Hi BP peeps! I found a multifamily prop that I would like to move forward on. After doing further research, I found the current owner bought it in foreclosure for a steal. It's listed for significantly higher than its appraisal value and when compared to local comps. Would I be able to work a deal with the agent that has the property listed? Or should I have my own (getting my RE license - be my own)? I just can't imagine one agent being unbiased with such a large price difference. Thank you!
Also, in West Palm Beach, FL if anyone is local!
How many units is the property?
4 units. Also, hi fellow palm beacher! (This one was hard to find, I’m sure you know ha!)
The listing agent isn’t supposed to be unbiased- he/she works for the seller and is loyal to their interests. It’s better to have your own representation; a buyer’s agent doesn’t cost you anything and you’ll have someone looking out for your best interests.
What makes this such a hot deal if it is listed way over appraised value? Did you have it appraised? Does it cash flow?
It doesn't matter if the current owner bought it low and is selling it higher--that's exactly what most participants here are trying to do!
If you can't get a below-market price, OR seller financing/terms, I'd keep looking for another deal, instead of grabbing something now because of the excitement of the market at this moment.
Florida, (and some other areas of the country) as you probably already know, has a boom/bust cycle of about 7--8 years. That being said, there's always opportunity, and it's always a good time to buy. Just make sure your deal can stand on it's own (without anticipated appreciation).
As for the agent question--God bless the child that's got their own! Get someone you trust on YOUR side. IMHO, if you are just now getting a license, I'd definitely seek guidance and council by using another experienced agent, who also invests in RE themselves.
@Victoria Noska I should preface this by saying that I am a HUGE advocate for getting your own RE license. I have mine, and although I use it for investment purposes only, I have allowed my commissions to be added towards closing costs. My license has paid for itself 100 times over.
However, there is a benefit to using the listing agent in a situation like this. That agent would prefer to represent the buyer as well. Who wouldn't want both sides of the commission? Now, the agent should be completely unbiased and neutral and allow the sellers to determine the offer. But let's be real, they can sway if it benefits them.
Having an aggressive buyer's agent would be the other side of the argument. The right agent can put the right amount of pressure on the listing agent. I suppose test that I would use to determine which strategy to go with depends on the listing price. If I believe that the listing price is set to sell, and there will be no negotiations, I would go with the listing agent. This is a scenario when the first offer is more important than the best offer. If you believe there will be some hard-nosed negotiations, I would use a different agent to represent you.
Also, we have a monthly coffee meetup at a coffee shop in Delray Beach every month. We discuss things like this and other topics. Let me know if you'd like more details.
Unless you are an experienced RE Investor then I do not recommend relying on the listing agent. As Sharon points out, the listing agent is required to always put the seller's best interests first (within some legal and ethical boundaries, of course), and while that isn't necessarily a zero-sum proposition it almost certainly will come at some expense to you.
Get yourself someone experienced to walk you through this deal, if it is a deal at all.
Feel free to shoot me a message with more details on the property.
Would be happy to help you look it over and analyze since I know the local market.