Why do realtors hate putting in lowballs for you?

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Why do realtors hate putting in lowballs for you?

Nick Zito
Flipper/Rehabber · WA · Member since 2019 · 5 posts · 10 votes

I’m not saying all, but the majority scoff at the idea of putting in a lowball for you. Does it give them a bad rap or something I’m not aware of since I’m not an agent? I agree in some markets it’s not appropriate but I’m looking at a property that’s been listed for 6 months, needs allot of TLC, it’s the owners investment property also, and vacant. Why the heck not? My math only works at 60k less than asking price but I can’t find an agent that doesn’t think I’m being “rude.” What don’t I know??

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y

Here is a question.....are you willing to pay someone for the time it takes them to write up the offer and put it in?  Whenever someone asks me to write up a lowball that I know has no chance of going anywhere, I tell them its $500.  Funny that no one takes me up on that. I guess they know its $500 essentially flushed down the toilet.  They dont mind asking someone else to waste their time, but they dont want to put their own money or time up to accomplish their goal.

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  • Rion Manita
    Real Estate Broker · Boston, MA · Member since 2015 · 57 posts · 11 votes
    6y
    Originally posted by @Russell Brazil:

    Here is a question.....are you willing to pay someone for the time it takes them to write up the offer and put it in?  Whenever someone asks me to write up a lowball that I know has no chance of going anywhere, I tell them its $500.  Funny that no one takes me up on that. I guess they know its $500 essentially flushed down the toilet.  They dont mind asking someone else to waste their time, but they dont want to put their own money or time up to accomplish their goal.

    0Reply
  • Jonathan W.
    Los Angeles, CA · Member since 2019 · 512 posts · 301 votes
    6y

    @Nick Zito isn’t the word low ball relative? If you know it’s a low ball the term itself implies that you are offering way below what would ever work.

    You want a agent to write a low ball offer for you? Give him a good reason to. No one will accept one without one

    0Reply
  • Daniel Sok
    Member since 2019 · 8 posts · 2 votes
    6y

    My advice to you would be to find another realtor or submit the offer yourself. 

    0Reply
  • Steven Strauss
    Washington, DC · Member since 2019 · 7 posts · 7 votes
    6y

    I’m new here on BP, and new to the world of property investing, so I have a lot to learn. Please explain to me what's considered lowball? I found a house that was originally listed this past summer for $249K. A week later it dropped to $229K. It actually sold two and a half months later for $180K. Nice discount! While I have no way of knowing how they got to the final number, I am wondering if that would be considered as a lowball offer? Is there a certain percentage of the asking price that is considered “lowball”? Do realtors have a certain percentage below the asking price that they consider it insulting and are not comfortable submitting the offer?

    08/19/2019Sold$180,000$153BrightMLS
    06/03/2019Price Changed$229,900$195BrightMLS
    05/31/2019Listed$249,900$212BrightMLS
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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Steven Strauss:

    I’m new here on BP, and new to the world of property investing, so I have a lot to learn. Please explain to me what's considered lowball? I found a house that was originally listed this past summer for $249K. A week later it dropped to $229K. It actually sold two and a half months later for $180K. Nice discount! While I have no way of knowing how they got to the final number, I am wondering if that would be considered as a lowball offer? Is there a certain percentage of the asking price that is considered “lowball”? Do realtors have a certain percentage below the asking price that they consider it insulting and are not comfortable submitting the offer?

    08/19/2019Sold$180,000$153BrightMLS
    06/03/2019Price Changed$229,900$195BrightMLS
    05/31/2019Listed$249,900$212BrightMLS

     It all depends on the individual property, the market, and the list price of the subject property.  The property was listed for $250k, but sold for $70k less....so in this instance an offer $70k lower would be perfectly reasonable, as would have been even a lower number to finally arrive at that sales price.

    Lets say though a property priced the same at $250k is underpriced to draw in 5 or 10 offers, and is expected to sell for $50k over the list price.  Well in that case, even a slightly below list price offer might be a low ball.

    It all depends. I dont write lowballs.....but this past year I did do a transaction where we landed $250,000 below the list price, and to get there we had to start the offer at $400,000 less than list price. Not a lowball.  Other times Im way over list, and not even close to being the winning bid.

    Investors and agents need to be able to value a property completely independent of the list price.  

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  • Steven Strauss
    Washington, DC · Member since 2019 · 7 posts · 7 votes
    6y

    Thanks for your reply, Russell

    0Reply
  • Account Closed
    Member since 2019 · 1k+ posts · 1k+ votes
    6y

    @Russell Brazil

    I’ve followed this thread fairly closely and appreciate your response here Russell. Wrt that last statement, one thing I found early on was that it took me some time to find a realtor who could value a property from an investment standpoint. At the beginning, I provided my realtor a checklist that had some things I was looking for and then the top two were non-negotiable. I went through 6 realtors before I found one that didn’t disregard the non-negotiables. I even pointed it out to them in bold letters on the checklist.

    Recently, the realtor I've been using for almost a decade and I looked at a property that was almost perfect... except it needed literally $125-150k of work to bring it up to speed, which was about 40% of its ARV. I knew a builder could get that work done for $80-100k, but I couldn't. We didn't write because we knew it would not get accepted (previous inquiries) because a builder WOULD likely come along soon enough and pay more. List was $299, value to me was $150 (tops), it sold last week for $268... i suspect a builder bought it and will knock it over, split that massive lot, and build 2 high end ($800k+) units there profiting $150-$200 off each. In this case, my opinion was that $150 was not a lowball, but it also wasn't going to get accepted. And for the builder $268 was likely fairly reasonable as they'll still have a healthy profit on the way out.

    A realtor able to value a property from an investment standpoint is essential if you plan to write offers. An investor able to value the property based off their skill/ experience is also essential so as to not lose your shirt. If I’d paid $268 and completed the renovations I would be upside down probably $40k and would’ve burnt 90 days worth of work to get there.

    2Reply
  • Amare Lovely
    Member since 2019 · 2 posts · 0 votes
    6y

    @Nick Zito

    An agent should at least give the owner the offer verbally, especially if it has been on the market for 6 months like you say. It takes no time to do that and also helps the agent with lowering the expectations of the seller. Plus if the buyer does agree then the agent can represent both parties in dual agency and usually make more on the full 5-6% commission that 2.5-3% even at low much lower sales price. You’ve just run into a bad agent imo.

    0Reply
  • Noah Mccurley
    Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
    6y

    @Nick Zito

    I am not a Realtor but I suspect it is because it can effect their reputation if the offer is not taken seriously and believe it or not some sellers who feel very emotional about their properties may feel offended by a lowball offer.

    0Reply
  • Rod F.
    Rental Property Investor · Higginson, AR · Member since 2016 · 48 posts · 46 votes
    6y

    My wife was a realtor, Went inactive and refused to deal with us guys. I called the number on the sign, Asked if there was anyone there  that wanted to sell a house today. She said I will be there in a few minutes, Came over showed us the house, asked her if she mind writing up ridiculously low offers?  She said i will write up any offer you guys want to make. 

    We didn't get that house , but she closed over 40 for us before she retired. I miss her. After she started selling us a few, The realtors started trying to chase me down. one thing I knew when my wife was a realtor, was just how cutthroat this business is. Like i told them. She took the time to help me in the beginning, She had to quit me, i didn't quit her.

    Finding a replacement has been very hard to do, I have dealt with her broker, but she is retiring now also.

    I will be searching again soon. 

    0Reply
  • Alex G.
    Eastern Mass & Central Maine · Member since 2009 · 252 posts · 135 votes
    6y
    Originally posted by @Frank Procopio:

    Ask them to call in a verbal and feel the other agent out 

    I second this.

    0Reply
  • Bryan S.
    Rental Property Investor · CA · Member since 2018 · 225 posts · 180 votes
    6y

    @Nick Zito contact the LISTING agent and tell them they can have both sides.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Account Closed:

    @Russell Brazil

    I’ve followed this thread fairly closely and appreciate your response here Russell. Wrt that last statement, one thing I found early on was that it took me some time to find a realtor who could value a property from an investment standpoint. At the beginning, I provided my realtor a checklist that had some things I was looking for and then the top two were non-negotiable. I went through 6 realtors before I found one that didn’t disregard the non-negotiables. I even pointed it out to them in bold letters on the checklist.

    Recently, the realtor I've been using for almost a decade and I looked at a property that was almost perfect... except it needed literally $125-150k of work to bring it up to speed, which was about 40% of its ARV. I knew a builder could get that work done for $80-100k, but I couldn't. We didn't write because we knew it would not get accepted (previous inquiries) because a builder WOULD likely come along soon enough and pay more. List was $299, value to me was $150 (tops), it sold last week for $268... i suspect a builder bought it and will knock it over, split that massive lot, and build 2 high end ($800k+) units there profiting $150-$200 off each. In this case, my opinion was that $150 was not a lowball, but it also wasn't going to get accepted. And for the builder $268 was likely fairly reasonable as they'll still have a healthy profit on the way out.

    A realtor able to value a property from an investment standpoint is essential if you plan to write offers. An investor able to value the property based off their skill/ experience is also essential so as to not lose your shirt. If I’d paid $268 and completed the renovations I would be upside down probably $40k and would’ve burnt 90 days worth of work to get there.

    this is what we do in our day jobs.. we find hidden lots.. thats were the big money is at.. you just described it.  why buy for a few hundred a month cash flow when you can knock down 250k plus in a year on the same asset ?

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  • Account Closed
    Member since 2019 · 1k+ posts · 1k+ votes
    6y

    @Jay Hinrichs

    Yep. And that’s the direction I’m headed with at least one that I currently own. But it takes pockets full of holding funds to make it work!

    0Reply
  • Robert Freeborn
    Real Estate Agent · Bellingham, WA · Member since 2017 · 427 posts · 182 votes
    6y

    @Nick Zito I love working with investors in my area, even those who make low balls. Why? Because and investor will buy and sell 2+ times a year. A homeowner, 1 every 4-7 years, and often with new agents every time.

    With some recent clients I spent 9+ hours for 3 weekends in a row driving around MULTIPLE counties. I put hundreds of miles on my car, and will gladly do it again. Why? Because I will get much more business out of them then I ever will from a homeowner.

    In the end, it’s still a numbers game. As some others have said, I’m not afraid of the lowballs. But I do want a couple things. 1) evidence to back up that lowball. 2) confidence you can close on it. 3) to earn their repeat business for listing it on the sale side and buying the next deal.

    I know that, if I prove myself to my clients and we work well together, that it will be a profitable relationship for years to come. So I’m willing to do my part to make that happen.

    0Reply
  • Trevor Emmett
    Residential Real Estate Broker · Portland, OR · Member since 2015 · 48 posts · 38 votes
    6y

    @Nick Zito as a realtor that doesn’t mind putting low ball offers in I can say that most realtors are not investors and do not work with investors. However they probably have worked with people that have worked them to the bone with low ball offer after low ball offer for one, maybe two checks and in some cases working out to barely minimum wage. My early years I had a couple of these would be investors destroy my quarter because I was too in experienced to know better.

    I love working with investors but I drop them fast if my “ time suck” radar goes off.

    It sounds like you do not have a regular realtor that you have made a part of your team. It will take a few tries and I suggest dropping them fast if they seem like they don’t understand you goals or take you seriously. Real estate is above all else a business of people.

    0Reply
  • Doug P.
    Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Jedd Lucas:

    @Dennis M. This is what I was looking for. I know this is a dumb, newbie question, but what’s the process for buying a house without an agent? Thanks in advance!

    I'm not Dennis but can answer. The process is simple:

    1.You get in touch with the owner (by knocking on their door, calling them up, advertising so they call you or fill out the contact us form on your website, etc.).

    2. Then you ask them what they want for the property, whether it needs any repairs or updating, why they're selling, whether or not they owe anything on it, whether or not they would like you to take over their payments, whether or not they would be willing to hold paper etc.

    3. If it sounds good you go over and look at it if it's local, or you pay someone to take pictures and video of the property and send them to you.

    4. You'll likely have a few more questions for the seller after seeing the property. Combining the answers to those with what you've already learned should give you a good idea of whether or not the seller has a problem you can solve. Then you offer them a solution or 2 to choose from and if the seller agrees that 1 of your offers solve his/her problem you have a lawyer or title company (whichever you use in your area) write up the contract and get close.

    1Reply
  • Desiree Wrencher
    Member since 2019 · 8 posts · 4 votes
    6y

    @Nick Zito Not a bad rap but they no the value of a house and what’s happen in the Market

    0Reply
  • Aaron Hunt
    All Over, USA · Member since 2017 · 689 posts · 756 votes
    6y

    Thank God I found two agents who don’t have their head in the clouds.

    Agent’s these days do a fraction of the work that their predecessors did.

    Agents want buyer's to go on Zillow/MLS/whatever find the house, offer list price without any work other than an e-sign.

    They then expect to be rewarded with 3% for peanuts of worth of actual time.

    1Reply
  • Aaron Hunt
    All Over, USA · Member since 2017 · 689 posts · 756 votes
    6y

    @Russell Brazil

    You’re making $728,500 a year as an agent!?

    That is impressive.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Had to laugh at the previous comment. If it is so easy, why arnt you making a million plus dollars per year being an agent?  I guarantee the potential income is higher than the potential income of what you probably do, so why not be an agent if its so easy? 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Aaron Hunt:

    @Russell Brazil

    You’re making $728,500 a year as an agent!?

    That is impressive.

    I make less than that. I dont put in 40 hours a week, and I take 6 weeks off per year. 

     Theres at least 5 agents in my office alone breaking a million per year though.

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  • Nick Zito
    OP
    Flipper/Rehabber · WA · Member since 2019 · 5 posts · 10 votes
    6y

    @Kevin Scott tried that. Even though duel agency is legal here in WA the listing agent doesn’t like to do that and refused

    0Reply
  • Billy Thurston
    Swanton, VT · Member since 2019 · 17 posts · 5 votes
    6y

    @Joe Funari

    How do you get POF before getting an excepted offer on investment? My bank wants all the #'s before running an approval (portfolio lender).

    0Reply
  • Billy Thurston
    Swanton, VT · Member since 2019 · 17 posts · 5 votes
    6y

    @Russell Brazil

    Is submitting an offer really $500 worth of work? How long does it take to write up an offer and send an email?

    0Reply
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