Kickbacks to agents from investors

5 Replies

Hi all,

I have just started looking at investing in our first flip. We have been heavily involved in bidding on homes in our area for a couple of weeks. 

I have an uneasy feeling that certain bids we have lost out on are due to the actual listing agent receiving kickback from other buyers to ensure their offer is put to the seller.

Has anyone had the same experience? Its a very competitive market so this wouldn't come as a surprise. I also know it is illegal :(

My reasoning is as follows:

2 deals - we offered at least $40K above asking price -I'm talking about a $175K home here. We were told we were the highest bidder. Offers closed an hour later. We stressed that we would love the opportunity to counter if we did not come up as the higher bidder (just in case). The listing agent said of course.

Obviously 3 hours later we find out the home is under contract - no response by agent.

So I find it hard to believe that an agent who works off commission will not return to eager and involved buyers to get an increased sale price. Who turns down free money - except if they are getting it from another buyer already.

There are many flippers in my market and the difference between a winning bid is the listing agent and what he presents to his clients.

Any thoughts?

When the house closes check and see how much it actually sold for. If it went for less than your offer, then I would make some noise. Contact the seller if it is a bank, contact the listing agent or contact the realtor Association and let them know that you had a higher offer that was not reviewed

@Eli Gla  Is it possible that the Listing Agent is also representing one of the other buyers? You should try to find that out. In California that has to be disclosed. 

Another option you might try, when presenting your offer, tell the listing agent you want to be present when the offer is presented. I don't know if they'll let you, though I have done that as an agent before when the listing agent also had buyers bidding on the house. 

Medium house plansKaren Margrave, Parlay Investments | [email protected] | http://www.parlayinvestments.com | CA Contractor # 680782

Thanks Karen :)

No they won't let us be present as they say they are presenting multiple offers, which is fair enough. 

I will see if they are representing the buyer and seller, this was not disclosed but I can always check after the fact.

I do understand the difference between submitting your best price and not getting a response. This I would think is common to ensure you submit your best and highest in a multiple offer situation.

Originally posted by @Eli Gla :

Any thoughts?

1st thought- If your dealing directly w/ the listing agent get a buyer's agent.  A good buyers agent can usually pick up the phone & get answers you can't get directly from a listing agent.  

2nd thought-  In a competitive market w/ bids above asking price sellers then make decisions on contracts based on terms.  We have seen & been in situations w/ multiple offers above our list price.  We accepted the offer w/ better terms, stronger Proof of Funds, ability to close faster......  

Since you've only submitted 2 contracts it's time for you to do some research & find out what terms are winning the day in your market.  

Originally posted by @Crystal Smith :
Originally posted by @Eli Gla:

Any thoughts?

1st thought- If your dealing directly w/ the listing agent get a buyer's agent.  A good buyers agent can usually pick up the phone & get answers you can't get directly from a listing agent.  

2nd thought-  In a competitive market w/ bids above asking price sellers then make decisions on contracts based on terms.  We have seen & been in situations w/ multiple offers above our list price.  We accepted the offer w/ better terms, stronger Proof of Funds, ability to close faster......  

Since you've only submitted 2 contracts it's time for you to do some research & find out what terms are winning the day in your market.  

 Thanks Crystal

We do have a buyers agent that is why we know so much about the deals and the fact we were top offer on at least one.

Our offers are squeaky clean - all cash, no inspection, no contingencies, close in 2 days. 

We are not new to buying property so we know our offer was a sellers dream.

I agree that we will wait and see if this happens again.

So I am hoping this was just 2 bad experiences but in reality with everyone wanting a piece of the same pie it's not surprising that there could be something going on. 

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