The other day my agent set me up to see a place that won't come on the market for a week or two. Two somewhat run down 2/1 houses in a nice neighborhood with 1% rule or better potential (which is pretty hard to come buy around here). They've connected with my agent to sell the place, have a decent price in mind, but sound like they might be open to negotiation. So I went and saw the places with my agent and the owner is there, working on fixing up various things. She lives couple hours away, she's driving hours to come paint and stuff herself. I walk around and check it out and think it could be a really good opportunity for the right price. I thought about trying to talk options with the owner, but felt awkward about that given that my agent was there.
So I'm wondering, what would a pro do in a situation like this? I'm not currently in a position to make a cash offer, but it seems like someone with experience might really be able to capitalize in that situation or if not right then, would have a good strategy to move on this property. I could shop it out to contacts, I could try to go back over and talk to the owner directly, see about getting an owner carry, an option to buy, I could work up the numbers and just put in an offer before they list...
Anyhow, struck me as the kind of situation that I could learn from. What would you do?
so your agent brings you a deal possibly with the hopes to earn a 3% commission and your looking for ways to go around that? Maybe not on purpose. You should only speak and relay messages through your agent who will contact the seller agent. Unless you have done many deals with your agent or plan to pay them a flat finders fee then no big deal.
If I were there, I would have struck up a conversation with the seller and worked some questions into the flow of the conversation that would clarify if the seller is open to creative acquisition strategies (I would have told the agent that I was going to talk to the seller if the conversation didn't just initiate naturally...don't surprise the agent).
If you want to talk to the seller now, after you've left the property, you should go to your agent and ask if she'd be willing to ask the seller if she would participate in a conference call. If everyone agrees, great! If not, respect it.
Direct communication is OK, just don't try to end-run around your agent or you could jeopardize the relationship. If you and the seller work out a deal, make sure that the agent's commission is protected. You are in a small town, you don't want to get a bad rep with the agents, word will get around. If you are respectful of client relationships and agent compensation, you'll be fine.
You need to go through your agent. Your agent just brought you a potential deal. That's great. Don't screw the deal producer.
At this point, I'd recommend letting your agent know of your interest. Brian's idea of a conference call is smart. At a minimum, your agent can communicate your interest to the seller. Also, remember that the seller most likely has a signed listing agreement in place with another agent (is your agent the listing agent?). This is likely since the seller will be placing the property on the market in the next couple weeks. To approach the seller and ask the seller to sell without the assistance of your agent may place you in a position where you interfere with another's contract. Very risky.
Further, make sure all transactions go through your agent regarding this property. Building trust with your agent may be very important to you in the future. Working with your agent when they bring you business is simply up front and good business on your part.
Put yourself in your agent's shoes. If you were your agent, and your client went behind your back and stole a commission by purchasing a property you brought to them without using you - would you work with that client again? Would you bring them more deals? Commission is how your agent feeds himself/herself. The seller pays the commission - not you/buyer (so it's not costing you anything). The way I see it, it's really to your advantage to use your agent.
Let me clarify just a bit in that I like the agent I'm working with and have no interest in trying to cut her out of a commission. My question was more directed at the fact that the property is going to be listed with my agent, so she's representing both the seller and me. I don't have a problem with that. She can make a nice double commission. But I can't really see it leading to a particularly great deal for me, since she's on both sides. And in this case the seller is right there, available to talk to. I like Brian's idea of working in some questions and then maybe following up with a call/meeting where the agent helps but you also have the opportunity to talk/negotiate directly with the seller.
The other part of this that I thought I could learn from would be on how to approach a deal like this when I'm not currently in a position to do anything other than put together a loan offer. Obviously asking if the seller would consider carrying would be one way to go, but I'm also curious if I should shop the deal to people that could pay cash. Generally when I hear about people doing that they have the place under contract, and at a wholesale price. In this case I just have a lead on a place pre-market, that just seems like a pretty good deal, with seller that could be talked to. So I'm wondering if a more experienced person would have a way to get it under contract, then look for partners/private money, or how a pro would approach that part of it.
Thanks again for the comments/ideas/suggestions!
Commit to paying the agent regardless and talk to owner direct. By offering to take the place as is you can save money and get the deal done. Agents don't care as long as they see the money.
Dean Letfus, Memphisinvestment.com | 901 264 8674 | http://memphisinvestment.com/
If you have a decent relationship with this agent, I would just tell them, basically, what you have told us here on the forum. I agree with you that having the agent represent both you and the seller is not in your best interest, especially if you haven't worked with this agent before.
Given what you've said here, I'd approach the agent and tell them that you're interested in making an offer to the seller directly before the house hits the MLS and paying them 3% on whatever the purchase price is, but only if the agent is open to the idea. The seller might even agree to the same thing, still giving your agent a double commission. You would get a better deal, and the agent gets a commission for making one phone call. If the agent is cool with it, you are good to go. If the agent doesn't like that idea, I would not push it- it's not worth earning a bad reputation.
The agent representing you and the seller is a whole different issue and really comes down to how much you know and trust this agent. I would definitely look at those two things as totally different situations.
@Orion Walker First, you never stated what the opportunity was. Show me the money. What the numbers look like, will depend on what you do from this point forward (if anything).
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