Real Estate Agent killed my possible wholesale deal

25 Replies

First of all I  have to say thank you to @Michael Q. for providing his tips to direct mailing and negotiating your way to wholesaling.  His strategies allowed me to get calls and invitations to come out to buy their homes.  The rush of getting phone call in the money line is really exciting. =)

Anyway, here is the bummer part. I got slapped with the dreaded Real Estate Agent promised me bit a few times now. I believe we all experienced something similar like this before right?

But Nixon "The Real Estate Agent that would like to list my house promised me and strongly believe he can sell my house for this price".   

Not sure what to do with these type of angles. I had a property, which came in from one my Yellow Letters. The father passed away in March of 2014 and all of the heirs would like to sell this property ASAP. The property is located here in La Canada up in the hills and home prices are going for like 1.3 million for the 3 bed and 3 bath ARV. If a house is completely demolish from ground up and they start from scratch, you can see homes selling in the range between 3 to 4 million (brand new). The seller contacted me and informed they have a house they need to sale they have an idea that the going price is like 1 to 1.3 million, but they are willing to go lower if it is a full cash offer. Without any hesitation, I made an appointment to visit them the very next day and view the house they would like to sale.

Property Profile Breakdown:

  • La Canada Property 91011
  • 3 Beds, 3 Baths
  • 2590 Sq. Ft.
  • Pool
  • 1 Carport
  • Built: 1957
  • Lot Size: 20,673 Sq. Ft
  • ARV 1.3 million

Property Red Flag:

  • Non-permitted garage conversion into two bedrooms and den now has a closet to become extra bedroom (Seller indicated it is now 6 bed and 3 bath which makes to sq ft to 3200)
  • Electrical and ground wiring are outdated needs to be upgraded
  • Homes felt like it was back in the 70's living in the Brady Bunch era. Everything was very old and out dated.  Anybody can move in but would take lots of work just to get up to date.

So here is the kicker to my story.  After examining the property and knowing what I can actually go in and actually make a proper offer.  The seller indicated that morning a friend brought over a Real Estate Agent to see if they can assist.  Straight out the agent indicated that she should could list the property for 1.7 million as is and somebody will not hesitate to purchase it as is. My jaws dropped and I didn't really know how to respond with that price.  Since originally the seller was willing to go down below from the 1.3 million range if paid in cash. The crazy part is that the seller really believes she can get a buyer for 1.7 million.  I even presented the seller the compare report I had gathered showing her numbers are skewed. The agent was good and because the seller responded by saying "that the non-permitted converted bedrooms in the garage, expanded her property sq. ft and value".  I indicated that if they do find a buyer, the appraise value from a certified appraiser may not match her request and may cause a major delay in closing.  Once again the response was that "The agent said this" and "The agent said that". 

I am still at ughhhh.  Don't really know how to respond to this situation.  I guess you can say I am pretty much frustrated and the same token I kick myself in the butt and wish I went out sooner.  Anyway, any good tips to over coming this would be great.


@Nixon Vayupak  

You can not overcome a prospects FantasyLand objection until they live in RealityLand. 

Real estate investors are not teaches we are buyers. The prospect must be taught by someone or something else. Most do not jump from FantasyLand into RealityLand until the need outweighs the fantasy. 

Don't beat yourself up. Live by the idea that you cannot lose what you do not have. 

Be happy, you are now one step closer to a YES:)

Could you go to your favorite buyer and say "hey I know of a deal thats about to go on the market and I'm pretty sure they are willing to take 1.3m for it"

and ask for a bird dog fee...?   

What I would do is wait for the listing to sit for several months and eventually expire...then if it hasn't sold go back to the seller/s with your offer. They'll likely be a little more motivated at that point. Patience is the key.

If new houses go for 3 to 4 million. Then someone could buy the land for 1,700,000 and build a new house and sell it to make  a good profit.

They would just tear that house down as it's easier to start over. 

Ask yourself; if you were the seller what would you do?  An investor offers you $500,000 less than a licensed real estate agent says your home is worth. I know what I would do.  

@Ryan Mullin   that was my plan but unfortunately, the agent was a little more quicker than me. =(

@Jim Viens   trust me I plan to stay in communication with the home owner.  Just going to be a chicken hawk and wait for an opportunity.  Hopefully the seller listens to my suggestion and not list with the agent too long. 

So, usually a seller can exclude specific buyers from the agent getting a commission when the seller has come upon that buyer without the property having been listed; the agent did nothing in that case to locate such a buyer. So you tell sellers before listing to have you as such a buyer. If the agent is good and gets the seller a buyer for more than your offer - oh well; if no buyer comes in above what you had offered, that seller might re-visit your offer. 

Oh, agents don't like telling sellers that info since they could do lots of effort towards marketing on a property only to end up with no commission. 

I was just about to say what Steve just did about the listing.

Tell them that they should have the agent put you as an excluded buyer so there he won't try to fish for a commission if the listing expires and they immediately take your offer.

Wish them luck and you hope the agent can get them that price, but if they can't and they want to get out of the place you will be there for them.

It is the old story, an agent can list at any price and hope a commission shows up. The California Dept. of Real Estate used to have a policy against what they called Freeze Out Listings but they had a tough time enforcing the policy. I have no idea of your specific market and maybe she is right but may just be just a listing hawk. I would suggest to the owner that if they are going to list and if the agent is honest they will have no problem with taking a 60 day listing. 

They can always extend the listing for 30 days if the agent has earned that right. Plus I would suggest they interview 3 other agents before they sign on the dotted line. Plus as has been stated put you in the listing as a excluded buyer, no commission due if they sell to you, which automatically raises your offer amount by the amount of any commission.

If i were that agent I could honestly tell that seller I could get $10 million for your property and be truthful. Problem is the seller would have to agree to $1000 down and $1000, or more, in the note per month until it is paid off. 

Thanks @Shaun Reilly and @Steve Babiak for the tip.  I've totally forgot about that.  Anyway, I did make to the call to the seller and informed her to add my name on to a special buyers list.  

@Joel Owens   I had one builder who was interested, but only if he was able to get the deal at a cheaper price.  We shall see what will happen in the next few months.  If the seller is able to get her 1.7 million "as-is" property then the only thing I can say is WOW.  

It is also possible, and I say this with all due respect, that a licensed agent operating in that area has a better idea of what is "reality" and what is "fantasy" than you do.

I hardly think you can blame a homeowner for being suspicious of an offer a half-million dollars below what an agent is willing to list it at.

Tell the seller the agent is wasting their time and to prove it, tell them to offer the realtor 60 days to sell the house, calculate the amount of holding costs involved with the 60 day delay and inform them that they are going to lose another 3500 or whatever it is believing this guys story.  (taxes, mtg payments etc).      Have the realtor take the listing with you being excluded.

Write a contract now at the lower price and include a kickout clause for 60 days to the seller if they want to go with a higher offer that the realtor brings, include within that also a first right of refusal.   After 60 days the contract binds.      They win either way, you may come out ahead too.    

Other buyers will be discourged by your first right of refusal.      You have more time to work the deal and you are getting it 6% cheaper than anyone else.

no worries, if it works out my wife wants something shiny :)

Sounds to me like some great advice.

What I hear is be a close ally to the seller with your offer, providing free advice and guidance on what actions the realtor should/is going to take and what the seller should expect over the next several weeks/months no matter whom they choose to pick.

If you predict certain outcomes, especially if negative towards the realtor, then that might put you in the driver's seat once they are done with the realtor and still have the property.

My RE instructor taught me the three D's of Real Estate. Disclose, disclose, disclose.

California has stringent disclosure requirements, so make sure the listing agent discloses about the non-permit work. Any published listing (on the MLS or within other marketing materials) should clearly indicate if there is an unpermitted area of the house (such as "one bedroom plus unpermitted garage conversion").

Once you the agent knows that unpermitted construction was done on the home, they must, by law, disclose the issue to all potential buyers. If they don't they could lose their license.

Nixon, thanks for sharing this on BP. I am astounded by the wealth of great information and knowledge everyone is willing to share! Do you have any update on this? Have you kept in contact with the seller?

@John Chapman currently I am still in communication with the seller.  At this very moment they are still in la la land believing that they will be able to get their asking value.  If the property doesn't sell hopefully I will be able to make my move.  If I am able to lock this deal down I will keep everyone posted.

Originally posted by @John Hamilton:

Sounds to me like some great advice.

What I hear is be a close ally to the seller with your offer, providing free advice and guidance on what actions the realtor should/is going to take and what the seller should expect over the next several weeks/months no matter whom they choose to pick.

If you predict certain outcomes, especially if negative towards the realtor, then that might put you in the driver's seat once they are done with the realtor and still have the property.

I think John has some good advice here. Like he said, just make sure you keep in contact and provide friendly advice, approach them as someone who is there to help. If they DO get it sold for their asking price, well than good for them. If not be sure they know you're the one to contact! 

Have you provided any proof in writing to the seller that they're asking price is in la la  land? Did you show the seller a bank statement you have funds to buy, or you just trying to tie the seller's property up for 60 days hoping you can find a buyer?

Joe Gore

@Leigh C  

  I get were your going but that is just way to complicated for the average home seller. YOu would never get a home owner in a brisk market like CA do go for this.

Looks like right now they are just listening to an agent that will tell them the best price.

All of us RE brokers have been through this a hundred times on listing appointments its no

different so and so from RE max says I can get this you say I should list for that. And they go with who tells them the most..

All I can say is once this investor made the offer they should have moved to get it into contract right away and not let any time lapse so the seller sought second opinions. Now maybe it did not matter the second opinions were going to happen no matter what.

However as a general note this is what I see with folks that are trying to buy these deals. they are just too SLOW.. If you want a deal answer your phone see them that night close the deal ASAP.. otherwise your always going to run into the arm chair Quarterback or the RE agent that says your getting screwed..ITs human nature to take the negative side.

I mean how many people would say hey that's great.. Its not in their nature, people want to protect and just bring up the negative

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here