Strategy/Benefits For Off-Market Deals from Owner/Agent

Buying & Selling Real Estate
9yFollow

Strategy/Benefits For Off-Market Deals from Owner/Agent

Daniel French
Philadelphia, PA · Member since 2017 · 3 posts · 2 votes

Good Morning BP World!

I recently found a steal-of-a-deal condo in the NoLibs Philadelphia area. The current owner is a RE developer and wife is the RE agent....really nice / straightforward people. We are both motivated to move/close quickly and plan to work out a deal before they list on the MLS. I am comfortable with the Asking Price and don't plan to do much negotiating based on the current price, as it will definitely go for above-asking if they go to MLS.

Therefore, I am looking for some insights/opinion on the questions below:

1. I am currently not working with a REA, can I use the seller's wife to handle both sides of the deal seamlessly? Any risk to that approach beyond the obvious "best-interest"of her and her husband on the sales price?

2. Any potential savings tactics available? Ask for one side of the commission to be put towards closing costs?

3. Any inherent risks of an off-market deal?

Thanks for your insights and opinions!

Dan

2Reply
33 views

Most Popular Reply

Andrew Johnson
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Daniel French The risk isn't in that it's an off-market deal, the risk is that there's nobody looking after you in the deal. If it's a "steal of a deal" with a developer and an REA spouse then (almost by definition) it's not a steal of a deal. They know the property better than you, I'm guessing they know that micro-market better than you, and - well - there's two of them. If anyone is at a disadvantage, it's you. Don't you think that if they could hold the property for another 60 days, sell for $50K higher, that they would? Maybe you're an all-cash, close in 14 days, high EMD buyer. If you are, there economic value there, that value comes with leverage and (accordingly) a discount relative to "conventional" buyers. None of this means that you shouldn't go through with the deal. Maybe this is some odd exception where a developer and REA (together) don't know how to price their property. You never know, but I'd always wonder: what do they know that I don't?
3Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    9y

    @Daniel French

    Always use an REA if you can. They are contractually bound to act in your best interest and they are of no cost to you. I am not saying that the REA wife wouldn't be kind and fair, but she has an obvious interest in the outcome being favorable to her and her husband so I wouldn't let her represent me in such a scenario.

    As for the risks of off market deals, there may be the risk of purchasing the property as-is vs MLS deals that typically require the owner to make a few more concessions, but the sellers in this case are not normal owners in the fact one is a developer and one is an agent. They should have higher ethical standards due to their professions but not everyone plays by the rules and is fair in life so there's that as well.

    1Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    Daniel French The risk isn't in that it's an off-market deal, the risk is that there's nobody looking after you in the deal. If it's a "steal of a deal" with a developer and an REA spouse then (almost by definition) it's not a steal of a deal. They know the property better than you, I'm guessing they know that micro-market better than you, and - well - there's two of them. If anyone is at a disadvantage, it's you. Don't you think that if they could hold the property for another 60 days, sell for $50K higher, that they would? Maybe you're an all-cash, close in 14 days, high EMD buyer. If you are, there economic value there, that value comes with leverage and (accordingly) a discount relative to "conventional" buyers. None of this means that you shouldn't go through with the deal. Maybe this is some odd exception where a developer and REA (together) don't know how to price their property. You never know, but I'd always wonder: what do they know that I don't?
    3Reply
  • Daniel French
    OP
    Philadelphia, PA · Member since 2017 · 3 posts · 2 votes
    9y

    @Bob Okenwa - Thanks for the info, I definitely agree.

    @Andrew Johnson - Thanks as well! The long and short of it is, the owners core biz model is high end luxury homes outside of the city and the city condos are no longer worth their time/align with their core model. 

    Thanks again for your feedback gentlemen, much appreciated!

    Dan

    0Reply
  • Michael James
    Philadelphia, Pennsylvania (PA) · Member since 2017 · 39 posts · 16 votes
    9y
    Daniel French you can always use a Real estate attorney for the transaction, just make sure you have it appraised and inspected. Check with the HOA and see if there is anything they might have discussed with the homeowners, sometimes you find a HOA that doesn't allow the property to be rented, or they're raising the fees for a new roof. You can also search online through the courts to see if the owners have had any prior legal issues, criminal or civil. Check out https://ujsportal.pacourts.us/docketsheets.aspx
    1Reply
  • Chris Price
    Real Estate Agent · Philadelphia, PA · Member since 2015 · 51 posts · 9 votes
    9y

    If you want to talk it over tomorrow morning, give me a call before 10am or sometime 3p-6p. I'd be happy to give you an outside perspective on the deal itself.

    0Reply
  • Andrew Holmes
    Rental Property Investor · Chicago, IL · Member since 2015 · 275 posts · 271 votes
    9y

    @Daniel French

    Not sure about PA but in IL. That would be bad news for the agent. Her own deal and she is agent and directly working with a buyer all sorts of conflicts of interest issues from her end. The licensing rules now a days are very strict can even when there is nothing wrong it can be sticky. If I was her I would say work with your attorney for your representation and closing then she is in the clear. 

    From your end as long as you know what you are doing. You are okay with the price. You know what you are getting. So if are a seasoned investor no big deal. If you are new or have only done a few transactions why not get a couple of CMA's from a couple of agents. Get your attorney to over look the deal. Few hundred dollars well spent.

    1Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    9y

    In Colorado, dual agency is allowed. The dual agent must be impartial. An agent is not allowed to double-end their own personal deal, as it is impossible to be impartial in your own property.

    Get your own agent or attorney, but when you write up the offer, make sure the seller covers the commission for your agent.

    @Andrew Johnson  is correct, this is most likely NOT a steal of a deal, no matter what the seller says. If they could hold onto it for a short while longer and make significantly more, they would.

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    1Reply
  • Account Closed
    Investor · Fremont, CA · Member since 2014 · 260 posts · 31 votes
    9y

    Daniel,

    you will be making a HUGE mistake if you do what you are suggesting. Get your own REA.

    1Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    9y

    Hi @Daniel French,

    I'll have to agree with the majority here. Get your own agent and make sure you have someone on your side. I do know people who have just dumped something off for some reason or another at a good deal, but it's best to have someone step in who can give you an impartial opinion on it.

    Good Luck!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free