My Agent Willnot put an Offer becuase is too low.
NJ · Member since 2018 · 22 posts · 8 votes
My Agent Willnot put an Offer becuase is too low.
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Professional · Lowell, MA · Member since 2014 · 232 posts · 223 votes
8y@Tirzo Quintero I'm a licensed Broker in Mass and I can tell you that this practice is absolutely illegal here. You could offer to trade the house for a take out menu from a closed Chinese restaurant, and I am OBLIGATED to bring it to the Seller for the Seller's review. I think a simple web search will tell you whether this is similarly illegal in NJ.
Good luck!
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- Professional · Lowell, MA · Member since 2014 · 232 posts · 223 votes8y@Russell Brazil I feel like we're equivocating here. First, what constitutes an "offer?" Second, what is the broker's duty? **sorry in advance for the lack of paragraph breaks here. I've noticed that they dont hold when I draft from my mobile. To the first point, sure-- let's assume the offer is in writing. However it got there (agent, atty, potential buyer, convicted felon, foreign national... whatever. ) Let's assume the offer is already in writing. For the second point, I'm Speaking provincially. In Mass, all agents are Sellers agents unless and until they are requested to be buyers agents-- and then they must accept this buyer's agency. If Joe on the street asks me to bring an offer to a lister, but Joe hasn't asked me to be his agent, I must disclose to joe m that I'm a sellers agent. Consider this from the Commonwealth of Mass' consumer website for real estate matters: If you make an offer to purchase a property listed by a broker, the broker or salesperson is required to convey your offer to the owner of the property. There's no carve out for the work that one must do to get there, it's cut and dry in Mass, and it's stressed in every RE class I've ever taken. The SAME holds true in Mass If I am a buyers agent, except that my fiduciary duty is to the buyer and I could advise him (Joe in this case) that I thought his offer was low. I'd provide him with back-up detail to show the case. But if he insisted that the offer was what he wanted to convey, then I'm still legally obligated to bring it to the buyer. I'm talking about what the law requires of me. You are talking about the work it takes to 'waste your time' preparing offers for $0.39 on the dollar. I respect and acknowledge the point, but it's not going to change the fact of my obligation as a broker.
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes8y
@Steve McGovern I think @Russell Brazil's point is at any time the agent can decide not to work with the client.If the agent chooses not to represent the client he has no fiduciary duty to the person.
On the other hand I believe (Russel will know better than me) if there is a buyers broker agreement, That broker has a fiduciary duty to the client until such time as he or she fires the client and chooses not to work with them any more.
Of course we are splitting hairs here. The buyer has other options to get the job done.
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes8y
Well that is perfectly logical, but it doesn't always work that way. I have seen numerous times where a seller just gets fed up and accepts a dramatically lower offer. I scratch my head every time I see it, for the very reason you mention.
- Real Estate Agent · Ivor, VA · Member since 2011 · 73 posts · 21 votes8y
Two things. I just took the RE test here in VA and one of the questions asked. If a Sellers agent had to bring all offers to the Seller. A. was yes but the answer was C. yes unless seller has stipulated that he/she did not want to hear any offers under X#. Second I have bought more than one property with crazy low offers " 50% of asking" you never know the sellers situation and cash is king.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes8y
Originally posted by @Stanley Crawford:
Two things. I just took the RE test here in VA and one of the questions asked. If a Buyers agent had to bring all offers to the Seller. A. was yes but the answer was C. yes unless seller has stipulated that he/she did not want to hear any offers under X#. Second I have bought more than one property with crazy low offers " 50% of asking" you never know the sellers situation and cash is king.
Buyers agents dont bring any offers to sellers, that would be a violation of the code of ethics and the law. You are confusing buyers agents(Also called the selling agent) with the Listing Agent.
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"If Joe on the street asks me to bring an offer to a lister, but Joe hasn't asked me to be his agent, I must disclose to joe m that I'm a sellers agent. Consider this from the Commonwealth of Mass' consumer website for real estate matters: If you make an offer to purchase a property listed by a broker, the broker or salesperson is required to convey your offer to the owner of the property. There's no carve out for the work that one must do to get there, it's cut and dry in Mass"
I would like you to please prepare an offer for every property in your MLS for 1% of asking price for me. I am aware you are a sellers agent for each and every property and I accept that. I would like an inspection contingency (Radon/Pest/environmental/engineer/furnace), I would also like them to do surveys and stakeouts within 5 days, a $1.00 Earnest money, a 45 day attorney approval, a 60 day partner approval and an assignment contingency. Please send me an address at your earliest convenience and I will send a signature stamp and an initial stamp you can use on each of them. I also acknowledge you feel each offer is low and has a very low chance of success and accept that. I look forward to hearing the results from each one. Also they will all be in made in an LLC and all are requesting owner financing. Oh and please increase my offers for an additional $1.00 every 3 days until we get a favorable response.
I am rescinding my request at this time.
If that was the way it worked a spiffy agent could lock each and every agent up with offers and they would be the only available agent in 50 square miles.
While I agree that offers should be made and if an agency exists (substantive contact at least) there are steps that an agent is required/should morally take. There are also limits to that. I do not believe that even in Mass my above request would be considered something you have to entertain.
- Real Estate Agent · Ivor, VA · Member since 2011 · 73 posts · 21 votes8y
You are right ofcourse. I edited it.
- Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes8y
A little bit of inside info.
A bank is not going to let you wholesale the property directly. The contract, regardless of the offer price, will be nonassignable. There are ways around it, like doing a simultaneous close, but you're going to need to put in an offer with proof of funds. Banks tend to want cash only deals these days. That means you would need POF for your $135k plus closing costs. Do you have that?
Regarding the property itself, it's very common to see foreclosed bank properties to go under contract and then come right back on the market. People out bid each other and then later can't come up with the funds, or there are problems with the title due to a rush in the foreclosure process. You also get a lot of people putting in bids on multiple properties and then they decide later to not go through with the contract. And, hard money lenders turn down the funds.
If you want your agent to put in low ball offers, you need to communicate that up front. Most agents won't or can't work that way. Random low ball offers to a random agent are generally are tough. Sometimes they go through. Not because you're getting a deal, it's because it turns out the property was only worth that lower offer and everyone else ran away.
Banks never see the property. The asset manager assigns it to a big REO agent in the area and they order a broker price opinion on the property. Most agents doing BPOs know nothing about construction. They certainly don't climb up in a mold infested attic space to see if the trusses are any good.
They certainly don't look up to see if there are open permits or town violations or unpermitted work that will bust your budget. And they won't be able tell you that the septic system is now too small for that house since an illegal bedroom and bathroom were added. And, since the houses tend to be winterized, they might not notice that the sewer line out front has collapsed or that all the copper has been stolen from the heating system. And they might not notice that the main support beam has been compromised when the an illegal apartment was put in the basement.
And, here's the other issue. Let's say the property is in okay shape, in a town where even a knock down would go for $320k. There are 5 cash offers that you know of above $300. Why would an agent put in an offer for $160k? If you communicated that strategy upfront and the agent agreed to work that way, then that's okay. But not a random offer.
And trying to talk to the listing agent likely won't work. These folks get assigned 100s of homes. They don't pick up the phones. Lately, they've been using online submission portals at the buyer agent's expense. There's a Remax agent near me and his face is on just about every REO in town. I've never spoken to him. I've never seen him in public. I met a guy that claims to have met him 10 years ago. These agents work with large staff to deal with all of their property issues. They aren't picking up the phones. Some are even putting remarks on their listings that if you contact them you forfeit your offer.
That's the story with the bigger REO agents and with big banks. Small local banks might be willing to do one-offs just to get the properties off of their balance sheets. Small banks have a lower tolerance with the shareholders for having bad assets.
- Real Estate Agent · Athens, GA · Member since 2015 · 98 posts · 27 votes8y@Tirzo Quintero time for a new agent.
Originally posted by @Frank Wong:
Hi Tirzo,
You said the home is listed at $205k, ARV is $270k, you want to put in an offer at $135k and this is a bank owned property. Look at this from the seller's point of view and if you owned the home. Why would the seller even accept $135k or even take its seriously if they haven't even tested the market at a lower price point? House has not been tested at $185k, not $170k, not $160k, not $150k and you want them to accept $135k. Seriously.
Now your buyer's agent should explain this to you, the agent should also explain why it should be sold at a higher price. The agent should also let you know the bank owned sellers are not desperate. They can hold onto the asset forever hence 290 days. This is not 07-09 when banks needed liquidity.
You have the right to fire the agent and the agent has the right to fire you. If you are serious and you are a cash buyer. Your agent should use this as a learning experience. Write the offer have it get rejected and then you learn from it and grow. This is the reality of the situation that I see.
With this mentality I wouldn't have won 30-40% of the properties I've flipped. Most of the time the bank, homeowners, and brokers list up a price based on "comps" that have no correlation to the actual value of the property. I bid on what I think it is worth, regardless of how far it is from the list price. The seller might not like it, but it starts a negotiation or has them come back to me 3 months later when they realize all the bidders have been in the same range because all of the professional flippers know how much it costs to repair.
Also, asset managers don't walk these properties and see how much work needs to be put in to get it to that ARV. The reason why the property has been on the market for 290 days and has fallen out of contract multiple times tells me theres probably a lot of issues that a home inspector or buyer found when doing their DD. Also yes banks don't have to sell like before, but they still care about selling and do not want to hold forever. They have an incredibly high tax bill in NY/NJ. Some banks are much more aggressive than others to get these off their books. Some of these houses are files from 07-08.
- 8yGreg GaudetPro MemberInvestor · Pukalani, HI · Member since 2017 · 414 posts · 291 votes@Tirzo Quintero Same question was posted by another beginning investor last week. Hearing these egocentric agents laziness really frustrates me, but take your business elsewhere! Maybe that agent has so much business and too much money, but there’s plenty of agents that will be happy to make the commission. That being said, I typically have an equation that justifies my offer price. Whether that equation has any validity is another story, but I can make an argument for almost any offer price lol (Can use price per sq ft, list to sales price ratios, the average sold comps prices minus what you think the property needs, etc.) I learned this practice from when I was responsible for presenting offers for one of the top producing brokers in the state of Hawaii, and I believe that is part of the agents job to discuss the right offer with you and then to write an argument for the sellers explaining why 135k is the right price. But if your agent isn’t savvy enough to make the argument that’s going to win the deal for you, you can always write your own argument and tell your agent to include it as the cover letter to your offer. One more thought; in my last deal negotiations I was bidding against 3 other cash buyers, my max price was 75k, but I ended up accepting the sellers counter for 80k just to beat out the other buyers, then I did a moisture inspection, found some water damage and was able to get a 10k repair estimate which I used to get the sellers to give me a 5k price reduction to 75k (I already knew there was moisture, and was already planning the rehab anyway so this was really just a bluff to get a price reduction) . So what I’m saying is that sometimes it’s worth it to offer a little more, or accept a higher counter and use a home inspection as a negotiating tool to get the price back down once you have the property under contract and the sellers already moving towards closing. Hope this info is helpful! There’s tons of great agents out there, find one that understands REI and make sure you’re valuable to them too! Gotta close deals with them, or at some point I would say it is fair to stop writing offers - but doesn’t sound like that’s the case here.
- Member since 2018 · 4 posts · 1 vote8y@Tirzo Quintero You need to find a different real estate agent.
- Contractor · Atlanta, GA · Member since 2018 · 32 posts · 14 votes8y@Tirzo Quintero Maybe you can consider making the offer yourself.
- Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes8y
Originally posted by @Syed H.:
Originally posted by @Frank Wong:
Hi Tirzo,
You said the home is listed at $205k, ARV is $270k, you want to put in an offer at $135k and this is a bank owned property. Look at this from the seller's point of view and if you owned the home. Why would the seller even accept $135k or even take its seriously if they haven't even tested the market at a lower price point? House has not been tested at $185k, not $170k, not $160k, not $150k and you want them to accept $135k. Seriously.
Now your buyer's agent should explain this to you, the agent should also explain why it should be sold at a higher price. The agent should also let you know the bank owned sellers are not desperate. They can hold onto the asset forever hence 290 days. This is not 07-09 when banks needed liquidity.
You have the right to fire the agent and the agent has the right to fire you. If you are serious and you are a cash buyer. Your agent should use this as a learning experience. Write the offer have it get rejected and then you learn from it and grow. This is the reality of the situation that I see.
With this mentality I wouldn't have won 30-40% of the properties I've flipped. Most of the time the bank, homeowners, and brokers list up a price based on "comps" that have no correlation to the actual value of the property. I bid on what I think it is worth, regardless of how far it is from the list price. The seller might not like it, but it starts a negotiation or has them come back to me 3 months later when they realize all the bidders have been in the same range because all of the professional flippers know how much it costs to repair.
Also, asset managers don't walk these properties and see how much work needs to be put in to get it to that ARV. The reason why the property has been on the market for 290 days and has fallen out of contract multiple times tells me theres probably a lot of issues that a home inspector or buyer found when doing their DD. Also yes banks don't have to sell like before, but they still care about selling and do not want to hold forever. They have an incredibly high tax bill in NY/NJ. Some banks are much more aggressive than others to get these off their books. Some of these houses are files from 07-08.
- Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes8y
Hi Syed,
Like I said in my post-Tirzo agent should write the offer as a learning experience. The point of the post is to show both sides of a transaction. Sellers view and Buyers view. I think sometimes we look at our own side without looking at the entire picture. If you can understand the other side you might be able to put a deal together.
Yes, there are a lot of crappy agents out there. A good agent needs to explain in detail the process what the value of the property is and how to get the deal done. I have no problem writing an offer that is low but you as a buyer need to sell me on it. Please give me a list of costs and show me why. This way I can go to bat for you trying to submit your offer.
In Tirzo case, maybe he should go take photos of the house. Take photos of all the damage items and make a list. Get bids on all the work that is needed. Now you have a package. Now you have something concrete to present to the sellers.
In many cases, it's not that the agent is lazy and doesn't want to write the offer. It literally takes 15 mins to put an offer together and set it up for DocuSign and done. The agent doesn't want to ruin his reputation in his profession. Its a community of agents. He doesn't want to be known as the low-ball guy. He may have to do another deal with the REO listing agent in the future. This is the same in a lot of professions. You don't want to be the lawyer who represents a bunch of frivolous lawsuits and lose your reputation in the courts.
Now if you as a buyer have a strong case in why your offer needs to be written. The agent could just suck. If that is the case find someone new.
- Investor · Orlando, FL · Member since 2015 · 123 posts · 18 votes8y
Get a new agent who fully understands, and supports what you are trying to do. If a agent doesnt want to submit a offer for you that is fine just get another one. I had a similar situation, went with another agent who submitted what I wanted to offer, and I got the house for what I wanted!
- Lender · Granite Bay, CA · Member since 2014 · 456 posts · 454 votes8y
Fire the agent immediately and interview new agents. Tell them in advance that you are an investor and will often offer low. There are so many agents don't waste your time with anyone who will not do what you ask of them. I am a RE Broker in CA so it's easy I just write offers for myself. You might want to consider the same. The liability risk is very low if you fully disclose material facts. Good luck!
- Real Estate Broker · NC · Member since 2013 · 33 posts · 13 votes8y@Tirzo Quintero I’m an agent in NC, I would put on the offer. The worst the bank could do is reject the offer, which that is highly likely! Nevertheless, your agent is supposed to offer whatever you ask.
- Rental Property Investor · Jefferson, GA · Member since 2017 · 95 posts · 145 votes8y
Not only should your agent submit the low offer, they should back you up on it. If you and your agent are not aligned on your investing strategy, then it’s time to move on.
- Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes8y
Lots of good advice already! Real estate law sometimes differs by state. Here in Florida, an agent is not required to submit an offer from a Buyer to the Listing Agent. That's correct (I see you, Florida Bigger Pockets peeps). Agent has the option of saying "no" and you have every right to fire that agent and move on to another. There's no violation of the law. The law mandates that a Listing Agent present offers to the Seller. Different situation.
That said, what I would do is one of the following:
1. Find another agent willing to submit the offer,2. Submit an offer directly to the buyer, or
3. Ask the listing agent to submit your offer. Be upfront and let him/her know you're an investor and that the agent may keep both sides.
What's important is that you know the max you're willing to pay. Ie, if you think it's a good deal at $180k and you can make money, don't go in at $135k, do something more realistic like $155k. If it needs tons of work and you can't make money offering more than $150k, then you're right on point. Good luck!
- NJ · Member since 2018 · 22 posts · 8 votes8y
Thank you all for the tips and advise.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes8y
Time and time again on threads like this people all in mass the replies always say find a new agent. That could very well be the solution, you might just have the wrong agent. But then I see people going through 10 agents, and still people are telling them find another agent.
How many people on here surround themselves with people telling them what they want to hear, and then never get started because no one ever gave them realistic expectations for the market. What good is it for you to surround yourself with people who tell you what you want to hear for you to continue to fail.
Weekly, people on here and in the market tell me and Mike Cumbie or James Wise we dont know what we are talking about because we are agents who dont waste our time with people we view as not serious about doing deals since they dont heed our advice about how to go at the market. These are people who are novices telling veteran experts doing a ton of deals and working with people doing a ton of deals that we are wrong because they read some book or went to some seminar filled with some idiot promising 50% returns.
Could you have the wrong agent? Absolutely. Most of them out there are simply not good, or dont operare in the space you are looking at. But its also entirely possible that maybe you are working with a great agent who is an expert at investing, and you simply cant handle the reality of the market, and cant handle when they tell you the truth instead of wasting everyones time telling you what you want to hear. I fire about a client a month and pass on 2 to 4 clients a month, usually those from BP who cant approach the market with realistic expectations.
Its very important to pick the right agent...but if someone is the right agent, its very important to heed the advice and guidance they give or you will just spin your wheels and never get started.
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