an email to follow up because I hadn’t heard from her. She said that VTB’s are hard for people to understand. I wasn’t sure if that meant that the sellers wouldn’t do it or if she had even talked with them about the option. Either way, it didn’t sound like $300,000 was a go for them.
The market really started to move in late March and early April but still, the home sat there. On April 8th, the price dropped to $309,900. I didn’t hear from the realtor before the price dropped but I didn’t think anything of it since I had made it clear that I was only going to play at $300,000.
How the Realtor Lost the Deal
Here’s the kicker though … and here’s where the real estate agent really failed to make this deal happen:
In May the list price dropped down to $299,000.
My phone didn’t ring. My inbox didn’t fill up with emails from her. I didn’t hear a thing. Of course, we follow the market closely so we knew it had dropped, but most folks wouldn’t know that. Yet, she never bothered to call. She had my business card, we had exchanged phone calls and emails. She should have had my contact information. But I didn’t hear a single thing from her.
By this time we had our hands full with 3 other deals so I wasn’t about to chase this one down. Instead, we kept an eye on it.
But then something sad happened last week … something I have seen happen so many times … the sellers changed real estate agents and the new agent listed the home at $284,000 with the caption “PRICED TO SELL”!
So this poor home that we would have considered buying at $300,000 is now probably going to sell for $278,000. And at that price, it’s under it’s market value. But it will sell down there for the simple reason that the market has slowed down again and now everyone looking at it is wondering why it’s been on the market for nearly 6 months when it’s in such a good area!!
The sellers are going to take a loss, the realtor that tried to sell it won’t make a penny, and the whole story could have ended differently if only she’d made one single phone call.
There’s a Japanese proverb that says “Money grows on the trees of persistence“. Or, put another way, money rots on the trees of laziness. I can’t say for sure we would have purchased it … but I know Dave, my husband and investing partner, was pretty keen on this home. And if she would have called I can guarantee she would have had an offer in her hand at the very least.
Instead she lost the listing, and she lost me. I won’t ever deal with her and I certainly would never recommend anyone I know use her.
This is a great failing on her part, and she’s not the first to make this mistake. My Grandma’s words ring through my head reminding me that this home wasn’t meant to be for us which is why she never called. I couldn’t agree more. Even now, at such a low price, I am tempted but not that tempted, for the simple reason that it’s going to be tough to rent out with only one bathroom. So it wasn’t meant to be for me, but who was looking out for the sellers?
I’m not just going to point this lesson at realtors who fail to follow up … Joshua Dorkin posted a video this week about an investor on the BiggerPockets forum that was losing a deal because a very persistent buyer couldn’t get in touch with them about the property they had posted.
In the short term a single phone call could mean the difference between doing a deal or not doing a deal. In the long run it’s your reputation and your deals at stake.
The secret to success really is simple: FOLLOW UP. Don’t let your money rot on the trees of laziness.
1st Photo Credit: Julie Broad
2nd Photo Credit: IStockPhoto 001abacus