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.
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".
I think we will all agree that when it's a seller's market, low ball offers aren't the greatest idea. And i think there's a difference between an unsupported low ball offer and a "regular" low ball offer. A low offer that is supported with empirical data, bids, inspection reports is a whole lot different than "let's offer $70,000 on this property asking $110,000 and see what happens."
But what seems to elude a of people here, is the value of time.
I should add that i've had a few people waste a lot of my time. You don't understand the irritation that comes with spending hours on something to end up with absolutely nothing until it's happened to you personally. It's especially painful when you knew at the beginning that this "investor" was useless. If this has not happened to you, you have no basis for argument.
Here's the trouble with submitting a lot of low ball offers and relying on the law of large numbers to get deals: you only have a certain amount of time in a day and must spend it in the most efficient manner possible. Spending hours sending useless offers is a cost.
Personally, I cannot afford to waste time on low ballers when there are so many other intelligent, qualified, legitimate and rational investors to work with. Why spend time with the trash when there is so much greatness out there? Why tell my top buyers, "sorry i didn't get back to you, i was busy sending unrealistic offers for some unqualified deadbeat?"
Fiduciary duty is not the same as blind obedience. Great realtors are not order takers.
@Bob Collett that is a great, fair, and reasonable idea.
I realize this is more of a philosophical question that has no "answer," only opinion. To solve @Cam Jimmy's problem about getting agents to submit low-ball offers, i'd suggest either giving agents payment for their time, supporting the offers with facts and data, or find a young, energetic, keen and obedient agent to take orders.
I learned this from an overpriced guru; look on realtors and screen for ones who list "investment" on their bio. You can either call, beforehand or after you find a property, and ask if they are comfortable writing lowball offers. These are much more likely to work with you to reach your goals.
It really is that simple.
I love reading all the posts about how real estate agents are basically your task force. When I interact with investors that feel this way, I fire them before we ever get started. Real estate agents get paid when a transaction closes. Period. Between being an agent and running my own company, I don't have time for people that want to waste my time. If you're not going to actually buy something, then go find someone else to waste their time. You need to have skin in the game just like any other deal. If you want to write lowball offer after lowball offer, then you should pay the agent to do so, because they really aren't your real estate agent anymore, they are an acquisition employee in your enterprise. The likelihood that an offer will get accepted is incredibly low, so you in essence are just someone pulling focus from things that will actually generate revenue. And for the person saying pay them $10/offer, if you're finding agents that will work that cheap, good for you! And for the person saying they can have a legitimate real estate offer package (which would be approved by your state's Division of Commerce and Real Estate) in under 10 seconds, I say, I doubt it. I have templates set up that make the time it takes to generate an offer package very efficient, but it's not 10 seconds. It's probably not even 10 minutes.
Bottom line, if you want to throw out offers on MLS listed properties at 40-50 cents or lower/dollar, then you should get your own license and do it yourself, or pay an agent a reasonable amount of money to do it for you. If you want to recoup the cost of an actual transaction completed, then you could consider that if you're cheap, but you're asking someone to waste a ton of time for you, when there is very little upside in it for them.
It's like anything else in a real estate investing transaction: You all need to provide value to the transaction or it makes no sense to partner up. Doesn't matter if you're doing a flip, or a normal real estate deal. If you don't provide value, I'm going to find someone that does.
I was taught not to make low ball offers, because they are a waste of your time... not just the realtor's.
I was taught to setup searches on a MLS service like Zillow and the day you are alerted that a property hits the market (that fits your guidelines), write an offer for it at or above asking price. Speed is important because good deals don't last.
@Ken Quella and @Matt Motil because I'm a full time wholesaler and speed can very frequently matter in my business, as well as having a need to track a large number of properties at all times, I use a custom Salesforce platform (partially built by a company call REthink). There's an app that I've installed called Drawloop that I use to generate offers very quickly. I've uploaded our local board contract, along with all required addenda and have essentially inserted mail merge fields that pull info from the property and from my offer terms (all I have to type to make an offer is the following:
Offer Price
EMD amount (in numbers and words)
Buying entity
Inspection Days
After that, I push a button in Salesforce and the entire offer is generated as a .pdf. I've got about $10,000 in building out the system to where it is, so it's not generally cost effective if you're just doing a few deals a year.
I'm also a licensed real estate agent, but as I said, I still wouldn't run around submitting a bunch of low ball offers for anyone. Aside from the time spent writing the offers, I can't do anything to be more efficient with following up on them.
The funny thing is that as an agent, I would rather attend a sheriff sale with my investors or go with them to explore a wholesale property than to write unsubstantiated low ball offers. I won't get paid for the other activities, but they can be much more fruitful for the buyer without stepping on toes. And if they do work out, I will likely get a listing out of it.
how low are you offering
Cam, I'm thinking you didn't mean to come across like you did in your original post? Probably just frustration talking I'd guess? You've received some very good responses from investors and brokers.
I guess I would empathize that a well funded or financed investor and a smart real estate broker can make a lot of money together but you need good communication and mutual respect for it to work.
Tons of great advice here!
My suggestions would be - Find a new, hungry agent. Many of the top players that have been around for a long time already have a steady pipeline full of leads and referrals, and their time is much better spent nurturing those relationships rather than running around making tons of low offers on cheap properties.
Be upfront with your agent about what you want to do, your goals, etc. They may even come up with ideas that you haven't thought of as long as they know what you're hoping to accomplish. Once you find a good agent, be loyal to them. Let them know that if they help you find a deal, you will list with them. They may be more willing to spend more time with you on the buying side, knowing that you will be selling with them. Be respectful too. I think many people don't realize how much work goes in to showing properties, writing offers, negotiating, etc.
OR - Go directly to the listing agent. They may be more willing to work with you because they would get 2 sides of the transaction. I love the idea of just writing a quick email outlining the terms you would like to offer, as suggested previously. That way, you know if you're at least in the ballpark, and the listing agent works directly with the seller so they know more or less how negotiable the seller will be. This will also save everyone time. In your email, clearly outline purchase price, earnest money, financing terms, closing date. Let the listing agent know if they think you can get the deal done, you would write the offer with them. That way, they'll have a little more incentive to make it work.
@Andres Piedra @Brett Tousley . You are correct, I did not intend to come off like that lol. I have this same problem with text messages to my family and friends as well. I need to learn to write/communicate better in the future :). Anyways thanks for the responses!
no worries :) I figured that since I do it a lot.
Cam,
First of all I just got back from a couple weeks of doing a driving tour of Alaska and I have to say I LOVE your state. What a phenomenal place. I still can't get the salmon quesadilla from AK Alchemist out of my mind. Anyway, as to this - the answer is you need two kinds of realtor. There are investor realtors and there are retail realtors. When I was on a buying spree, I had my investor realtor who made all of my "insulting" purchase offers because he was young, aggressive and frankly needed the money. He did well and got 30 or so closings from me where he averaged about $1000-1500 a closing. One thing that helps with a guy like this is we had an agreement set up where his commission always had a baseline minimum in his pocket of $1,000, if I remember correctly. I made up that $1,000 easily in having a realtor willing to send insulting offers 6-10 at a time to see who would counter us.
Your retail realtor is who you use to sell your properties. That's the realtor you use to act shocked at the insulting offers you receive from people like the first paragraph.
@Timothy W. I totally agree.
I submit 6-10 offers easily before some one takes the bait. A lot of other Realtors are insulted, or just don't get it.
If you use a weak agent, they have weak results. If you're scared of submitting a lowball offer, get out of the game!
There you go Cam. There's your insulting, lowball agent for making the right kind of offers. :-) James, you owe me one of those Kobuk donuts now. :-)
Cam, depending on the bank, they will usually have a threshold that they won't go under based on their asking price. Some banks will go exactly a certain amount under their asking price and will only go lower after a set amount of market time. This may be why your new Realtor was skeptical of it getting accepted if she knew that it was one of those banks that operate that way. The offers usually go through an asset management company, so you really aren't negotiating with the bank, the management company is given a price they can't go lower than and will accept the highest offer at or above the threshold.
Regarding your frustration with Realtors, it takes a 40 hour class and a 120 question test to get your Realtor license. It is harder to become a poodle groomer than a Realtor in Alaska. That means you need to be diligent about finding the RIGHT Realtor to work with. James Cash on here is a good friend of mine and very knowledgable about the market. I am also a Realtor, however, James would be a great resource to help you find a great buy in the distressed world. He knows his stuff when it comes to investment properties.
Btw, what type of properties are you looking for? Single family or multifamily? I have multiple off market multifamily distressed properties coming up soon that would be great for flip or hold investments.
@Jonathon Rodriguez preferably multifamily with owners unit. I spoke with you over the phone last week. I still am waiting on an answer on my offer.
My apologies. I knew you by name, but had forgotten your BP user name.
Its hard for realtors to submit lowball offers because it may undermine their credibility to the seller or listing agent. For your goals, Id suggest getting your license and submitting the offers yourself
You have to have a business sense to understand what is happening here.
90% of Realtors operate on a retail level. 10% will operate on a wholesale level. The retail person will work with traditional buyers on a consumer level (i.e. First time home buyer who got approved at a bank). We as investors operate on a whole different level (i.e. Investor/contractor working with private money.) What we do is not taught to the general public. You will go through MANY Realtors because it will usually end up being a Realtor who is a seasoned investor themselves.
Also, as has been mentioned, your are (literally) wasting their time. They show and run CMA's on 35 houses for you, and then you end up buying from a wholesaler, or privately, of course they get no paycheck from that. Be patient. Give them some money, or a nice dinner for their time. Nobody should work for free, keep building a positive relationship. The Golden Rule still applies...
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.
Not correct. You expect 100% effort for you and their experiences shows these kinds of offers just disrespect their time - - they have to eat & pay bills too. Such offers often come with enough weasel-words to fall out just because "I don't like what I see". They see few (1/100) actually close and that's about how many you would need to write to get anywhere IMO.
When you go bottom fishing, you can't expect trophy fish.