Why does it seem so hard for a realtor to submit low ball offers?

Investor · Anchorage, AK · Member since 2016 · 222 posts · 294 votes

So, I haven't been doing this often at all, but with 3 different realtors I've talked to, it seems like they are so annoyed with submitting low ball offers for me. They all say it in an annoyed way "I'll do it... but its not going to get accepted". I don't want to hear that! Why is that? They should be working for me and should represent me no matter what, without saying anything back to me. I've finally found one that is so far the best realtor I've dealt with, but I could still tell she was disappointed that my offer was low, and even said "I definitely won't be making 10-20 of these kind of offers for you". How the hell am I supposed to get a distressed property for %80 ARV if the realtors don't want to make the offers for me??? Anyone have any advice? Oh and by the way it was a foreclosure property that I made the offer on.

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Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

10y

Because they realize you are basically a waste of time, and when and if you do actually get one after so many offers/showings, they'll be making about $2.00/hr. And with the attitude "you should do what I want, and not talk back to me"......I wouldn't talk back to you much, just enough to say "see ya', have a nice life".

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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
10y
agents dont want to see sales prices drop , it effects their commission and can lower the comps in the area , possibly reducing commissions in the future . My personal house was listed for $ 499,900 . I told my agent to offer $ 425,000 cash .She did but was reluctant . Seller responded that they wanted full asking , told the sellers to hang on to the offer when they change their mind , call me . house sat for 3 months , 2 price drops . The seller contacted my agent and asked if my offer was still good , I dropped my offer $ 25K to an even $ 400K cash final offer take it or leave it . ......... They took it . House appraised for 475k then the bottom fell out , Now 10 years later similar houses are selling for $ 450K .
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Mike Sattem
Investor · La Grande, OR · Member since 2014 · 194 posts · 176 votes
10y
Hey @Jay Hinrichs,
PREACH IT BROTHER!!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Mike Sattem Love your neck of the woods Montana in ORegon.. best kept secret in the west.. !
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Mike Sattem
Investor · La Grande, OR · Member since 2014 · 194 posts · 176 votes
10y
@Jay Hinrichs,
Only place with a 4 year college, 3 lumber mills, and a walmart for 200 miles!
@Brandon Turner, that's Real Rural, not just down the road from Seattle Rural.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Mike Sattem In my Timber days I bought a few units in the hills there and I had the huge 50k ranch out of north powder in contract.. but the export slid and we could not close. plus the seller kept upping the price ..
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
10y
@Cam Jimmy Firstly I don't get many deals from the MLS. There are times when the MLS is full of them and times when inventory on the MLS is tight.
One question is, what kind of properties are you making offers on? Is there some reason to think that a low offer maybe accepted or countered; or are you randomly sending out offers?
Does the agent have a clue about investor deals? Maybe you have the wrong agent. Does the agent work with other investors?
Does the agent understand the benefits of dealing with you? Do you have a track record to point to? Or as already mentioned, evidence of the financial wherewithal to pull off deals? Do they understand that, they will get the listing when you rehab and flip? Does the agent have the ability to auto fill contract so they are easy to blast out? Does the agent understand that you will be a repeat customer? A homeowner buys a house on average every 7 years. You may buy 7 houses in a year.
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David ShortPro Member
Flipper/Rehabber · Fishers, IN · Member since 2014 · 71 posts · 47 votes
10y
Pay the agent $10 per offer so they know your not wasting there time. When you get an accepted offer then you recover a portion of the offer money. Based on your post you will then understand why you can't get an agent to work for you or you will make better offers to save you money. You will get tired of paying. I've done over 100 flips in past 3 years and have never used this approach .
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Patrick Britton
Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes
10y
@Cam Jimmy As a real estate broker who has experienced dealing with buyers and their lowball offers, I feel I offer some particularly unique and valuable insight.
When it's a hot real estate market, brokers want to deal with people who are serious. This means having your financing in order and being picky about submitting offers. For example, some investors want me to submit offers on 3 or 4 properties per day and through the law of large numbers, we would eventually get something. Well, that's a total waste of my time. Being a realtor is like owning your own business and the buyers and sellers are the customers. Businesses will go out of business spending huge amounts of time on customers who never buy. It's as simple as that.
Sure, you might think that you are special and you're worth their time, but you have to earn that trust.
One of the ways to earn their trust is to respect their time. So if the market does not allow for lowball offers, such as anywhere in Western Washington, don't submit lowball offers. I know there is a stigma around real estate agents, that they are only in it for the commission, but there are few of us who look after your very best interests. These people know when offers are a waste of time or not.
If you still feel the need to submit lowball offers, you will find yourself dealing with some of the less experienced and less educated agents who are able to spend their time less wisely.
Real Estate agents are not here to be used and abused by newbie investors needing their ego stroked.
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John Mathewson
Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes
10y
My thoughts. I started my real estate investing career getting my real estate license. This was the best thing i have ever done for my investing career. As a new agent submitted hundreds of lowball offers every week. While i was young and a new agent i was willing to do that. However as many people mentioned it is a lot of work for very little reward. As just an agent my time would have been better spent focusing my efforts else where.
Here is my suggestion. 1. Find a young new or hungry agent willing to work and learn. 2. Do your due diligence before having them write up the offers. The most frustrating thing as an agent was when i submitted the offer for what the client wanted got the house accepted after a ton of negotiating and convincing only to have the client go through the house and tell me. No i cant make it work now. Just my thoughts would love to help if i can.
@Cam Jimmy
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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
10y
Suggest perhaps to get your own license. Reputable agents when submitting low ball lose their ability to work with locals. They will help you to write offers only if it is close to what they think the sellers will accept.
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Thomas Fisher
Real Estate Professional · New York City, NY · Member since 2016 · 20 posts · 2 votes
10y
Realtors work for commission only. Why would they want to represent a time waster who is submitting unrealistic low ball offers that likely won't get accepted? Their time also has value ..
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Bob CollettPro Member
Property Manager · Brecksville, OH · Member since 2014 · 486 posts · 464 votes
10y
Here is another way to look at this question. Let's say it takes 2 hours of your agent's time to show you a property, write an offer... and another 2 hours to respond to the seller counter, etc. Of course you respect your agent, so would you be willing to pay her $50 per hour to happily write the offer, another $50 per hour to respond, and perhaps another $50 per hour to run around and show you properties. Doing this, you could then arrange to have your agent rebate some or all of the 3% commission they are going to make when the deal on one of your $25,000 properties finally goes through.
If you would be willing to pay the agent for her work in this way, you would have the basis of a wonderful relationship. Since you seem to know better than your agent if your offer is reasonable, and you would not be willing to pay the agent for working for you and doing as you ask, then why not?
This follow-up is not meant to propose an alternative to working with an agent on a commission basis... but more intended to help you see what you are asking your agent to do for free. There are only so many hours a day. Imagine how much money an "investor friendly" agent would make, if their 20 investor clients each had them show 20 properties per month, place 20 offers per month, and closed on a total of one or two per month. It would not cover the gas!
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Tom V.
IA · Member since 2015 · 304 posts · 152 votes
10y
@Cam Jimmy
I used to think that the "shotgun" approach, as @Jay Hinrichs referred to it, was something I wanted to try, but I quickly changed my mind (thank you BP forum members). Here's something I've realized about the MLS. If your market is a seller's market like mine is, then making low ball offers on properties that are listed on the MLS is a waste of time for you, your agent, and everyone involved.
The MLS is like an auction block. The reason people list their homes on the MLS is so that the listing can be seen by thousands of potential buyers, and those potential buyers will have a bidding war to see who is willing to pay the most for the property. When a seller is listing their home on the MLS, this means that they are wanting to get the maximum dollar they can for their property. This is also why banks prefer to list their REO properties on the MLS.
And, the seller's agent (or the bank's agent) has likely made a recommendation to them what their asking price should be, so you can usually assume that the asking price is likely within 10% of what the market says the property is worth. Remember, the selling agent only gets paid when the property sells, so it is their best interest to price the home competitively. There would be no reason for them to accept your 50% offer, when they know that if they just hold out a little longer they will likely get 90% or better from one of those thousands of eyes that are searching the MLS every day.
Now, if you're talking about distressed properties that you've found yourself that are not listed on the MLS, then that's a different situation.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
Cam one last thing and this is something many folks who don't know exactly how RE works
is that agents are not employees they are independent contractors so they are not obligated to work with someone they do not have a contract with.. now some redfin agents I think work as employees but 99% of the agents out there are independent contractors and there is nothing that says the are obligated to work with anyone they don't choose to work with.. you may already know this but sometimes folks don't ...
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Ryland Taniguchi
San Francisco, CA · Member since 2015 · 786 posts · 717 votes
10y
In a hot market like today, as a buyer agent you get deals accepted based on having a good reputation with listing agents for being able to deliver and close. A buyer's agent that makes lots of lowball offers will ruin their reputation.
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Cam Jimmy
OP
Investor · Anchorage, AK · Member since 2016 · 222 posts · 294 votes
10y
Great thanks for all the info people! So I guess I am currently in a sellers market (which I did not know), but here are the details of my offer I made.
Forclosure listed in MLS for $199,999. ARV would be about $290,000. MY estimated repairs are $70,000-$85,000. I "low balled" a $160,000 offer. 160,000 + (estimate) $75,000 = $235,000. then I added about $25,000 for realtor fees and cloasing costs to sell. That comes out to $260,000. Then I figure it would take about 2-3 months to be able to fix it and sell it AFTER I close.. so ($1600 x 3) for holding costs about $5000. so MY total cost would be about $265,000. so I would walk away with approx. $20,000-$30,000 profit total.
Does this seem unreasonable? I personally do not think so, but like I said, I am new and I don't know anything :)
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Anthony Angotti
Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
10y
@Cam Jimmy
Remind them that they have a fiduciary responsibility to represent you :)
Also, find an investor friendly real estate agent...or say screw it and take the test yourself and save some money while selling/be able to reduce your commission to get the deal done.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Originally posted by @Cam Jimmy:

Great thanks for all the info people! So I guess I am currently in a sellers market (which I did not know), but here are the details of my offer I made.
Forclosure listed in MLS for $199,999. ARV would be about $290,000. MY estimated repairs are $70,000-$85,000. I "low balled" a $160,000 offer. 160,000 + (estimate) $75,000 = $235,000. then I added about $25,000 for realtor fees and cloasing costs to sell. That comes out to $260,000. Then I figure it would take about 2-3 months to be able to fix it and sell it AFTER I close.. so ($1600 x 3) for holding costs about $5000. so MY total cost would be about $265,000. so I would walk away with approx. $20,000-$41630,000 profit total.
Does this seem unreasonable? I personally do not think so, but like I said, I am new and I don't know anything :)
The listing price of the property does not matter. Is the market value of the property close to $160k? If it is, then it is a perfectly reasonable offer for the property. If the market value of the property is $100k, then you are greatly over paying. If the market value of the property is $200k, then your offer is likely too low to be even worth making the offer.
You need to learn to value the property independently of what the list price is. If you can not, then lean on the advice of someone who values property every day like an agent.
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Christina CareyPro Member
Real Estate Broker · Dayton, OH · Member since 2010 · 245 posts · 186 votes
10y
@Cam Jimmy I wouldn't call 80% of list price an unreasonable offer at all. Don't know how long it's been on the market already, but around here, if an REO is priced appropriately, there will be multiple offers on it in the first day, and it will sell at or above list price (this applies to investors as well as those which are limited to owner-occupants only for a period of time). If it's still available at that price after a week or so, then they have priced it too high. Depending on the bank who owns it, I would be looking for a price reduction at around 30 days on market - likely $10K-20K at that price point. Be ready to submit that $160K offer when that happens.
That said, for a property that needs $85K in work (that's an awful lot for a house that is worth less than $300K, by the way), I personally would not want to purchase for more than $120K. Something else to consider: I can do a whole lotta work for $85K ... including major structural repairs. If your repair numbers include major work like this, you might want to rethink this property. Major structural work is better left to those with some experience under their belts and not usually a good project for a newbie.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Originally posted by @Matthew Paul:

agents dont want to see sales prices drop , it effects their commission and can lower the comps in the area , possibly reducing commissions in the future . My personal house was listed for $ 499,900 . I told my agent to offer $ 425,000 cash .She did but was reluctant . Seller responded that they wanted full asking , told the sellers to hang on to the offer when they change their mind , call me . house sat for 3 months , 2 price drops . The seller contacted my agent and asked if my offer was still good , I dropped my offer $ 25K to an even $ 400K cash final offer take it or leave it . ......... They took it . House appraised for 475k then the bottom fell out , Now 10 years later similar houses are selling for $ 450K .
Sorry to pick on you a bit here, but I see this mistake in the logic of many people on BP often. Agents absolutely do not care about the price point of the sale other than to make their clients happy. Take your scenario for instance with a $75k price difference. After factoring in the typical commission split which will be 75/25 for most agents, then 20% business overhead, and income taxes, (this is self employment income so taxed higher) the actual in pocket difference for the agent is about $732. ($4875 vs $4143). Now thinking strictly in economic terms, is the agent more incentivized to make $4143 today, or the possibility of making $4875 sometime in the future. The incentive is to close the deal now for a guaranteed amount.
Agents dont care if prices go up or go down. The effect on their commissions is pretty negligible after the brokerage, business and government take their cut.
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Julie N.
Real Estate Investor · Unionville, CT · Member since 2016 · 260 posts · 167 votes
10y
I'm an Agent in CT. I have put in countless "low ball" offers and have to do it when I'm representing a Client. Sometimes my gut tells me it's not going to go anywhere- but that doesn't matter I do it anyway since that my job. Investors are great since they purchase multiple properties over time instead of regular homeowners who usually purchase 1 or 2. So if that low ball offer doesn't get accepted- another one will. It's just a matter of time. You do have to find the right Realtor for you although we are all required to put in what the Client wants. Some will do it with a smile on their face😀.
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Brooke Bennett
Real Estate Agent · Hendersonville, NC · Member since 2015 · 8 posts · 2 votes
10y
I'm a Realtor that is "investor friendly" because I own a real estate investing business and am also an agent so I share a similar mindset with 100% investors. I work in the Bozeman (Gallatin) area of Montana. I know many investor friendly agents in other cities if anyone needs one in another area. I have a few buyers that are renovators, and some that are buy and hold investors. As an agent, they can't be afraid of hearing no and to go pound sand. Unfortunately they will hear no more than they will hear yes if working for investors but it's all about being creative and making the deal work for everyone or walking away. Ask your agent (if you are new to working with them) if they are skiddish about asking low offers. If they are, move onto the next one.
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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
10y
Originally posted by @Russell Brazil:

Originally posted by @Matthew Paul:
agents dont want to see sales prices drop , it effects their commission and can lower the comps in the area , possibly reducing commissions in the future . My personal house was listed for $ 499,900 . I told my agent to offer $ 425,000 cash .She did but was reluctant . Seller responded that they wanted full asking , told the sellers to hang on to the offer when they change their mind , call me . house sat for 3 months , 2 price drops . The seller contacted my agent and asked if my offer was still good , I dropped my offer $ 25K to an even $ 400K cash final offer take it or leave it . ......... They took it . House appraised for 475k then the bottom fell out , Now 10 years later similar houses are selling for $ 450K .
Sorry to pick on you a bit here, but I see this mistake in the logic of many people on BP often. Agents absolutely do not care about the price point of the sale other than to make their clients happy. Take your scenario for instance with a $75k price difference. After factoring in the typical commission split which will be 75/25 for most agents, then 20% business overhead, and income taxes, (this is self employment income so taxed higher) the actual in pocket difference for the agent is about $732. ($4875 vs $4143). Now thinking strictly in economic terms, is the agent more incentivized to make $4143 today, or the possibility of making $4875 sometime in the future. The incentive is to close the deal now for a guaranteed amount.
Agents dont care if prices go up or go down. The effect on their commissions is pretty negligible after the brokerage, business and government take their cut.
No offense taken . Its just whatI have experienced in my 10 sq mile area .
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Ken Quella
Cleveland, OH · Member since 2015 · 23 posts · 2 votes
10y
@sean
@Sean Cole Hey Sean. Just got my sales license up in Cleveland. Mind sharing with me your 10 second offer trick? Haha! Seriously though........... :)
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Greg JeanfreauPro Member
Real Estate Agent · New Orleans, LA · Member since 2015 · 146 posts · 127 votes
10y
Some incredible deals happen well over the asking price. If an "investor" puts in a low ball offer when there are 10 other offers on a new listing, then that investor is wasting everyone's time. Going below market is fine when there is an opportunity to do so, but not in every case.
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