Seller Wants an Offer Before Seeing Property

Investor · NC · Member since 2023 · 35 posts · 7 votes

My wife and I are currently looking into investing in Detroit and have secured the pre-approval letter. Upon looking for a home to invest in, we noticed the seller only allows us to see the property if an offer is made. Is this normal? Also, when asked about current lease agreements and rent rolls, no one responded. Is this weird? All properties are tenant-occupied and pay rent at or above the market rate. This practice is very odd to me. It even happens for homes with no tenants.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Quote from @Elton Tate:

nope totally normal for renter occupied homes. its a big pain in the butt to coordinate showings with tenants and you dont want to burn out or piss your tenants off by inconveniencing them with potential buyers who maybe just kicking tires.. NOT in any way saying you are.. but you get the point I am sure.. your tenants are your life blood so keeping them happy is more important than letting buyers who are not even in contract into the houses just to look around not like it and not buy it.

If the home is vacant I suspect they are Leary of squatters and thieves and or they have been burned by wholesalers and their lies about having their partner look at the house.. which is really not their partner but is potential buyers.. very slimy how they do that.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Elton Tate:

My wife and I are currently looking into investing in Detroit and have secured the pre-approval letter. Upon looking for a home to invest in, we noticed the seller only allows us to see the property if an offer is made. Is this normal? Also, when asked about current lease agreements and rent rolls, no one responded. Is this weird? All properties are tenant-occupied and pay rent at or above the market rate. This practice is very odd to me. It even happens for homes with no tenants.

nope totally normal for renter occupied homes. its a big pain in the butt to coordinate showings with tenants and you dont want to burn out or piss your tenants off by inconveniencing them with potential buyers who maybe just kicking tires.. NOT in any way saying you are.. but you get the point I am sure.. your tenants are your life blood so keeping them happy is more important than letting buyers who are not even in contract into the houses just to look around not like it and not buy it.
If the home is vacant I suspect they are Leary of squatters and thieves and or they have been burned by wholesalers and their lies about having their partner look at the house.. which is really not their partner but is potential buyers.. very slimy how they do that.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
@Jay Hinrichs, thanks for the quick response. You made a lot of good points, and I agree that this is the best way to handle things.

The only thing that still doesn't make sense to me is why not provide the documentation for interested buyers to view, such as lease agreements, rent rolls, or any other documentation that will also help people make a decision. My real estate agent asked a few buyers, and no one has provided that information yet. One property did at least provide reasons why they were selling the property (I had to ask, because the property's cash flow is insane based on their description).
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Elton Tate:

@Jay Hinrichs, thanks for the quick response. You made a lot of good points, and I agree that this is the best way to handle things.

The only thing that still doesn't make sense to me is why not provide the documentation for interested buyers to view, such as lease agreements, rent rolls, or any other documentation that will also help people make a decision. My real estate agent asked a few buyers, and no one has provided that information yet. One property did at least provide reasons why they were selling the property (I had to ask, because the property's cash flow is insane based on their description).

cant answer why they don't share redacted leases. Also no offense please but asking why they are selling is not something experienced buyers will ever ask it makes no difference and half the time they will lie anyway.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
I take no offense. You're right; as the buyer, if the numbers line up and the location is great, why does it matter? But it also doesn't hurt to ask. I was just curious, so I asked.
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Elton Tate:

My wife and I are currently looking into investing in Detroit and have secured the pre-approval letter. Upon looking for a home to invest in, we noticed the seller only allows us to see the property if an offer is made. Is this normal? Also, when asked about current lease agreements and rent rolls, no one responded. Is this weird? All properties are tenant-occupied and pay rent at or above the market rate. This practice is very odd to me. It even happens for homes with no tenants.

Of course not, seller is a moron. Here is what I would do, drive by see how it looks, run your comps, Make the offer assuming it needs everything, subject to viewing. If they are still giving you a hard time, MOVE ON. Its Detroit there are deals everywhere

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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
Thanks, @Bob S.. I think that is the rule of thumb, right? Don't get invested in one property; there are plenty out there.
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Elton Tate:

Thanks, @Bob S.. I think that is the rule of thumb, right? Don't get invested in one property; there are plenty out there.

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Jessie Dillon
Investor · Hopedale, MA · Member since 2021 · 321 posts · 213 votes
2y
if the home is listed for sale with an agent, and the AGENT is refusing to provide the rent roll, even after you've followed up a few times, that's a no. if you're using a buyer's agent, maybe they can do the leg work of trying to get that info out of them. BUT, if the property is listed FSBO, it's a regular ol' average joe trying to do the work of an agent to save a buck.. and doing it badly apparently. it's not unusual to say 'we don't want to disturb every tenant without a signed offer,' but they should have interior photos of at least most of the units. & it's normal to not get to see the actual leases before you're under agreement.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
Thanks, @Jessie Dillon. I don't mind not seeing the property until after an agreement is in place when a tenant is present, but not being able to see the property when no tenant is present is a bit odd.
I'm still trying to understand how the process should go, so thanks again for mentioning when I should expect the rent roll and lease agreements. I was told to review the two documents before finalizing anything.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
2y
@Elton Tate What does your gut tell you? This RE game is mostly about gut feels anyway. You are a smart guy and you're on here asking questions, you'll do just fine!
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
I appreciate the confidence boost @Bruce Woodruff!
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Elton Tate:

My wife and I are currently looking into investing in Detroit and have secured the pre-approval letter. Upon looking for a home to invest in, we noticed the seller only allows us to see the property if an offer is made. Is this normal? Also, when asked about current lease agreements and rent rolls, no one responded. Is this weird? All properties are tenant-occupied and pay rent at or above the market rate. This practice is very odd to me. It even happens for homes with no tenants.
This is very weird. I would reply back "how can we put an offer in if we have no idea of the condition of the home".

Are these properties that are listed on the market?
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Elton Tate what you're running into is agents with little to no experience dealing with investors and investment properties.
In our opinion and experience at least 95% of residential agents only know how to deal with owner-occupied transactions.
You'll see a big difference when you look at larger apartment buildings for sale (not on the MLS). Those agents will have proformas, rent rolls, etc. on their listings and EVERYONE knows the buyer won't see anything until a purchase contract is in place. Then they may see the units with their inspector and get actual leases, etc (after signing NDNC).
What local agent(s) are you working with?
Are you looking in Metro Detroit or the City of Detroit?
Going to guess City of Detroit because you posted, "All properties are tenant-occupied and pay rent at or above the market rate."
You want to be careful with that!
There's no LOGICAL reason for a tenant to pay above market rent. You're probably looking at Zillow rent estimates, which aren't granular enough to take into account Property Class - which is EXTREMELY important in the City of Detroit.
Good chance you are also looking at S8 rentals. Easiest way to ripoff an OOS investor is to sell them a Class D rental with a S8 tenant that was enticed with no app fee, no security deposit and really no screening. They will often tear up the house, not pay their portion of the rent or utilities. The investor will only find out 2-3 months after purchase that their expectations won't be met.
Let us know what else you might need assistance with.
We do our best to make sure investors understand all the risks of investing in Detroit, so they can make logical decisions that lead to their expectations being met, so they keep investing in our market:)

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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
This is very typical for multifamily, and also not uncommon for any occupied rentals being sold to investors. The listing agent should have all the info available to potential investors that they'll need to make an informed offer however including rent roll, financials, photos, proforma, sometimes current leases redacted and sometimes (more rarely) even a recent inspection or pre-inspection, etc.
If the proforma numbers work for you, just make the offer contingent upon inspection and due diligence. Sometimes buyers will send an LOI (Letter of Intent) instead of a complete offer, especially in commercial/ multifamily. Maybe it's priced aggressively enough that they think someone will buy it based on the limited info available on it, or maybe it's a FSBO deal and the seller is unreasonable, or maybe the listing agent is doing the best they can dealing with a difficult or hard to reach seller, or the seller has sloppy accounting, or they died, or the listing agent is incompetent/inexperienced, who knows? Sometimes these are the best deals but you have to be able to do your own due diligence and protect yourself with the appropriate contingencies (just like you should be doing on any other deal anyway).
Regarding "Why are they selling?"... please don't take this the wrong way but this is what home buyer's who do one deal every 5-10 years like to ask. If there's a reason that would jeopardize the sale or give the buyer an advantage in negotiations, then the listing agent or the seller obviously isn't going to share it. The answer will always be "The property no longer serves the seller's purposes" or "personal reasons" or "the seller is moving (if it's owner-occupied)" or something generic like that. I just say "Ghosts" in a somber tone and then don't say anything else ;)
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Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
2y
Quote from @Elton Tate:

My wife and I are currently looking into investing in Detroit and have secured the pre-approval letter. Upon looking for a home to invest in, we noticed the seller only allows us to see the property if an offer is made. Is this normal? Also, when asked about current lease agreements and rent rolls, no one responded. Is this weird? All properties are tenant-occupied and pay rent at or above the market rate. This practice is very odd to me. It even happens for homes with no tenants.

We make sight-unseen offers all the time, but we never close sight-unseen. Our offers will always include inspection and attorney review contingencies that allow us to complete our due diligence. If you consider how many properties you may end up looking at during your search you may be competing against people like me, who will lock up a property while you're trying to make an appointment to go see it.

From a seller's perspective- They do not want to upset tenants and want to avoid what I call lookilous.
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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
2y
It can be normal but it is silly on a practical basis. They want to know that you are a serious buyer. On the flip side, they should just say, "send me a pre-approval and POF and here is all of the information on the property, do you still want to see it?" That would be a better approach.
Go ahead and write an offer at whatever price you want. Then go in and renegotiate because you couldn't see the inside and didn't know of the condition, etc.
I get the logic that you can write an offer assuming it needs everything. But everything would mean a tear down. You don't know the condition of the foundation, roof, termite damage (if it is a thing out there). Too many variables.
If it were me, I would low ball them, come to an agreement, and then do another round of negotiations once you can get inside and do your due diligence.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
@Chris Seveney

The properties are listed on the MLS.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
@Michael Smythe, I'm working with someone with experience investing properties in the Metro Detroit area. I'm definitely looking in the City of Detroit because I know the market well. I agree with the rent analysis. The details are mentioned in the MLS. One of the properties is listed as S8 rentals. Thanks. If I need any help, I will definitely reach out.

@Steve K., one property was almost double what it is today, so it's not priced aggressively enough. I did a little research out of curiosity on one of the properties, and it shows an out-of-country seller, so what you're saying makes sense.

No offense taken, but I don't see anything wrong with asking the question; so far, I have only asked one seller this question, and it was merely out of curiosity, especially what I know about the area of that property, so it just made me wonder. I am glad that I clearly found a lot of people's pet peeves with this question. :D

@Crystal Smith, that's definitely been the case :), but I don't have a solid team like yourself. Not yet, at least.

@Rick Albert, I agree, but I guess that's just for primary residencies... But I have even seen it for those types of properties as well, which is why I was confused. Those properties are marked as investment properties and primary home occupancy. If you lowball them, they're not even going to take it. I actually did make an offer on a property that I should have written a lower offer for; they held on to the offer for a few days and then tried to get me to pay full price after they couldn't get other people to buy the property. For this property, the boiler went out (cost $25,000, is what I told you in the past), and the pipes burst, damaging the ceiling and surrounding area.
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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
2y
Quote from @Elton Tate:

@Michael Smythe, I'm working with someone with experience investing properties in the Metro Detroit area. I'm definitely looking in the City of Detroit because I know the market well. I agree with the rent analysis. The details are mentioned in the MLS. One of the properties is listed as S8 rentals. Thanks. If I need any help, I will definitely reach out.

@Steve K., one property was almost double what it is today, so it's not priced aggressively enough. I did a little research out of curiosity on one of the properties, and it shows an out-of-country seller, so what you're saying makes sense.

No offense taken, but I don't see anything wrong with asking the question; so far, I have only asked one seller this question, and it was merely out of curiosity, especially what I know about the area of that property, so it just made me wonder. I am glad that I clearly found a lot of people's pet peeves with this question. :D

@Crystal Smith, that's definitely been the case :), but I don't have a solid team like yourself. Not yet, at least.

@Rick Albert, I agree, but I guess that's just for primary residencies... But I have even seen it for those types of properties as well, which is why I was confused. Those properties are marked as investment properties and primary home occupancy. If you lowball them, they're not even going to take it. I actually did make an offer on a property that I should have written a lower offer for; they held on to the offer for a few days and then tried to get me to pay full price after they couldn't get other people to buy the property. For this property, the boiler went out (cost $25,000, is what I told you in the past), and the pipes burst, damaging the ceiling and surrounding area.
It’s definitely a pet peeve of mine. “They’re selling because “Nunya” was in the building.”
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
@Steve K. fair enough. lol
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Elton Tate if your agent is actually experienced working with investment properties, then how come they didn't warn you that you wouldn't get to see the properties until your offer was accepted?
We post this right on our website, so our clients are fully aware how investment property offers work.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
@Michael Smythe, it's great that you provide transparency to your clients.
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
2y
Not the smartest move by the seller, but it cuts down on buyer competition, which is in your favor.
include something like this: Offer is contingent on buyer walk through of the entire property within 3 days of acceptance to buyers satisfaction, otherwise buyer may declare this offer is null and void via written notice within 5 days after AO. Earnest money within 5 days after AO. Use similar language for document review incl leases and rent roll.
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Elton TatePro Member
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Investor · NC · Member since 2023 · 35 posts · 7 votes
2y
Quote from @Marcus Auerbach:

Not the smartest move by the seller, but it cuts down on buyer competition, which is in your favor.
include something like this: Offer is contingent on buyer walk through of the entire property within 3 days of acceptance to buyers satisfaction, otherwise buyer may declare this offer is null and void via written notice within 5 days after AO. Earnest money within 5 days after AO. Use similar language for document review incl leases and rent roll.

That's a good point. Most homes that need an offer before seeing it stay on the market longer than the ones that don't. I will include something similar to the verbiage you mentioned in the offer.
Elton
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Jordan Deaver
Member since 2022 · 11 posts · 3 votes
2y
Never Buy anything unseen and un tested run away.
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