Agent doesn’t want to “lowball”

Buying & Selling Real Estate
5yFollow

Agent doesn’t want to “lowball”

Thomas Ingrao
Rental Property Investor · Jamestown, NY · Member since 2020 · 33 posts · 55 votes

So I found a property that has SERIOUS potential. The duplex is owned by an elderly couple, both of which were moved into a home and this is an estate sale. Asking price is $27,900 and assessed value is $19,800. The house will need one new electrical panel, a tub surround, carpets, and paint. Im estimating around $2000 in renovations (I’m an electrician and have a friend who does hvac plumbing so it’s mostly material cost. My real estate agent is being reluctant to make an offer below assessed value and i don’t understand why. The owners already accepted an offer and financing fell through so I’m up to bat but I want this to be my game and I’m just at a cross roads with a non-aggressive agent and me who just wants to get a killer deal. Any opinions? Rent roll after renovations will be about $550/unit, taxes are approximately $800/year. I have a preapproval from the bank and I’m thinking I can get this place for less than $7,000 upfront, out of pocket. Trying to make an offer today, let me hear some opinions!!

40Reply
583 views

Most Popular Reply

Steven Foster Wilson
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
5y

@Thomas Ingrao find a new agent, theres plenty out there, key is to find a good one. Nothing wrong with making an "aggressive offer".

37Reply
See this reply in the discussion

122 Replies

Jump to latestLatest
  • Tyler Smith
    Member since 2018 · 20 posts · 5 votes
    5y

    What market is the duplex in?

    1Reply
  • Michael A DeAngelo
    Columbus, GA · Member since 2020 · 51 posts · 31 votes
    5y

    @Thomas Ingrao to write up an offer it takes agents time and their time is valuable as well is yours. If I have a real low ball offer I always ask the agent to at least make a verbal offer to the listing agent. This way they don’t run through the muck of writing a up a contract that will never have a shot at getting accepted

    6Reply
  • Conn G.
    Rental Property Investor · Cincinnati, OH · Member since 2019 · 120 posts · 68 votes
    5y

    Like others: Find a new agent. 

    A helpful tip: When interviewing potential agents, be upfront with them. Say that you're a RE investor that intends to submit XX amount of offers that make sense based on your numbers. If they're confused by it, show them a quick spread sheet to justify your offer price. It's a two-way relationship that needs effective communication to strive & grow.

    Best of luck!

    1Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Thomas Ingrao

    That agent sucks

    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    5y

    @Thomas Ingrao Surprised at all the “get a new agent” comments. For f*’s sake, the poor agent is only going to make a few hundred bucks off this deal. It’s not worth risking one’s reputation just to work for less than minimum wage.

    9Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    Honestly, at that price point your lucky to find someone who will write any offer at all. Unless the agent is charging you a substantial fee, most agents would actually lose a good amount of money servicing properties at that price point. The fixed costs of managing the transaction alone would be substantially higher than the grosa commission. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    6Reply
  • Kristopher Cowen
    Real Estate Broker · Member since 2020 · 10 posts · 1 vote
    5y

    @Thomas Ingrao wow! That is a great ROI. What area are you in?

    As an investor and agent I’d discuss directly with your agent. It is usually a communication error on either side. If not, I’d tell him that a what you want, and you want him to act on your behalf. Best of luck!

    0Reply
  • Richard D Graham
    Real Estate Agent · Indianapolis, IN · Member since 2020 · 14 posts · 6 votes
    5y

    @Thomas Ingrao. I am an agent. I learned a long time ago. NEVER be afraid to submit a low offer. Too many times I have been wrong when I have reluctantly submitted offer that I considered too low. It’s not your agents job to qualify an offer but to submit what you request. They will give you advice but ultimately it’s your decision

    1Reply
  • Jon Morgan
    Rental Property Investor · Leavenworth, KS · Member since 2018 · 22 posts · 18 votes
    5y

    @Thomas Ingrao you are basically negotiating for a $20 payment deduction a month over the life of the loan. Just pay it, lol.

    2Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y
    Originally posted by @Joe Splitrock:
    Originally posted by @Account Closed:

    Guess this kinda brings up the hypocrisy involved in investing that has always kind of bothered me- doing on to others as you'd have done onto yourself is often contrary to being a smart investor. 

    Being a landlord and collecting rents is gainful for me because my tenant pays the tab, but I wouldn't want to be a tenant.

    I like profiting from dividends from companies I would never work at. 

    I buy at prices I wouldn't sell at, and sell at prices I wouldn't buy at

    I like making "aggressive offers" to others and want them accepted, and if someone makes one to me I chew their ear off and/or make sure they understand to never contact me again. 

    Cognitive dissonance 

     Cognitive dissonance is a state of mental discomfort from holding two competing beliefs. I can make aggressive offers to others and when one is made to me, I can reject it. In both cases I know aggressive offers are unfair to the seller. Making one as a buyer is congruent with rejecting one as a seller. 

    Humans are very hypocritical, but there are also many situations where different beliefs apply in different situations. It may be the best choice for my tenant to be a renter, given their life situation. At the same time, it may not be the best choice for me. I can be a landlord and not want to be a renter, without those beliefs being contradictory. You don't need to be a customer just because you own a business. I am sure there is someone out there who owns a pizza restaurant and hates pizza. That is not cognitive dissonance, it is just the realization that 99% of the rest of the population loves pizza.



    “Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.” Thucydides

    1Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y

    A chimpanzee has a well-developed sense of fairness. If it is trained to do a simple task and taught that it will receive a grape for doing it, it will do the task and eat grapes all day long. Chimps love grapes.

    If it sees that another chimp is doing the same job and also getting a grape, it's quite content.

    If if it suddenly starts getting a slice of cucumber instead of a grape, while the other chimp keeps getting grapes....the chimp sulks, throws the cucumber at the person who gave it, and refuses to keep doing the task. On principle.

    No cucumber, no grape, and you can't eat principles.

    0Reply
  • Tchaka Owen
    Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
    5y
    Originally posted by @Kevin Leonce:

    @Thomas Ingrao You should remind the agent that they have a fiduciary duty to submit all offers. But you should find another agent and get your offer submitted. Vet the agents before working with them and let them know that you're an investor and will sometimes make aggressive offers and find out if they're ok with that.

    This is incorrect - at least in FL. A listing agent has the obligation to present all offers received, however a selling agent can tell you to pound sand. 

    2Reply
  • Olga M.
    Investor · Lees Summit, MO · Member since 2018 · 74 posts · 33 votes
    5y

    ?

    0Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    5y

    I would think that an agent is risking spending time with you writing a contract which will likely be rejected for a buyer of a very low priced property, that will need a loan at that, when the agent could work with another customer looking at a much higher priced property and earn a livable wage.  The agent knows that the property may not qualify for many loans as banks do not even like to bother with issuing loans at that price point as that too is not worth their time for the paltry interest they earn.

    So good agents will NOT have a desire to spend their time with clients looking at property at this price point.  When you start out you may want to listen to the agent and go with something she thinks will get a contract.  The amount of money you are talking about will not impact your bottom line and the deal sounds great even at full price.  

    Sometimes when you try to get too much out of the deal you can destroy the relationship rather than build it.

    At the price point you are building your real estate business at, and with loans too, you should be stroking the relationship with the realtor so she will think of you the next time a good deal shows up.

    You will find the same goes through out all the business relationships you will need to develop.

    Example, I just had 4 trees cut down at one of my properties.  The prices from tree contractors were all over from $3500 to $5000.  I choose the contractor that was not the lowest price because I want to develop a relationship with that contractor.  I have 2 more houses that need tree work.  The cheapest contractor is very busy and will never value me as a customer.  I will always be taking a number at the end of the line.  He is big and runs numerous crews.  He won't be there when I need him, like after a storm.  The one I chose gave a fair price, is small family owned.  And hopefully will become my go to tree contractor.  

    I make calculated business decisions to build my business that are not always financially based, but growth based.

    If you like other things about that realtor, maybe this time it would be better to build the relationship with her for a few thousand dollars and have a hard to find resource (the realtor).  And realtors that will work with loans and low priced properties are hard to find.

    2Reply
  • Kevin Leonce
    Investor · Atlanta · Member since 2016 · 58 posts · 54 votes
    5y

    @Tchaka Owen Thanks for the correction.

    1Reply
  • Thomas Ingrao
    OP
    Rental Property Investor · Jamestown, NY · Member since 2020 · 33 posts · 55 votes
    5y

    For anyone keeping tabs, I made an offer last night of $22,155. This will be my first intentionally purchased rental property (I hacked one when I was in the military years ago and still rent it out). Stay tuned for my journey to financial independence 😃

    And for anyone wondering why it’s so cheap and needs minimal work, the area that I live in seems like an investment property anomaly. I have used the BP roi calculator on many houses listed in the area and haven’t seen one under 100%. Checked out a house yesterday that is owned by an investor in Australia. My agent is working for an investor in Vegas. The potential here is incredible.

    For anyone curious about the are, it’s Jamestown, NY.

    3Reply
  • Thomas Ingrao
    OP
    Rental Property Investor · Jamestown, NY · Member since 2020 · 33 posts · 55 votes
    5y

    For anyone keeping tabs, I made an offer last night of $22,155. This will be my first intentionally purchased rental property (I hacked one when I was in the military years ago and still rent it out). Stay tuned for my journey to financial independence 😃

    And for anyone wondering why it’s so cheap and needs minimal work, the area that I live in seems like an investment property anomaly. I have used the BP roi calculator on many houses listed in the area and haven’t seen one under 100%. Checked out a house yesterday that is owned by an investor in Australia. My agent is working for an investor in Vegas. The potential here is incredible.

    For anyone curious about the are, it’s Jamestown, NY.

    0Reply
  • Mike Lee
    Investor · Tampa, FL · Member since 2017 · 123 posts · 109 votes
    5y

    Find an agent who aligns with your investing strategy, very easy. 

    0Reply
  • Thomas Ingrao
    OP
    Rental Property Investor · Jamestown, NY · Member since 2020 · 33 posts · 55 votes
    5y

    @Randalsowrey

    0Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    Most experienced agents will want to be able to put their time toward serious clients, it's only right to those who hire us not to have our time spread among non-serious buyers. I will submit low ball offers if I think a property will accept a lowball offer and actually sometimes even tell my client to offer lower but other times I know properties in an area will not accept that and if a client wants to constantly lowball I will tell them it's not a good fit working together. It sounds like in this case your agent was right if seller said offer in 20's only.   

    0Reply
  • Robert Calabro
    Rental Property Investor · Columbus, OH · Member since 2018 · 42 posts · 29 votes
    5y

    It's your decision, since it's your money (or loan) so your agent needs to do as directed by you. That being said, making a lowball offer is not ALWAYS the best strategy to get the best price. Is there are reason behind his reluctancy? Sounds like you need to discuss a negotiation strategy and if you're not on the same page you can always look for a new agent. Also, in most markets, the tax assessed values have very little to do with the actual fair market value. Sounds like a good opportunity, so hopefully you can make it work. Apologies if any of this was already said in previous comments. 

    0Reply
  • Cole Simpson
    Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes
    5y

    We are talking about 8k dollars, don't lose a deal because you are greedy.  If a full price offer works then consider it, you will be much more frustrated if you lose the deal then if you spent in extra 3-4k in a year. That is just my opinion

    1Reply
  • Jason Reichert
    Pittsburgh, PA · Member since 2019 · 4 posts · 1 vote
    5y

    @Thomas Ingrao find a new agent and be up front about making low offers for good deals. It’s a numbers game. If your agent isn’t on your team now what makes you think they will be for houses 2,3,4....

    1Reply
  • Jared Logan
    Real Estate Agent · Birmingham, AL · Member since 2020 · 11 posts · 11 votes
    5y

    @Thomas Ingrao

    you need to find a new agent. Regardless of her opinion of the offer, it’s her fiduciary duty to represent you. My license law requires me to submit any offer a client presents me with. If she doesn’t want to present the offer and you can’t find a new agent shoot me a DM and I’ll help you find one in your market. 

    0Reply
  • Jared Logan
    Real Estate Agent · Birmingham, AL · Member since 2020 · 11 posts · 11 votes
    5y

    @Arsen Atanasovski

    exactly!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free