Where did I go wrong?

23 Replies

Disclosure Newbie to all of this. Have done some education but still working on it: 

I found a property that was pre-foreclosure.  my wife and I dropped off a number of hand written letters to try and get in touch with the owner. Previously we had spoken with a few agents that were familiar with the owner who said she was spooked by investors and banks in the past. We felt the hand written letter would be a more personal/less investor like approach. 

The letters seemed to have worked. After several weeks we got in contact with the owner and built a rapport. We found out she inherited the house with 100% equity but over leveraged the equity and was now behind on her mortgage. She was thinking of doing a short sale however, before doing so she wanted to securing housing down south (we live in the north east). We told her We understood and would like to see the property and make an offer on her house. She said to wait to do so until she spoke with her lawyer about the move.

Several months go by. We are in touch with her every few weeks just to check in. She tells us we will be the first to know once she is ready to sell the property. 

We’re on vacation and I check Redfine and see the property listed (salty)... We get in touch with the owner who informs us she ended up listing it (duh). The agent refuses to show us the property and says there will be an open house soon. 

We come back from vacation and the agent has an offer at asking price(we didn’t know it was at asking price at the time) and says if we want to see the property we could come at 10am the next day and make an offer by 2pm. 

Long story long, we made an offer below asking and they went with the other offer.

I’m sure we did a bunch of stuff wrong. Should we have just made an offer without seeing the property in the first place? That seemed really risky but there is probably a how to on that. (Searching now) any other glaring things?

Once it gets listed, that is really when you want to work with an agent. Seller agents often respond better and faster to other agents then to non-agents. It is just the way things work. 

You can always offer a low safe number. (40% of ARV or such). Explain the number. Where you are getting your ARV. Your lack of being able to see the place. The concerns you could see from the outside. At least you have started a conversation and let them know you are serious and have $$.

Originally posted by @Leah Stuever :

Once it gets listed, that is really when you want to work with an agent. Seller agents often respond better and faster to other agents then to non-agents. It is just the way things work. 

You can always offer a low safe number. (40% of ARV or such). Explain the number. Where you are getting your ARV. Your lack of being able to see the place. The concerns you could see from the outside. At least you have started a conversation and let them know you are serious and have $$.

 40% of arv, in my areas that would get someone to never respond to you again. 

Also, I’ve never had sellers agents respond to me slower than my agent. If anything, they love not having to split their fee.

OP, it’s hard to understand sellers do what they do sometimes. 

But in this case, they just went with the highest offer. Nothing wrong with that. Everyone has a different number that makes a deal work for them. 

Thanks for the advice. We went with a pretty low offer with an explanation. Since they had another offer it really didn’t matter. Once it was listed my agent was contacting the buyers agent. I think everything was pretty standard once the agent got involved. My question was more so about prior to the agents getting involved. I assume I should have just made the owner an offer before she had a chance to list it. 

Originally posted by @Leah Stuever :

Once it gets listed, that is really when you want to work with an agent. Seller agents often respond better and faster to other agents then to non-agents. It is just the way things work. 

You can always offer a low safe number. (40% of ARV or such). Explain the number. Where you are getting your ARV. Your lack of being able to see the place. The concerns you could see from the outside. At least you have started a conversation and let them know you are serious and have $$.

I agree, once she listed it, they just went with the higher offer. What do you think I could have done differently before they listed it?. 

Originally posted by @Syed H. :
Originally posted by @Leah Stuever:

Once it gets listed, that is really when you want to work with an agent. Seller agents often respond better and faster to other agents then to non-agents. It is just the way things work. 

You can always offer a low safe number. (40% of ARV or such). Explain the number. Where you are getting your ARV. Your lack of being able to see the place. The concerns you could see from the outside. At least you have started a conversation and let them know you are serious and have $$.

 40% of arv, in my areas that would get someone to never respond to you again. 

Also, I’ve never had sellers agents respond to me slower than my agent. If anything, they love not having to split their fee.

OP, it’s hard to understand sellers do what they do sometimes. 

But in this case, they just went with the highest offer. Nothing wrong with that. Everyone has a different number that makes a deal work for them. 

Sellers in distress can be flaky, not know what to do or what they want to do.  It can just me a matter of lucky timing.  I once bought a distressed property from an owner with a “I buy houses” sign on the fence directly across from her.  I knew the investor with the sign, sold to them for $25k more than I paid for it, 2 mo.s later, on a $16k Purchase.

@Munir Hassan

I wouldn't beat yourself over it as I believe the end result would likely be the same whether you provided an offer months ago or not. The owner was in a legal situation and sounds like she was letting it play out at the advice of counsel. It was probably a done deal from there that any shot you had at it would be the same as everybody else when it became listed. I think you did an exceptional job building a relationship with the seller, and I don't believe they were leading you on. Hope your next property leads to a more fruitful resolution.

@Munir Hassan I’m not seeing really what you did wrong except like others said maybe work with an agent.

Agents know other agents, it works in your favor if the seller is also working with an agent. The listing agent is the gatekeeper.

If the listing agent knows your agent, and your agent says “this buyer is a solid buyer and will close unless something major comes up” Aka you’re a known quantity, it makes you much more likely to get the offer accepted.

I just went through this strategy a couple weeks ago.

Lets say you spend a lot of time wasting time on this. Perhaps you will be more efficient next time making a cash offer above her balance with incentives.  I have seen these cash only offer with 24 hour closing offer to precipitate an action. Often the offers are still ignored.

Thanks @Caleb Heimsoth . The seller didn’t have an agent at first and we were trying to get it below retail. In my market that’s like finding a unicorn riding a dragon in Atlantis. Once she got an agent the price went up to retail minus what we expected to pay for repairs.

@Munir Hassan

Yeah been there done that kick the dust off your shoes move on. Your gonna get your feelings hurt by a bunch of greedy folks, immoral and uneducated folks. In all dealings in real estate. It will be the down fall of agents. It will allow easy access for amazon and google to take our jobs away as agents.

Well You really didn’t do anything wrong . Once they threw it up on the mls and got other hands In the cookie jar that good deal was over unfortunately . If you did anything wrong it was your marketing and time management. You put a lot of effort and time into only one deal and one owner . Look You gotta go deep and wide to get a vast amount of leads to pick through . You should mailing letters out like crazy . You missed out on many deals because you tried chasing one rabbit that ultimately just went down its hole .

You hoped to buy the property at wholesale from an overwhemed owner. The seller "un-panicked",  got her head on straight and sold for retail using an agent. Basically, she looked after her own interests in a calm, rational way.

Maybe figure out  what value you can bring to the table that other buyers can't?  5 year lease back, deal with hoarder houses,  accept an unusually long escrow,  deal with probate/arguing heir properties, etc. 

I think the more you are on the side of the angels, the better. That isn't to say you don't make the deals that won't work for you, but figure out if you can have something special to offer to sellers that other buyers just don't want to deal with (Cash! Fast! Just take what ever you want and you have permission to walk away from the entire, horrible, garbage-filled mess - no guilt!)  

People get overwhelmed, and sometimes the fast easy solution is more important than the $. 

@Deanna Opgenort our goal was really to make a win win with the owner but she wouldn’t let us see the property or tell us what she wanted for it. Honestly if she had said she wanted us to buy it at the price she listed it for and showed us the property we would have most likely made that offer. The agent wanted us to make an offer after only seeing one unit (the best of the tree), as is. Too risky.

I agree with your point of adding value. I told my wife we should have offered to help with her interim living situation or something. Reached out to an agent in the state she wanted to move to. To help her out.

Ah! Multi makes a difference - its not just her place, it's her tenants being disrupted. 

No access to 2 of the 3 units during a showing --no problem. That's why offers are written "subject to inspection". OFFERS aren't risky ---you can make those every day, all day long 100% risk-free as long as they are written correctly. An offer is simply "IF what you are selling is indeed X, then I will buy it for Y". No sane person expects you to PURCHASE without an inspection (and no non-refundable earnest money until you've seen & inspected everything. Really.). One of the values of having a good RE agent is that they would likely have written up the offer on this property. That doesn't mean you would have necessarily gotten it, but you would have had a better chance.

"Should your wife have helped her more".  Was your goal was to manipulate a vulnerable person into selling her property for less than it was worth?  That really doesn't sound so nice, does it.  I'm pretty sure that's not how you MEANT it to come out, but it's always a good idea to step back and imagine how things look from the outside.

Ps -- Do also study a bit more about the process of how buying a house works . You don't lose out on deals because of imaginary risk (but you also don't want to take risks without knowing what those are).

@Deanna Opgenort

That usually would make sense accept

1. The property was owner occupied, which is why she wanted to find housing before she sold it. She wasn’t currently renting it out So if there was a tenant being difficult, it was the owner.

2. The sale was “as is” with NO INSPECTION. Which was the stipulations the selling agent made with the owner. Too risky.

3. Not being able to secure housing was the reason she didn’t want to show the property. Again, we were looking for a win win so that’s why we thought it might have been a good idea.the property sold below market rate because it needed a lot of work, not because of some wholesale tricks.

Based on most of the feedback, sounds like it’s a win some lose some thing.

Originally posted by @Wayne Brooks :

Sellers in distress can be flaky, not know what to do or what they want to do.  It can just me a matter of lucky timing.  I once bought a distressed property from an owner with a “I buy houses” sign on the fence directly across from her.  I knew the investor with the sign, sold to them for $25k more than I paid for it, 2 mo.s later, on a $16k Purchase.

think about it this way..   I am at the table with them you are on vacation. who do you think wins.. I get the listing.. at the end of the day its a belly to belly business.. first contact should have been for an appointment to meet them..  that's how reporte' is  established not on the phone e mail text..  I mean in mass scale that works.. but not when your honing in on a deal 

My old partner in the Northwest was a Master at landing timber and land deals for us.. I called it Oregon porch time..  and I went a few times and realized he was the master and I would fail..  but with distressed sellers in foreclosure I was pretty good.

Ah!  An owner who won't let EMPTY units be viewed and won't allow an inspection even AFTER an offer?  A whole different beast!  That's no longer a newbie property, that's territory for someone who is a contractor and knows the area well enough to have a pretty good idea of what they are likely to find, and has the resources to fix whatever is wrong, and price with the according discount.

I'm sure her realtor pointed out that the "no inspection" clause would limit her pool of potential buyers, and lower the selling price significantly, but people ARE entitled to make bad decisions. It would be interesting to follow the property, & see how it plays out for the person who did buy it. 

I purchased the notes on my current project before seeing the inside of it, so I had to price the note according to an "expected worst case" scenario. I was extraordinarily lucky,  and the rehab cost only about 1/3 of what I'd budgeted (which virtually never, ever happens, BTW).