I'm purchasing my first home!!! I've taken the plunge and applied for financing and have been approved. I've been set up with an agent through my bank. I want to live in the property as my primary residence for a few years, but although it will be my primary residence it's also an investment so to me the numbers must make sense. I have a pre approval letter for a certain amount and I have enough cash for closing cost so all that it good. There are a couple of properties I'm interested in that are priced above my pre-approval amount and I'm not afraid to submit an offer based on what I can and am willing to spend, but the agent I'm working with feels it's a waste of her time to schedule a showing for a place outside my approval limit because "there's no way a seller would accept that offer." Yet most, not all of the places the agent is prepared to show me don't really fit my criteria outside of being in my price range. although I'd rather move faster, I don't mind a bit of patience for something I want to come up. I'm not sure how I should proceed because I want to press the issue feeling that I'd rather the seller disqualify me than be out of the game based on fear of rejection or an agent that may not understand what I'm trying to do. Does anyone, Agent or investor, have any advice or guidance on how I should treat this situation?
I never have an agent I always go directly to the agent that listed the property in my opinion it makes no sense to do it any other way
Think about it the listing agent is going to make a double commission if they sell to me
If they sell to you they make half the commission who do you think they're going to push for me or you drop your agent and calling the properties yourself
@Michael Plante that does make sense. Follow up question: If you aren't using an agent, do you have access to mls for finding deals?
no I don't I use Zillow and realtor.com which as you may or may not know really don't have all the properties that are out there for sale for some reason
My wife and I enjoy driving in the countryside and anytime I see a sign on something I might be interested in I just called the agent it takes time but I'm pretty obsessed with it so it's all enjoyable to me
@Darius Lipsey So either your agent is giving you great advice or they're a little bit lazy. If you're frustrated, why aren't you contacting the seller's agents directly? There's Trulia, Zillow, Realtor.com, etc. and most will have who the agent is right there on the listing. You can try and go direct and see where that lands you.
Or, alternatively, try and find a middle ground with your buyers agent: "Let me pick 10 properties, show them all to me, I'll make offers on the ones that I think fit my criteria. If all of those offers get shot down, rejected, etc. we can revisit." If the buyer's agent says no, doesn't have the time, etc. I wouldn't be afraid to ask if there's a junior agent in their office they can refer me to that has more time. It doesn't sound like you want a consultative, seasoned agent but just someone that can get you into the door of the properties that you want to see.
@Andrew Johnson i don't think the agent is lazy, in fact from the outside-looking-in really they are busy. Having said that, being that busy means higher commissioned sales are probably higher priority and submitting ridiculous low ball offers could be a negative on them considering experience. I understand protecting ones on interest, but where does the line get drawn? I've been trying to go through the buyers agents first not wanting to see someone's work for free and honestly this is the first bit of resistance I've felt outside of having to wait several days for showings.
get a new agent.
And even using a buyer's agent, they get paid through the commission paid out by the seller. Get someone working FOR you.
@Darius Lipsey I think some of this boils down to the definition of "ridiculous". The current offer I have in (who the heck knows what will happen) is about 55.9% of the first listed price. Why? The listing agent had a "ridiculous" assertion that you could build a 2-3 story mixed use development on the land. Oh, if it weren't for pesky zoning issues and historic districts. Consequently, the attributed value of the land was completely wrong, you wouldn't be able to build on it, and now you'd have the rehab one of the homes that was borderline fit for a bulldozer. To anyone from the outside, my offer does look like "a ridiculous low ball" but that's only because the listed price was ludicrous to begin with and based on completely wrong information. My weird 55.9% of the original asking price was actually oddly specific and based on comps, rehab estimates, etc. My agent was happy to make the offer, defend the price, and we'll see where it ends up.
So that's one version...the other version is...
There's a subdivision of 100 similar homes with an average sales price of $200K and then I go in and low-ball $100K on every single home that comes up for sale. All in the hope that I'll stumble across the one person that says "yes". And I want the buyers agent to tour each of them with me and write up the offers without laughing so hard they spit their coffee all over my Star Wars t-shirt. In this case it sullies (in my opinion) their reputation, is a huge waste of time, and might implicitly validate a strategy that won't yield a positive result. That said, I'm sure someone on BP can talk through how they got the one-in-a-thousand deal using that tactic.
You aptly point out that there is a fine line. But I do think it's a different fine line. Do they put you at ease by just writing up 10 offers that have no chance of being accepted? Or do they sit down with you and have a tough(er) conversation about why your strategy won't work.
Personally, I'd look for a realtor that has no issue writing up those 10 offers so that at least you can validate that your strategy *doesn't* work. In my woefully uneducated opinion it's a good middle ground between "write up 1,000 offers!" and you having grating thoughts of "what if we did make the offer?" stuck in your head.
@Andrew Johnson in this instance the "ridiculous" offer is about 20% under listing price. The property had been listed at least two different times in the last year and the asking price has dropped 15k from the first time it was listed to my knowledge. I am fairly new to investing but I'mnot just throwing mud and hoping it sticks. I've put a fair amount into deciding what I want to purchase over the last couple of years and have just recently gotten myself into a position to pull the trigger so by normal standards the offer would be insane, but feeling so aside the numbers have to make since.
I wouldnt show you properties outside your price range either. Sounds like the agent values their time and doesnt want their time wasted. If you find an agent who will show you properties outside your price range...that means they do not value their time...and that is because their time is not valuable. So would you rather work with someone whose time is valuable or someone whose time is worthless?
@Russell Brazil so you wouldn't be willing to put in an offer for a client and negotiate with a seller because you value your time?
Originally posted by @Darius Lipsey :
Russell Brazil so you wouldn't be willing to put in an offer for a client and negotiate with a seller because you value your time?
If I know an offer is too low to be accepted or get a counter, then no I do not waste my time writing fruitless offers.
I can see both sides. Is 20% below asking your maximum approval, or is it lower than your max and you are looking to negotiate.
If you had a max approval of $160,000 and wanted to be shown $200,000 houses, I could see the realtor feeling this is a waste of time. Especially if you only want to look at houses priced higher than your approved for. The agent may know that the market is not going to support the lower offers. Also if we are talking about nice houses that should be getting market price, then I would think this holds even more true, verse fixer uppers in need of work.
With that said, you can always get rid of a realtor you don't feel is working for you, and hire a new one. Not every agent and buyer are a good fit.
Are you saying you are approved for 200K and wanting to look at houses on the market for 3 weeks at 210K or are you more saying you are approved for 200K and want to look at houses listed at 300K that hit the market yesterday? It makes a difference. If it's the first one, sure look at writing an offer. If it is the second then, I personally would let the client know that we are not a great fit and it's best if they find an agent more in line with their thought process.
Showing a client 20 properties outside of their price range is just setting things up for failure. They will never be happy with anything in their range becauase they will all be conpared to the houses in a different bracket. Just like taking someone to test drive a bunch of Cadillacs and then show them the Malibu they can afford.
You could consider getting your real estate license and that way you can let yourself in and out of the properties and write up your own offers. Something to think about if you don't mind the expense of holding an active license.
As far as going directly to the listing agents - while they may push for you don't assume they are all getting "double commissions" as the other poster stated. Most of the time if you are getting both sides of the transaction as an agent, you may get 4 or 5%. Better than 3 but not double.
Buyers always want a deal. The KEY question becomes is what they want to try to do realistic or not?
A seasoned broker or agent knows the market.
If the market has listed properties trading at 98% of list price and goes under contract in 3 weeks or less time then a hotter market. If properties sit for awhile and properties are constantly reducing in price then appears more of a buyers market. You have to know what type of market you are in.
Why does the buyers broker have to put in a bunch of low ball offers? Why couldn't that broker CALL the sellers broker and feel them out for what might be possible? Sometimes you will see a listed price and then after talking with the sellers broker to see why they are selling you find out the seller might look at a substantial price drop due to timing or life circumstances.
In that case it's not the market but the sellers life circumstances that might dictate a below market sale.
What price point is this? Is this a 200k house? A 400k house? A 75k house?
I do commercial real estate and it is about time and money for return. A brokerage business is just like an investor looking for the best use of their time. I am an investor and a broker so see both sides of it.
Someone wants to buy a small retail strip center with mom and pop tenants for 1,500,000. In that range I know typically that is a weak suburban type area with lower rents and the center will have many smaller mom and type tenants ( maybe 8 to 10 plus) and financing will be tough to get ( especially if investor buyer is not local) . The work on getting to closing will be very high for a low return of say 40,000 in commission.
Comparatively a buyer wants to buy a Starbucks triple net with one lease to look at for 2 million plus. Same or greater return in commission with much less headache. You can do more velocity in the same time span.
So for a bunch of tenants with more mom and pop for me it would have to be a 4 million center and up with a six figure check to take that on for my time.
Any broker or agent that is in demand will work on reasonable type requests they see as possible. What busy agents and brokers will typically NOT do is work on deals that take 100 or 1,000 offers and a years worth of time to maybe find the unicorn to buy. Might be a great deal for the investor to finally find it but a waste of time for a broker or agent especially at lower price points. What you really need in that case is to do it yourself or find a newer agent with nothing to do and virtually no business. They do not have to be seasoned usually as they are just getting access to show you the property and then submitting a bunch of useless offers most of the time hoping something sticks.
At this point just talk to this broker or agent. Be candid and let them know for you to buy it has to be a deal and if they do not want to work with you because they do not have the time then you understand. It doesn't have to be a big deal. The broker might like the additional smaller check business but not if it takes all of their time versus other clients. Then it becomes a thorn they want to get rid of. They might have a junior agent willing to try it out.
You as a buyer have a certain amount of capital which took a long time to save and make it count which is understandable. The broker or agent on the flip side is also looking at time invested for the potential return. If both parts do not come together where both are mutually getting out of the relationship what they feel they should then it might not be a relationship to pursue.
If you are an electrician and you charge $75 an hour nobody would chastise you for turning down a job offer from a customer who wants you to work for $12 an hour. In Real Estate however agents are not treated the same. Real Estate is about the only industry where a professional is attacked or seen as lazy for not being willing to work for less than their normal pay.
If the pay will be fixed. Let's assume it's $5,000 to sell a house in whatever range the O.P. is talking about why would the agent work with someone who isn't able to afford homes in that range? They have a very small chance of closing a deal at all. On top of that if they do somehow get lucky enough to cross the closing line with this buyer traditional logic would dictate that it would take at least double or triple the amount of time it could take that agent to close with a client who is looking at homes in their price range which would cut their hourly pay in half or into thirds.
I wanted to look at 1 property that has been on listed on the market
I wanted to look at 1 property that has been listed twice in the last year and has dropped in asking price 15k in that time. It's 25k above what I originally wanted to offer but the numbers still make sense so I was willing to step above that because it's cash flowing currently.
The majority of the homes I wanted to see with this agent were well below my approved amount but i wasn't big on them. This one property I am very incline to do because it's a good deal so I'd make it work and I can still afford. I have since started dealing with a different agent. And will make sure I do a better job of vetting before hand
Just and update: after looking into this agent in particular more they have a reputation for taking on too much work and dumping clients by being rude and condescending. I have found a new agent that I've been working well with and has been able to get me results in a timely manner and really seems to care about my interest and building a solid relationship. Thank you all for the input. I can't wait to send another update after closing my first successful deal.