Hello, BP! I have realtors in California, Utah, and Arizona and am actively seeking my first property to fix and flip or--even better-- BRRRR. While they are sending me automated MLS listings (except for my CA realtor, who I think maybe forgot to set that up for me because he is crazy busy right now), I am doing the legwork of sorting through the listings and trying to figure out which ones are in need of significant repair. I then try to guess based on images and description what kind of renovation would be required, and then I email the realtor (or his team, in the case of my CA realtor) to ask for comps for the ARV. Once they send me the ARV comps I can run my little formula and see if it is worth offering. I want to have a good relationship with my realtors, and definitely make sure our time together is valuable for both of us. I hope they will enjoy working with me and want to continue to work with me throughout my REI career. Here are my questions for you realtors and brokers: 1. To make my numbers work, I will usually need to offer lower than asking on these properties, sometimes significantly lower. When clients ask you to submit low-ball offers, are you annoyed? Am I making a faux-pas by requesting that my realtor make low offers that have a fairly good chance of being rejected? I mean, you never know unless you make the offer, but I also don't want my realtor to think I'm just wasting his time. And I don't want to waste his time. 2. Is it a significant amount of work to submit offers? I mean, I would LIKE to be submitting a handful of offers every week for properties in every state, and see who bites. But I hesitate to ask my realtors to do this because I don't know how much work is involved in this. If it's just a matter of a phone call to place a verbal offer, that's one thing. But maybe all offers need to be written out, and maybe it is a lot of time? 3. When I ask for comps for ARV for properties, is that something automated or does that take significant time for the realtor or his team to do? Ideally I'd like to create a funnel where I'm going through the MLS and picking 10 rehab properties each week that look viable, then asking for ARV comps for all those and based on those numbers narrowing to 3-5 properties on which to offer each week in each state. I appreciate your insights.

It takes me anywhere from 10-30 min to do comps for ARV. It takes me anywhere from 30 min-60 min to write up offers. Most realtors want to receive written offers as there are other terms than price that need to be determined. A verbal offer is rarely done, unless you're an agent on HGTV. I don't like when clients are unrealistic and make low-ball offers unless I truly think they can get it for the "low-ball" price. My clients hire me for my professional advice, including how much to start at negotiations. I would not like writing up 5 low-ball offers for a client, unless I had a lot of extra time or an assistant.

Such excellent feedback! Thanks so much everyone. I appreciate the push to learn how to be comfortable pulling comps on my own. It is a skill I am developing, and this conversation has solidified for me the importance of getting better at that quickly. My takeaways from this discussion are: 1. Get better at doing comps on my own 2. Find a system for digging up those properties that would be more likely to sell for less--whether that be auction properties or doing yellow letters or working with a wholesaler or something else. 3. Think again about my strategy to tackle three states at once, as asking realtors in each state to help me is not fair to the two of them who end up not getting me the next deal (at least until I can afford to do three simultaneous deals) 4. Meet up with my realtors and have an honest conversations about my goals, and hear their suggestions. Just so everyone knows, I haven't yet started asking these agents to churn out lots of comps, or to submit any offers. I'm just a few weeks into this stage, and so I don't think I've done any irreparable damage to my relationships with them yet. :) Only my Los Angeles agent has found me a few ARV comps, about 4, and I would very much have acted on them if the numbers had worked. Now it's time to re-strategize. Love this community. Thanks to all of you!

1+2) Low ball offers can be problematic if you take the approach of just submitting as many as possible and seeing what sticks. You are going to burn your agent out because while it is not necessarily that hard to submit an offer, it does take time and effort. That adds up when done over and over. It's not that it is annoying, it's just not the best plan and your agent needs to focus on activities that make money, consistently. Additionally, I would probably try to talk a buyer out of low balling houses that just came on the market. Even bank owned properties. It seems the banks are pricing close to what they want and do adjustments about every 30 days until it sells around the asking price. But, lowballing a home that has been on the market for 90+ days and is vacant, estate/probate or distressed in some way can be a sweet spot. 2) Doing an ARV for every single property you want to lowball will get annoying if you expect a report and analysis. Again, this takes time and effort. If they know the market well and can just give a range based on sqft, bed, bath, etc. That's doable. I do that for a couple investors all the time. But they also know the market and just want to double check their thoughts. A good solution would be for your realtor to give you a dump of all sold comps in the area you are looking for property. You can get both an excel format and report with pictures. Ask you agent to meet with you for an hour and show you how to do a few ARV's. If your market changes rapidly, have them send you updated sold data every month or so. This way you can start figuring out ARV by yourself and you will be in a better position to work with your agent more productively. I guarantee if you do those 2 things, your relationship with your agent will be solid. 1) Form a plan around submitting low ball offers 2) Get sold data from your agent and figure out ARV on your own.

I too am interested in what your strategy will be if you do get a property under contract. But to your question, I don't think you're giving your agents enough credit here. You should be working with agents that will know right away if a property has good flip potential, whether it's worth making a low ball offer, etc. For example, under market REO's are getting 10-20 offers and selling for 10-20% above list in some of my markets. I wouldn't write a low ball on this for you. There is no doubt that, even in hot markets, there are sellers willing to accept low-ball cash offers. You will have a tough time convincing a real estate agent to both run comps for you and make offers without any more screening than your analysis from 500 miles away. However, if you were to pore through everything that hits the market and look for anomalies like photo opt-outs, frustrated listing agents (from their comments), etc. you might be on to something. In other words, making me do a ton of work so you can do analysis to determine what level of offer to make assumes that I don't know anything about my market. I can look at 100 properties in 5 minutes and tell you the best ones to make offers on. So find agents that are knowledgeable in what you are trying to accomplish and follow their lead instead of making them do a bunch or work so you can feel comfortable with their markets. That's what due diligence is for.

You should be capable of pulling comps and determining ARV on your own, even if you don't have access to MLS. Even if an agent could/would do this for you, it is really important to get right as it is directly tied to your profit, so I'd still want to do it myself. Will be tough to find a deal with enough margin to flip off the MLS in CA, but if you do, you will need to act fast. I would advise going through the listing agent with your offers ... easier to put 100 offers through 100 listing agents that may double end it if they close your offer than to put 100 offers in through the same poor buyer's agent that at best will only make one side of one closing for all that work. How the heck are you planning on doing a flip or a BRRRR in AZ or Utah? ... you need to seriously reconsider this strategy ... way too many ways to get ripped off there. If this were your 100th flip and you already had the systems in place and team on the ground to do it, maybe I could get behind the idea, but to try this without too much experience and scale would be a non-starter IMO.

If you are looking for your first deal in three separate locations and using agents in each one and they know that, they will first ask are you looking to and do you have the means to close in all locations. Because if not, you are going to be wasting two of the agents time. As an agent, in order to be comfortable with out of state buyers, I want to see a proof of funds and also know your plan for properties. I also want to use something like UberConference to make sure we have a good idea of how we both work. You are asking a lot of agents who don't know if you will do 10 deals with them if it works or if you are looking for the best deal with 3 realtors and when you find it, you will opt out of the other areas. Running comps is not simple if done right, especially for investors. You want to know block values, foreclosure prices, market prices, this all takes time so you need to show the agent if you are intending on making this a business and how you are going to do it. Automated comps are not comps. Any agent can put you on an MLS drip every morning, that's basic. In terms of all lowball offers, you have a much better chance of finding an agent to do this where you live. Being out of state and expecting an agent who you have never done a deal with to look at the properties for you, do all the comps, assess everything and then basically be responsible for your purchase, all tied in with low-ball offers is going to be very hard. I hope this helps.

@William Hochstedler You are completely making sense. I am finding it challenging to figure out what is the value a realtor adds vs. what I SHOULD be doing on my own, and also not being too needy or too controlling. Oh wait; that's my whole life. Ha! I really appreciate your candor. You make such a good point that a good realtor will bring deep knowledge of the market and the area, something I can't just calculate out on my own on the spot.

@Ashley Benning I like your attitude, but still don't see you giving your agents credit for knowledge of their markets. You are still talking about direct marketing and doing a ton of analysis. Basically doing their job for them. Would you ask your attorney to send you all of the relevant case law so you can pore through it in order to instruct him/her on how to prepare your legal strategy? The value that agents bring to the table is not just to help you fill out the relevant forms, but to help you find what you're looking for in the marketplace. Find agents who can do that for you. You mention that you looked at a bunch of deals in LA, but the numbers didn't work. If you were my client, I would have a discussion with you (ahead of time) about what your criteria are look at preparing offers for you on anything that meets those targets. You can figure out the details (like running your own analysis) if it goes under contract. I just think you are selling yourself short by thinking that you can recognize deals remotely better than a local real estate agent. If this is true, you have the wrong agent. You need to find professionals that will get you what you want because of their market knowledge (or set you straight if you're being unrealistic), not paper pushers who are willing to play blind-folded darts for you. To be fair, there are a lot more of the latter than the former. Good luck!

Why not just partner from someone already doing this? For instance a deal with J Scott or Brandon Turner etc. Learn from their network and experience. You place smaller amounts of capital per deal in a partnership for example. It just seems trying to rehab and have a team in an unknown market all on your own because you think it's a deal can be a recipe for disaster. Show the broker/agent your ability with cash and then tell them what you want. It's better to know upfront. The skill level of the broker/agent usually determines demand. They won't let any one person take up most of their time unless they are getting usually transaction after transaction off of them.

I just had this conversation with my agent and here's what she shared with me: because she knows 1) I'm an investor and 2) I'm serious when I inquire, she doesn't mind making the offers, and she understands why my offers will more often than not be less than asking price. I do not ask her to run comps for me, simply because I do believe it improves my skillset. I'm also not sending her every deal, rather I'm sending her the best ones after running the numbers. Having said all this however, I still feel guilty because I'm aware it can be a great deal of work without guaranteed immediate return. I also know some agents that charge a higher percentage or a flat rate for investors because they are chasing leads for them all day. I suggest being up front with your agent and asking them if it's a good fit.

Is this too much to ask my realtor to do?

Ashley Benning

OP

Woodland Hills, CA · Member since 2016 · 98 posts · 40 votes

9y

@Shiloh Lundahl Thanks for sharing your process. Your realtor would make $9k on the sale of that property (if you bought at 200k and sold at 300k), but would also make $6k on the purchase. So he is making less by taking a cut of the $20k profit than he would by just doing the commission. I'm surprised that he is willing to do that, and that's why I've hesitated to make a suggestion to my own realtor. But maybe he sees a benefit in this arrangement because I assume you do MANY deals with him, and because if you profit more than $20k then he could potentially earn more through the partnership than he would on the commission. This is very interesting!

I like how your arrangement allows you the flexibility to ask for comps regularly, and not feel like you are burdening your realtor. (Of course, you know your market well which helps considerably. I hope to become that familiar with my own market.)

I will probably reach out to connect since I am looking at Arizona. Thanks for the offer!

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Ashley Benning

OP

Woodland Hills, CA · Member since 2016 · 98 posts · 40 votes

9y

@Tobias Falzone That's an interesting idea. I may shoot that over to my realtor and see if he would be game. Thanks!

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Ashley Benning

OP

Woodland Hills, CA · Member since 2016 · 98 posts · 40 votes

9y

@Joe Funari Glad to hear your perspective. It is definitely possible that my realtors aren't investor-savvy, and that could be where some of my hesitation is coming from. Thanks!

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Ashley Benning

OP

Woodland Hills, CA · Member since 2016 · 98 posts · 40 votes

9y

@Jeff Schneider Yes; I'm not seeing the margins I need/want either. I am looking for really fixer projects, and still can't seem to find them. But I'm pretty specific about where I'll look because I don't want to branch into other cities until I have good systems in place, so Mesa and Gilbert, and into Tempe and Chandler, aren't yielding what I had hoped.

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Shiloh LundahlPro Member

Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

9y

@Ashley Benning we do many deals together. So far this year we have purchased about 16 houses together. Not all have been flips though (11 of them have been buy and hold deals). So the volume makes it worth the effort to him.

480-206-1209 Podcast Guest on Show #287

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Kuba F.Pro Member

Real Estate Investor · Los Angeles, CA · Member since 2013 · 2k+ posts · 694 votes

9y

Great comments all around. I've found that it really does come down to your relationship based on trust, mutual benefit, and shared goals. In general thought you'll find that the higher the volume of repeat transactions, the more willing everyone is to work harder to get a deal done.

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Patrick Wentland

Rental Property Investor · Sarasota, FL · Member since 2017 · 3 posts · 0 votes

9y

@Ashley Benning, like @Jeff Schneider said the market is crazy here in AZ. The good deals that hit the MLS are gone within a day or two. If you're looking for real fixer projects I'd recommend getting on some of the wholesalers distribution lists here in AZ. These will be your true fixer properties that are already listed well below market value. Some of the more established wholesalers here will include solid comps and ARV with their properties too. I'd still recommend doing your due diligence and double checking them. Another thing to consider is that most of the wholesalers are going to require cash or hard money financing on their deals.

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Sam C.

Lehigh Valley, PA · Member since 2016 · 144 posts · 91 votes

9y

1. More often than not, the best deals never make it to the MLS. You should be highly engaged in finding deals on your own and utilize a realtor to help get it to closing.

2. A realtors stock in trade is knowledge and time. None that I know will work for free. Either you pay them a fee to put in offers or close on a few a year with the same agent. The second option is best because it builds loyalty and trust.

3. No one I know successful in buy, hold or flip makes "offers every week for properties in every state, and see who bites." No realtor sees that as a serious investor and would be violating his/her fiduciary responsibility by making offers and managing sales in a state they are not licensed or knowledgeable. If you have agents working on your behalf in states/areas you do not live at least within a 2-3 hours is problematic at best and at worse financially dangerous. A smart agent will cater to his local pool of investors and "outsiders" are not a priority because when word gets out that the great deals you are getting are being done by an agent for someone not local, the agent will want for work and income in a short period of time.

4. Investors that I know with your type of goals, either gets a license and support their own team to build a portfolio or brings enough business and income to one or maybe two agents IN THEIR AREA that bonds them to the investor.

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Eddie Egelston

Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes

9y

I am one of those "investor friendly" agents; I have clients that flip houses. I see a lot of good (and relatable) tips from others here. My thoughts are:

Definitely start out in your own market. There are so many challenges to investing from afar. And as others have mentioned it's not a smart decision for anyone- agent or buyer to get involved in something like that.

Issues I have had with my clients are these:

Sometimes they want to make an offer that will net them $60k on a $200k ARV house. I try to explain to them, there isn't an investor in the world that wouldn't take that deal. Make a more realistic offer. Make the offer that nets you $30k and do it before the other dozen house flippers find the same house and out-bid us. Have a conversation with your agent to discuss what a "good" offer for you is, to see how realistic it is.

Another thing that drives me crazy is when clients don't make an offer, period. If we have invested the time to view a property, and then create a CMA, why not make the offer? Even if it's a low-ball offer, we have already put in the time, why not try? At worst it's one more "no" we can cross off so that we can get to the "yes".

Docusign is my best friend. I have a template that allows me spam our offers. Without it I'd be making the clients write their own offers. HUD and Hubzu offers are the quickest. REO's accept the standard contract so they aren't bad either. Fannie and Freddie... I need to stop sending offers to them. Waaayyyy too much work.

CMA's do take 10-30 min as others have mentioned. A good client would do them on their own. Ask if your agent has access to ListingBook.com. It gives clients MLS-like search abilities that I think is better than Zillow etc.

The one thing that has not been mentioned in this discussion, what price range are you dealing with? To me, as your agent there is a huge difference in buying houses for $100k and reselling for $200k versus buying for $400k and reselling for $700k. Approx $7,500 gross commissions versus $27,500.

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Brandon McLean

Investor · Knightdale, NC · Member since 2014 · 122 posts · 74 votes

9y

When I write "low ball" offers for clients or myself I've learned over time to save time by just listing the pertinent terms of the contract in an email rather than filling out and docusigning the whole thing. Like this: Greetings Angie Agent, Here are the terms of my clients' ALL CASH offer for 123 Main St: Sales Price: $74,680 DD: $100 Earnest: $5000 DD period: 7 days Closing: x/x/2017 Please let me know when you've received this, and we can fill out the contract and sign once we've agreed on the terms. My client has asked me to let you know that they won't be asking for any repairs and will buy the home as-is. They can also close faster if that works better for your client. Thank you, Brandon ------- The "terms" and what you call them vary from state to state, of course. But to touch on your original post...I guess we're all wondering your level of experience. If you're just starting out, how did you get the idea to try to tackle 3 states at once? I recommend to any new investor to go after like a 5 mile radius, a part of one town in one state, to get started. Dealing with a rehab more than 20 minutes away from your house can be a huge problem for you. Until you've done several and have systems in place, I would seriously consider focusing your efforts to your own back yard. Good luck!

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Kim Tucker

Flipper/Rehabber · Kansas City, MO · Member since 2011 · 2k+ posts · 712 votes

9y

As a Realtor who sold REOS

Low Ball offers are a waste of time in a hot market - need to be realistic and right now houses are selling above asking.

You might have a buyers agent who will argee to low ball offers for one or two offers, but they will not keep doing it as it is costing them money.

The good agents that work with investors usually charge for their services in the way of a flat fee or additional commission over and above MLS listed commission.

Speaking as an investor who sells houses - every house we have sold in the past 3 years has sold at full price or over full price, all cash and closing in 5 days or less. And having sold REOs and bought them in a hot market, they usually sell over list and all cash.

Low Ball offers through a realtor are appropriate when the home is listed unrealistically high. But if it is listed correctly, at least in the KC area, it is going to sell quickly and they are not going to consider a low ball offer.

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Ashley Benning

OP

Woodland Hills, CA · Member since 2016 · 98 posts · 40 votes

9y

Thanks so much for the feedback, everyone. Some great ideas and insights! I'm going to adjust my strategy according to this excellent advice.

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Steven Greenhill

Real Estate Agent · New York, NY · Member since 2017 · 66 posts · 26 votes

9y

If you know the numbers, it takes me seconds to write up the offer. Comps are another thing -- I am OCD about have perfect spreadsheets so that takes me 20-30 minutes but if you want to keep submitting offers, I could hand them out as fast as you throw them

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Is this too much to ask my realtor to do?

Is this too much to ask my realtor to do?

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