Agents and Low ball offers

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Agents and Low ball offers

Amber Butler
Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote

Hello all. Newbie Here!

I am looking at a property that I would definitely like to make an offer on. From what I have supposedly heard from the agent, the seller is extremely stiff on the price. The house is listed at $53,000 and my realtor said that the seller was offered a $50,000 cash offer a couple months ago and would not take it and that the seller wants full asking price. Then my realtor said that the seller is finally starting to come around and is willing to accept $50,000.
The only reserves that I have is there is a cracked soil line near the kitchen and possibly cracked under the base of the house through the concrete that leads to the street. For that reason, and with all the other repairs, we want to put in an offer of $40,000. However, my realtor says that the seller is an investor, lives in Indonesia, and has no attachment to this house, and for that reason he does want the full $50,000.
Either way, my realtor pretty much will not put in my offer which is extremely frustrating. Can someone please explain why my realtor won't put in my offer? It's very frustrating.

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Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
14y

I'm unclear on which agent is which. You mention "the agent" and then "your realtor". Does your realtor have this listing? If not, why not make your offer directly to the listing agent on this one? I'm not a fan of dual agency, but for a low valued prop and such a small commission, it makes more sense to go direct, IMO.

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  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    14y

    From my experience, if you want to put in lowball offers, especially a lot of them, it is best to work with a buyer's agent ot a hungry inexperienced real estate agent.

    Maybe you can try someone else.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    As red faced as they may be, just remind them that they are legally required to present all offers. It'snot up to them to decide what offers to present unless the seller has given instructions not to present an offer under some cutoff value, that should be with the listing agreement. See what they say. If you see these problems and it's likely an investment property and not showing well for a Harry Homeowner, your offer might be a good start to get to 45 orsomething. Good luck....

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  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Bill Gulley:
    As red faced as they may be, just remind them that they are legally required to present all offers. It'snot up to them to decide what offers to present unless the seller has given instructions not to present an offer under some cutoff value, that should be with the listing agreement. See what they say. If you see these problems and it's likely an investment property and not showing well for a Harry Homeowner, your offer might be a good start to get to 45 orsomething. Good luck....

    Actually it's the *seller's* agent that is required to present all offers, not this buyer's agent. A buyer can't force a buyers agent to write an offer, the buyer can find another agent, or possibly take the advice of the agent. If you're quoting "the law" to someone, be sure to get it right or you'll look like a boob.

    As for why the agent won't put in the offer, it sounds like they've already talked to the seller's agent and any offer under $50k is going into the trash (after its presented to the seller). Would you waste your time with *two* parties that are being unreasonable? ( both the buyer and the seller)... Especially for an underwhelming commission? The buy-side commission on a $50k deal is what, $1k before taxes & splitting it with the agent's broker...

    On a deal that probably can't be financed due to a known defect.

    Has the O.P. given the agent any reason to believe they actually *have* the cash necessary to close this deal?

    I have an agent's license ( for my own use) because I don't trust many agents, but that said, I can clearly see the agent's side of this issue.

    0Reply
  • Don Hines
    Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
    14y

    Oh boy!! I am getting some pop corn to watch this one.

    Don

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y
    Originally posted by Mark H.:
    Originally posted by Bill Gulley:
    As red faced as they may be, just remind them that they are legally required to present all offers. It'snot up to them to decide what offers to present unless the seller has given instructions not to present an offer under some cutoff value, that should be with the listing agreement. See what they say. If you see these problems and it's likely an investment property and not showing well for a Harry Homeowner, your offer might be a good start to get to 45 orsomething. Good luck....

    Actually it's the *seller's* agent that is required to present all offers, not this buyer's agent. A buyer can't force a buyers agent to write an offer, the buyer can find another agent, or possibly take the advice of the agent. If you're quoting "the law" to someone, be sure to get it right or you'll look like a boob.

    Sorry, but the buyer's agent is required to present the offer to the listing agent and you are correct, the listing agent is then required to present all offers unless the owner has given specific instructions to the contrary. Yes, the buyer can find another agent and report the refusal to act in their capacity as a buyer's agent, let the chips fall where they may....do you use a buyer's agency agreement where you are? Nevermind...

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y
    Originally posted by Don Hines:
    Oh boy!! I am getting some pop corn to watch this one.

    Don

    LOL, no that's it, no show here, move along please.....LOL

    0Reply
  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    Well I don't really think on my side that I am being unreasonable. I am trying to get the seller to play ball. As far as financing, I am trying to flip the property and am using hard money. It's not like the property is in the best condition, there is definitely work that needs to be done. On the other hand, I could care less whether the agent feels that they are getting too low of a commission to do their job. The realtor knows we are dealing with lower priced properties to flip because we are dealing with entry level price points, therefore her commission will probably be low regardless of whether I purchased this property or the next property.

    Bill Gulley Yes, we do have those agreements, but I have not signed any exclusivity with this agent or any type of agreement of that sort thus far.

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  • Kama Ward
    Investor · Asheville, NC · Member since 2012 · 184 posts · 76 votes
    14y

    The reason your agent is not putting in an offer is because he/she thinks there will not be a sale soon. Short term thinking.

    Fire your agent now. Find one who does what you want- but who is also smart enough to give you the lowdown. There is no shortage of realtors. Hopefully, find one who works with investors. My lowest recent offer was 165K (about 50%) lower than asking. My agent did it and was on board with why.

    Good Realtors are about service, and know it takes more than a fast sale to be successful. Even if they know this offer won't fly (that's a big IF), they should do it so you can learn your lesson- and move quickly to the next one. What's it going to take, 2-3 hours to write it and then an email/call rejection? They should be distracting you with the next thing coming down the pike.

    1Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Bill Gulley:
    Originally posted by Mark H.:
    Originally posted by Bill Gulley:
    As red faced as they may be, just remind them that they are legally required to present all offers. It'snot up to them to decide what offers to present unless the seller has given instructions not to present an offer under some cutoff value, that should be with the listing agreement. See what they say. If you see these problems and it's likely an investment property and not showing well for a Harry Homeowner, your offer might be a good start to get to 45 orsomething. Good luck....

    Actually it's the *seller's* agent that is required to present all offers, not this buyer's agent. A buyer can't force a buyers agent to write an offer, the buyer can find another agent, or possibly take the advice of the agent. If you're quoting "the law" to someone, be sure to get it right or you'll look like a boob.

    Sorry, but the buyer's agent is required to present the offer to the listing agent and you are correct, the listing agent is then required to present all offers unless the owner has given specific instructions to the contrary. Yes, the buyer can find another agent and report the refusal to act in their capacity as a buyer's agent, let the chips fall where they may....do you use a buyer's agency agreement where you are? Nevermind...

    You can "report" anything you want to the real-estate board, but in my state there is no requirement for a buyer's agent to write whatever offers a buyer wants.

    This is a pretty much indefensible point on your part. There is also a standard in my state of "fair dealing" with the other side of the deal - an agent has a legal obligation to deal in good faith with the other side. Writing lowball offers for unqualified dreamers would be a violation of fair dealing.

    1Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    14y
    Originally posted by Amber Butler:
    Well I don't really think on my side that I am being unreasonable. I am trying to get the seller to play ball. As far as financing, I am trying to flip the property and am using hard money. It's not like the property is in the best condition, there is definitely work that needs to be done. On the other hand, I could care less whether the agent feels that they are getting too low of a commission to do their job. The realtor knows we are dealing with lower priced properties to flip because we are dealing with entry level price points, therefore her commission will probably be low regardless of whether I purchased this property or the next property.

    Bill Gulley Yes, we do have those agreements, but I have not signed any exclusivity with this agent or any type of agreement of that sort thus far.

    There you go, find another agent , ignore their advice, tell them openly what you said here, about "not caring" what their interests are & I'm certain that will work out really well for you.

    Amazing attitude on the board here. Treat the agent like a flunkie & complain because there "aren't any good agents" out there ...

    0Reply
  • Philip Accardo
    Real Estate Agent · York, PA · Member since 2011 · 25 posts · 6 votes
    14y

    I am a real estate agent. If someone asked me to write an offer that I knew would be thrown out I wouldn't write it. You can go along and find another Realtor but you would just end up wasting more time and be back where you started. You should listen to your Realtor, you hire them for their expertise. You already know they are firm on 50k. I would move on and have your Realtor find you another deal.

    1Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y

    What you have here is at least 3 overly stubborn people involved in this deal so it isn't going to happen. Move on to the next deal and find a new agent.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Kama Ward good point, when Realtors begin getting in the strategy of a deal they open the door to trouble if they are not right.

    All good Realtors pre-qualify their buyers before offering taxi services and opening up properties, let's assume a buyer is qualified. The rather new agent decides not to present the offer for whatever reason and a week later an offer is accepted close to the offer refused, maybe less. Are we then to say that the perspective buyer who was refused service has no recourse? Basic law of agency and negligence.

    An agents position is not to ask the reason why but to do and die....sorta lol, I can see where agents that are not use to dealing with sophisticated buyers will take on more than they can chew with that feeling of having more expertise than the client.

    Kama is correct IMO that there is short sighted thinking there. I also agree that other Realtors should be interviewed if you don't have a meeting of the minds here. If anyone thinks that they know what a property is going to sell for as an agent, 100% of the time, I'd run away from them. And yes, the offer should be made in this case as the deficiencies can be noted and justify the offer and if it's rejected move along to the next one.

    PS. I'm kinda new to all this stuff, but that's my opinion.....

    1Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    I'm unclear on which agent is which. You mention "the agent" and then "your realtor". Does your realtor have this listing? If not, why not make your offer directly to the listing agent on this one? I'm not a fan of dual agency, but for a low valued prop and such a small commission, it makes more sense to go direct, IMO.

    3Reply
  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    Mark H. I do care about the agent's interests, but on the other hand, she could not answer my objections as to why I think my offer is justified because of the crack in the soil line. All she said was, "the seller wants $50,000." I completely understand that their is work the agent has to put into it, on the other hand, she has not given me a reason, nor I believe explained it to the listing agent why I am offering the price that I am. Isn't she supposed to do that?
    She has said it is an up and coming neighborhood and I guess to her that is reason enough for us to pretty much give full asking price. Besides that, I am not sure the comps would justify putting in more than 55k and getting a good ROI. I have seen some of the flips people have put out in my market. I am way to picky & precise to simply put out a flip that is half way done because I had to spend so much fixing the soil line.

    In terms of finding good agents, I definitely think there are some good ones, but I don't know, maybe I have not found one that has fully met my expectations.

    0Reply
  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    K. Marie Poe Sorry K. I may have used them interchangeably without noticing, but my agent is a realtor. When I referred to the other agent I have referred to them as the listing agent.

    0Reply
  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    Eric Michaels I definitely think you are right about moving onto the next deal.

    0Reply
  • Kama Ward
    Investor · Asheville, NC · Member since 2012 · 184 posts · 76 votes
    14y

    I have a selling agent I like and a buying agent I like. I listen to them and most often agree with and take their advice.

    I don't treat them like furniture- I treat them well, make them money and don't waste their time! But it took a LONG time and MANY agents to get to this point.

    There are so many crappy crazy lazy agents out there, because the bar is set so low to get into the profession- we all know that. So to all you awesome agents on this forum, don't get defensive- get even- by providing great service and the clients will come running. Then you can hand off the crappy crazy buyers to those innocent newly minted agents!

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    "Yes, we do have those agreements, but I have not signed any exclusivity with this agent or any type of agreement of that sort thus far."

    I think this might be the key.Agency laws vary by state. Yes the listing broker can refuse to present in my state if the seller has given them instruction not to do so in writing.You better have it written into the listing agreement or the sellers can change their mind on what they said verbally and throw you down the river.

    On the buyers broker side it might come down to representation.Since no broker agreement was signed with the buyer than that buyer is simply a customer and the buyer broker doesn't have a fiduciary duty to the buyer as a client just a customer performing ministerial acts.

    I don't know why everyone gets worked up on broker/agents.Just like investors rehabbing or buying properties is their business so is closing sales for a broker/agent.The broker/agent needs to decide what kind of business they want for the time invested.

    If a buyer broker is worried about time and low fees make the investor buyer sign a brokerage agreement with language that there will be a minimum commission of X on all transactions and the buyer will make up any difference in commission at closing that the seller is not paying from the guaranteed minimum amount.

    Running a business as a broker/agent involves knowing what you spend and what you get in return.Shotgunning low ball offers all over creation KNOWING only a small fraction gets accepted is not an efficient business practice. It's great for the investor who lands a steal and then makes a great profit.It's a low return activity however for the broker/agent unless compensated with the minimum in the broker agreement.

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  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    Joel Owens I definitely agree with you when it comes to not giving low ball offers all the time. I guess it comes down to really trusting the agent and their opinion, which personally, I don't feel I have accomplished that.

    0Reply
  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    I'd suggest finding an agent that is also an investor, but has a different set of criteria than you do for what they are trying to accomplish.

    For example: You are flipping with hard money, so you want deals that make sense to flip. Your agent should be an investor, but since they're the one with the MLS access, you're not going to see the best deals (on the MLS) if they are also looking to flip. However, if you can find an agent that is a buy and hold investor in your market, then you may just be on to something, as they are typically able to recognize a flip deal but won't be pursuing it themselves.

    You should also be looking for the type of agent who has the knowledge to tell you that your offer stinks and the loyalty to submit it anyway. Once you find that agent, life will be a lot easier, and your mutual trust factor goes up exponentially. Then you can REALLY start doing some business.

    1Reply
  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    Jake Kucheck Thanks so much Jake. That was definitely good advice. I will for sure do that.

    0Reply
  • James GefkePro Member
    Investor · Milwaukee, WI · Member since 2010 · 42 posts · 25 votes
    14y

    Hi Amber,

    Lots of solid replies here.

    Just wondering what you planned on doing with the property. If it listed on the open market and sitting at 53k it doesn't like much of spread even picking it up at 40k if you plan on rehabbing it.

    I don't know your market at all but there is a lot of inventory in Milwaukee in that price range but it's tough to rehab in these areas and get an acceptable appraisal back on the sell side.

    It's too bad because many of them are nice areas but just seems a bit risky at this point.

    Good luck and listen to all the advice already given.

    0Reply
  • Amber Butler
    OP
    Rehabber · Mount Holly, NJ · Member since 2012 · 50 posts · 1 vote
    14y

    James Gefke Well with the property we are looking at the property selling around 130k to 150k. Well my real estate agent believes it will sell for 150k but my husband thinks that's too high that it will sell for more around 130k. But, I definitely believe you are right about the appraisal side which clarifies my thinking of believing that this property is not that much of a deal that my agent believes it to be.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    If the seller is asking $53K, I wouldn't consider $40K to be a low-ball offer. It's on the low side, for certain, but nothing that I would consider insulting or too low to open up negotiations.

    Just because your agent has told you the seller won't accept anything less than $50K, doesn't mean it's true. In fact, even if the seller told me that, I wouldn't necessarily believe it. The only way to know for certain is to get an offer in front of the seller. If your agent refuses to do that, find another agent or go directly through the listing agent.

    It really is that simple...

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