Why do I have to view a property before agent will submit my offer?

Why do I have to view a property before agent will submit my offer?

Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes

So, I recently started making many more offer direct off the MLS than I have before (I am an agent submitting for an investor client). I am getting a lot of "resistance" from listing agents saying they will not submit my offer until both I and my client have seen the property.

I am only submitting offers based on ARV (after repair value) taking into account an estimated rehab cost, based on pictures and/or description, and assuming I will do a "normal" rehab. So, I know on average what my costs will be, for a 3/2 in a certain area.

I really don't care what the property looks like, until I know I have an accepted or at least close to accepted offer.

Once we have an accepted offer and open escrow, we then inspect the property in detail. A very high percentage of the time, we do not "adjust" our price. The only time we do, is if we see any foundation or other major structural issues, that would not have been seen without walking through.

I made over 100 offers in the past few weeks, these were all "fixer" properties. I could not possibly go see all these properties.

BP Nation - Help me out, what is a good response to those agents that want me to go see property. I want to be courteous, but also tell them my client doesn't really care about the paint color, carpet, etc, because he is going to rip it all out anyway. All he cares is the area, and the property has a solid structure.

Thanks,
Brian

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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y

Like Ned Carey stated, no disrespect to some of the other posts here, but many of which assumed things that are incorrect and they did not take into consideration all the facts.. To be fair, Brian did not explain in detail all the facts either.

So, in the interests of being crystal clear, J Scott first post is not a fair comparison as that was likely an end buyer and I would agree with him that no offer should be looked at or countered from an END BUYER who has not seen the property (both in and out). But, with an investor who knows what he/she is doing as has their numbers down, it is not always necessary until just before going under contract.

In Brian Wall case, he has evaluated the comps, estimated (based on previous averages) his rehab expenses, and made an offer based on those figures. If a list agent states that the offer is close, or could possibly be accepted by their client, then, at that time, Brian could and would go view the property to "confirm" the exit value and rehab costs. If he underestimated rehab, he could simply make that adjustment right then and there. This would be completely fair to the list agent and his/her client as the deal never goes under contract until Brian has in fact visited the property.

To play the numbers game on the MLS as an investor, you simply can't be efficient by visiting 100+ properties each month. Hiring an "assistant" as suggested by another is also not efficient. That costs money and I personally would never trust someone else to provide my financial numbers that make or break an investment deal.

So, Brian - keep making those offers and when the list agent comes back with such a response, inform him/her politely that your client is a professional investor, makes many offers every month and has his/her numbers down to a T. Adding in the fact that if your client's offer is within reach of being accepted, then you will most definitely show the property PRIOR to going into escrow and that once escrow is opened, only your short contingency period will be used for further detailed inspections by your client's team of professionals.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    Sorry, but I have a lot more empathy for the seller in this situation.

    We listed a property for another investor last week -- we had six offers in three days, with several of the offers being over list price. Two of the offers came from buyers who hadn't seen the property yet -- they were desperate to find something in the area, there isn't much inventory, and they didn't have time to visit the property before the seller was going to make a decision.

    Ultimately, we advised the seller to ignore the two offers from the buyers who hadn't seen the property, at least until they saw it. Our reasoning was, if the buyer hadn't seen the property, it increases the likelihood that they will either:

    1. Decide they're not interested in it when they do see it;

    2. Decide they overpaid once they see it.

    There's often a bit of buyer's remorse when a contract is signed ("Did I get the best deal?", "Do I really want to buy this house?", etc), and for a buyer who hasn't even seen the house, those feelings may be amplified.

    I'm not saying you and your clients are perfectly prepared to be making offers sight-unseen and won't close the deal 99% of the time; but the fact of the matter is, most buyers aren't like that, and for a listing agent to assume that you're different than most of the buyers out there is a stretch.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Brian you are "shotgunning" offers for this investor and seeing what sticks.

    It is a waste of time to go under contract and then back out.The seller loses time.Is your investor client willing to put up say 2,000 non-refundable money for the option period and if they back out they lose that money??

    I doubt it.

    In most states all offers have to be submitted by law to the seller but the seller does not have to respond to the offer and can simply let it expire.

    In some states if a seller instructs in writing not to present certain offers then the listing broker doesn't have to.Every state has quirky procedures.

    You could ask the listing broker for a rejection from the seller in writing but the seller doesn't have to do anything.

  • Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes
    14y

    J Scott - Thanks for the feedback. That is what I am expecting (and has happened a few times). Where the listing agent tells me, "your offer is in the ballpark, but seller wants you to see the property before considering it". Then, I will go within 24 hours, usually same day, to see the property.

    Joel - Depends what you mean by "shotgunning". Most people interpret "shotgunning" as mass sending out offers, without evaluating comps, etc. That is NOT the case here. I am spending time evaluating each and every deal, and making an intelligent offer, based on sold/pending comps in the area, as well as, an estimated rehab cost, based on what I know about the area.

    As I said, we don't need to go "under contract", and spend a lot of time. I am willing to put a non-refundable deposit, if we come to agreeable terms. I have done that several times, and have closed each time.

    So if a listing agent comes back and says,"Ok, seller will agree to your terms (or close to it), but wants a non-refundable deposit, you have 24 hours to respond", I will drop everything and go to see property, and most of the time, I will accept the terms, and open escrow.

    I am looking at it from this perspective. Lets say I am a "regular" buyers agent, and I send out postcards to 1000 renters, asking if anyone wants to buy a house. Then, George responds to my postcard. Now, lets say George lives all the way across town. Am I going to drop everything, and drive all the way across town to talk to George just to show him I am "serious"? No, I am going to talk to George over the phone, and "prequalify" him. If I call him and find out, he just lost his job, and filed bankruptcy, then I know he is not a good prospect. By calling and "screening" him, I found out we were not a "good fit", and minimized my time and his.

    Would you consider that "shotgunning"? Most people would call that marketing.

    I don't see much difference here. I see a listing on the MLS, but I am not sure we are a good fit. So, I send over an offer to "prequalify" the listing. Then, if there seems to be a good fit (we are close to mutually agreeable terms), I will do more "follow up" by going to see the property, etc.

    Maybe what I need to do is explain that better when I send the offer. Just come clean up front, and let them know we have not seen it but my client wanted me to submit offer anyway, and if we are close on terms, we will go see property.

    Or maybe just "play the game" and go along with the program and hire an assistant to go to each and every property.

    BTW - I just love BP!!

    Brian

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Great points above and after awhile, Realtors in Santa Fe start talking too, that this guy is shot gunning lower offers all over the place, and if a very hig per centage of thsoe don't close or even go under contract, many may start ignoring the offeres from that agent, especially if there's not much earnest money attached.

    The ability of a buyer to close may be questioned on all those offers. It will eventually begin to define that investor as well as the agent and their reputation. The fact that the properties are not even viewed seems to be a basis for questioning how serious the buyer really is to enter into any negoiations.

    Reminds me of a guy who shot out offeres by the dozens offering full price, the trick was that he wanted to pay it with the maturity value of zero coupon bonds! He didn't last long...... :)

  • Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes
    14y

    Well, its a good thing I am not offering full price!

    Regarding the EMD, we typically put $10k, not what I would consider "not much earnest money".

    Ok, so I get it.

    What is the alternative?

    If I go see every property personally, is that still "shotgunning"?

    Brian

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Enlist some help, pay them per property viewed and have them take pictures. I'd say that would go along way to showing the investor is serious and actually selecting properties. The previewer doesn't need a liscense to work for you and take pics, maybe some college kids who want to learn RE. :)

  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    14y

    No disrespect to the others that posted but I will give a counterpoint. If you are making legitimate offers and have every intention of honoring them barring extenuating circumstances I see no reason why what you are doing is perfectly reasonable and valid.

    As Joel Owens said most states require all offers to be submitted to sellers. I have little tolerance for agents that break the law and ignore their fiduciary duty. It is the clients decision which offer to accept, not the agents. This is exactly why these laws were instituted.

    My question is how do they know you haven't looked at them? I think if you have explained what you have here; large deposit, strong record of closing deals and usually paying the original offer price, you should get little resistance. If I did and still got resistance, I would not hesitate to threaten to talk to the real estate commission.

    PS: When I spoke to the Maryland real estate commission they made it very clear that buyers who spam low ball one page faxes, are still entitled to having that offer presented to the seller.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Brian Wall:

    Maybe what I need to do is explain that better when I send the offer. Just come clean up front, and let them know we have not seen it but my client wanted me to submit offer anyway, and if we are close on terms, we will go see property.

    To me, that's a very reasonable compromise.

    In the situation I mentioned above, we let both the agents know that their offers were competitive (they both were), and that the seller likely would consider the offer if the buyer had seen the property and could verify that was still the offer they wanted to submit.

    Neither agent was able (or neither buyer was willing) to go out to the property before the seller was to make a decision, and the seller just went with another offer. But, that said, the seller would have had no issue with the buyer seeing the property after I confirmed the offer was competitive.

  • Investor · Phoenix, AZ · Member since 2011 · 36 posts · 9 votes
    14y

    I would include something saying this in the email sent to the Realtor, if not in the contract sent.

    A 24 hour inspection period with hard emr after might open the doors for you.

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    14y

    Like Ned Carey stated, no disrespect to some of the other posts here, but many of which assumed things that are incorrect and they did not take into consideration all the facts.. To be fair, Brian did not explain in detail all the facts either.

    So, in the interests of being crystal clear, J Scott first post is not a fair comparison as that was likely an end buyer and I would agree with him that no offer should be looked at or countered from an END BUYER who has not seen the property (both in and out). But, with an investor who knows what he/she is doing as has their numbers down, it is not always necessary until just before going under contract.

    In Brian Wall case, he has evaluated the comps, estimated (based on previous averages) his rehab expenses, and made an offer based on those figures. If a list agent states that the offer is close, or could possibly be accepted by their client, then, at that time, Brian could and would go view the property to "confirm" the exit value and rehab costs. If he underestimated rehab, he could simply make that adjustment right then and there. This would be completely fair to the list agent and his/her client as the deal never goes under contract until Brian has in fact visited the property.

    To play the numbers game on the MLS as an investor, you simply can't be efficient by visiting 100+ properties each month. Hiring an "assistant" as suggested by another is also not efficient. That costs money and I personally would never trust someone else to provide my financial numbers that make or break an investment deal.

    So, Brian - keep making those offers and when the list agent comes back with such a response, inform him/her politely that your client is a professional investor, makes many offers every month and has his/her numbers down to a T. Adding in the fact that if your client's offer is within reach of being accepted, then you will most definitely show the property PRIOR to going into escrow and that once escrow is opened, only your short contingency period will be used for further detailed inspections by your client's team of professionals.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Will Barnard:

    So, in the interests of being crystal clear, J Scott first post is not a fair comparison as that was likely an end buyer and I would agree with him that no offer should be looked at or countered from an END BUYER who has not seen the property (both in and out). But, with an investor who knows what he/she is doing as has their numbers down, it is not always necessary until just before going under contract.

    For what it's worth, I would NEVER put a property I'm wholesaling under contract with an investor if he hadn't yet seen the property. Doesn't matter to me if it's an end-buyer or an investor -- until they see the property, there's no contract.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    The seller could always accept this offer from this investor with the right to accept other offers.The buyer could perform all their due diligence and see if they still wanted it and if a sweeter deal came along the seller could bump them out.

    Could have a provision where to stay in the deal when the other offer is received the first investor buyer has to put up 5k non-refundable EM or they get kicked out.

    Many ways to set this up.The point is the seller should NOT lock up their property for no skin in the game.

    The amount of EM doesn't mean anything.Sending 50k earnest money but having umpteen provisions in there mean I the seller will never see the money.You tied up my property and if you don't perform other buyer who were interested could have closed on it and might have already used their funds to close on something else or the market could have dipped further,etc.

    As a seller I would much rather have 5k non-refundable knowing it will be painful for the buyer to pull out of the deal.

    Of course what you demand of the buyer is based on how many other offers you have and there terms and price.If you have a desperate seller with no action on the their property then you can get away with demands slanted toward the buyer.

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    14y
    Originally posted by J Scott:
    For what it's worth, I would NEVER put a property I'm wholesaling under contract with an investor if he hadn't yet seen the property. Doesn't matter to me if it's an end-buyer or an investor -- until they see the property, there's no contract.
    Fair enough, in some cases, I would agree with you. For me, I have wholesaled several homes to investor buyers who then flipped the homes and they did not see the inside before we had a deal. I think the key factor here is that if the buyer is a professional investor and he/she is willing to purchase based on their numbers (without the benefit of seeing interior), there should not be a problem with the sellers list agent.

    Keep in mind that I have purchased many homes and closed on them without the benefit of seeing inside. All I do is expect to gut the kitchens and baths and do all the balance (paint, flooring, electrical/plumbing fixtures, water heater, etc. So long as you pre-plug in those costs, you are certainly safe. At that point, I can care or less if there are holes in walls or graffitti on them. I could care or less if the appliances are stolen. I have already budgeted to replace them all anyways.

    In sticking with the thread topic, keep in mind that Brian was refering to an investor buyer who has the capability to purchase sight unseen and also has the willingness to view the property once seller has "verbally" agreed to the offer price or both have come to a compromise.

    J Scott - If you were playing the MLS numbers game and making over a hundred offers each month (or even 50), would you want to personally visit each one before making the offer? I know I would not. That is the whole thing about the numbers game. If you get these questions from agents, simply respond back with the answers I provided above. If they still have a probelm, either move on, go see that one, or convince seller otherwise.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    Brian Wall - are your clients also buying at sheriff sale / trustee sale? If so, you could include that fact in correspondence with the listing agent, explaining that your clients are already accustomed to making offers on properties where they have not seen the interiors as a result of the sheriff sale / trustee sale purchases.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Brian maybe you could provide a short summary on your buyer with your one page offer.

    The summary tells of their track record,years in the business,and ability to perform.

    Maybe this will make the seller feel more comfortable that it's not a yahoo or newbie who just bought an infomercial course or a wholesaler pretending to be a bonafide purchaser that doesn't have 2 cents to their name.

  • Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes
    14y

    Thanks for all the great feedback. I will take this all in and prepare a more comprehensive "cover sheet" for the offers I submit for this buyer.

    That is a great idea Steve, did not even think of that!

    Brian

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Will Barnard:

    J Scott - If you were playing the MLS numbers game and making over a hundred offers each month (or even 50), would you want to personally visit each one before making the offer? I know I would not. That is the whole thing about the numbers game. If you get these questions from agents, simply respond back with the answers I provided above. If they still have a probelm, either move on, go see that one, or convince seller otherwise.

    Will -

    We're in complete agreement -- from the buyer's side. From the seller's side, I don't have accept certain tactics from buyers just because I would do them myself... :)

    Seriously though, like I said above, there is certainly a compromise (and again, I think we're in agreement) -- submit lots of offers without looking at the properties, but make sure to let the agents know that you're happy to look as soon as you get indication that your offer is being seriously being considered.

    As a buyer or seller, I'm good with that approach...and I'm guessing you're saying the same thing...

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Steve's point is a good one, I have purchased sight unseen but the I also talked to the listing agent and made sure they had confidence in my offer. That does appear to be lacking.

    BTW, I had two finance majors working for me who were very productive and more than earned their keep, depends on your management abilities and the time it takes to train a part-timmer as to efficiency. I'd think if you had an investor who could swing making a hundred offeres and closing a third of them, you'd need some help anyway.....

  • Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    14y

    Seller's Agents have to do a lot of work every time they get an offer. If it's an REO they have to "underwrite it" (making sure they have everything they need), upload it into a system by translating a bunch of information from the RPA to the system the Seller wants and they have to follow up with offer (acceptance, rejection, counter).

    Most listing agents in Southern California these days have tons of offers, so they can justify flat rejecting your offer if you haven't seen it.

    I think the only ones you get accepted via this method will need a lot more than a typical rehab or have other problems and after you end up seeing them you will back out too.

  • Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes
    14y

    First - the listing agents knew what they were signing up for when they took the listing for a "fixer". (remember I only go after fixers). So, I don't feel sorry for them, they are earning their money, just like I am. I also have to conform to all the special requests, and forms that the banks, and listing agents ask me to fill out, just for the privilege of them viewing my offer. Only because I have not physically drove across town, spent $10-15 in gas, not to mention a few hours in traffic, just to see a property that I know how it looks, and how my client would fix it up. There are really not that many "unique" houses, in my target price range, here in Los Angeles.

    Second - No, they cannot justify not submitting my offer just because I have not seen it, what if my offer was the "highest and best". Now, if their client tells them, I will only review offers where the agent has seen the property, then okay, but I don't believe most sellers (even banks) would require that. They really don't care. And if they did, the l/a needs to state that in the agent remarks on the MLS. I have seen it a few times, but rarely. The ones I do see, I comply or I don't submit the offer. Now, I did not waste my time or theirs.

    To be fair, I would agree that there are situations where their are investors "wasting" the listing agents time, by making unrealistic offers, without doing their homework, and blindly ignoring any specific instructions in the MLS.

    What makes you think I would "back out too". I am looking for those properties especially. Those are the ones I can get the biggest discount on and make the most money, and are also the most "pain in the butt" for listing agents, and the ones they want to get rid of the quickest.

    If it is an "easy" rehab, then an amateur investor will most likely pay too much for the property, put too much money into it, and then not make any money. That is okay with me.

    So, help me out, how would you recommend I go after those deals?

    Brian

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Brian Wall:

    What makes you think I would "back out too". I am looking for those properties especially. Those are the ones I can get the biggest discount on and make the most money, and are also the most "pain in the butt" for listing agents, and the ones they want to get rid of the quickest.

    If I were the seller, my primary concern wouldn't be about you backing out -- my primary concern would be that because you hadn't seen the property, you couldn't have put together an accurate cost estimate of the repairs, and if you determine that your "blind estimate" was incorrect, you could very likely be asking for additional concessions.

    Put it this way, if you over-estimated the repair costs, you're not going to give anything back to me, but if you under-estimated them, you're going to ask for a lower price -- it's a no-win for me as the seller.

    Now, if you're willing to keep your due diligence very short (less than 2-3 days) and I don't have any other interest on the property, then I have nothing to lose, and I'd have no problem signing a contract with you. But, if I have other offers on the property, I'm not going to risk losing those potential buyers for someone that hasn't seen the property yet.

    But again, I'm on your side on this one...you just need to make it clear to the listing agent your intent and your willingness to go see the property as soon as you get an indication your offer is being seriously considered.

  • Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
    14y

    As a seller, I am not accepting an offer from someone who has not seen the property unless it is "as-is" and they include significant earnest money. If they don't... then I feel like they just want to tie up my property while they do the due diligence they were too lazy to do on the front end and my time is worth something as well. I understand the approach on their end... but as a seller it does not benefit me and if I have other interest I won't be playing along. The seller doesn't care how you like to operate or what is most convenient for you. While you may have every intention of closing the deal... there are 500 other jokers and hack wholesalers using similar tactics that don't have the desire or ability to close the transaction in a clean, painless manner for the seller. Maybe you should reconsider your presentation and find a way to present those types of offers in a way that will inspire some confidence on the part of the sellers.

    Forgive me if I sound harsh but I just sold my grandmothers old house and it was chum in the water for every investor/wholesaler around trying to tie it up. It was a tear down on two lots with separate water rights in Carmel, CA two blocks from the beach. Going through the offers was very interesting. There are so many fakers out there it is not worth the sellers time to determine if you are the real deal or not. If you are not willing to invest a hour and $15 in gas... that doesn't inspire much confidence on the part of the seller. For us buying and selling houses is not a big deal... for many sellers it is a very big deal. It is just bricks and sticks to us... but to there are memories (good or bad) tied to that property for most real sellers. Sending a representative of some sort (intern/student/etc) lend some credibility.

  • Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    14y

    I agree that it cuts both ways. I know my numbers and often don't need to see a property. This is especially true if it is newer and has some pics. I've bought a lot at the courthouse and go hard on my emd. As a seller, I wouldn't deal with anyone who hasn't seen the property. There are too many fakes/flakes running around. As a buyer I have a reputation that is important to me. I usually deal with the lister and can convey my experience. Around here anything "good" goes so fast that it's a choice, sometimes, between viewing and getting an offer in immediately. I just had an reo offer accepted this morning. I saw the pics, I already own 3 in the complex and it was a no-lose situation. I talked to the lister Friday when the property came on. I don't know him but after a few minutes it became apparent that we know many of the same people in the industry. It was a matter of gaining his confidence in me. Sometimes I am out of town and can't view the property.

    I will admit to bailing on one that I had a relative view for me. The lender did come back at the last minute wanting more $$$ and the seller had made not one effort to vacate when I saw it the day before closing; but the place was a freaking disaster. I doubt that agent will deal with me again.

  • Orlando, FL · Member since 2013 · 165 posts · 62 votes
    13y

    This is simple . If you will put up about a thousand dollar non refundable under any circumstances deposit, Mr listing agent will be happy to present your offer whether you have seen the property or not. Then when Mr. Seller accepts your offer and you back out because who cares why. You have wasted about five hundred dollars of the sellers time and about five hundred dollars of the listing agents time. When you forfeit the deposit , they will be OK. To ask the seller and listing agent to waste their time for nothing is foolish . Put your money where your mouth is.

  • Contractor · Old Hickory, TN · Member since 2013 · 16 posts · 3 votes
    13y

    Brian you are a better man than I am, You have to consider these agents work hard too, and also, the majority of agents could not tell you about structure or anything else, You may have a boat load of investors, but eventually it will bite you on the butt, If you were buying properties for me, I would expect you to see them, However, That's my opinion, Because the minute the Investor gets a Big Lemon, Your credibility goes out the window, Thing about others before yourself, it does work, be smart, look long term.....Zack

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