Agent doesn’t want to “lowball”

Buying & Selling Real Estate
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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!!

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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".

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  • 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. 

    1Reply
  • Tim JacobPro Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 520 posts · 379 votes
    5y

    It sounds like a new agent that takes any client.  Hopefully they had you sign an agreement where they will get a minimum commision of 1500 as it will be tiny otherwise.  If they didnt its on them and I wonder if they realize how much work they are doing for minimal money and want to leave the situation.   Because its a cheap property I recommend unless they do what you ask cut them and submit it yourself.  Low income properties have a way of that moving forward.  I recommend you property manage yourself as well.  That is how you make money in low income housing.  Dont trust other real estate profesionals bc its not worth it for them so you will get crap service.  If you have that hustle and can tolerate drama and are patient and smart with tenant selection  you should be ok in the long run.  Good luck.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Thomas Ingrao:

    @Theresa Harris my bank gave me a preapproval of $40,000 with no minimum amount. 25% down, 25 years, 4.7%

    In certain markets in the US that have a lot of low valued assets.. IE under 75k to 100k  banks will make small loans

    they are portfolio loans generally.. 

    these are tough deals for agents..  with price points so  low..  what i see is minimum commissions  not % of purchase price.

    I mean if its co broker and your getting a traditional 3%  that's a whopping 600.00 bucks  hardly worth the effort ..

    this is perfect for a beginner agent who really is looking for experience more than compensation. 

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  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    5y

    @Thomas Ingrao. Agreed. Find a new agent. Not all agents are investor friendly so they don’t understand the numbers and perhaps they are putting their objective/ goal ( commission check) above yours. Having said that there is a caveat, when under a multiple offer situation, writing the standard 70% investor special offer in a hot market is usually a waste of value time.

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    5y

    Find another agent. We write lowball offers all the time in Minneapolis and Austin areas.

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  • Donn WhitacrePro Member
    Member since 2020 · 3 posts · 2 votes
    5y

    It is your purchase, your money, and your future.  Make "your" offer.

    The offer has to work for you.  The Seller can decide if it works for them, and if not, you can negotiate.

    1Reply
  • Reece Iovine
    Realtor · Columbus, OH · Member since 2016 · 170 posts · 227 votes
    5y

    For the most part I will submit any offer for a client. However "low balling" is not a great strategy. What's the highest price you can pay and still meet your investment criteria? That's your max offer...Then offer a little bit below that. Do you want to build a business or play games? If you are known as "that guy" that never submits a serious offer that will be bad for business. I'm not saying that's you I just want to make sure you see both sides of the coin. Maybe the agent is terrible, maybe they have sound advice...something to think about :) good luck

    2Reply
  • DJ DawsonBusiness Member
    Real Estate Agent · Sacramento, CA · Member since 2015 · 394 posts · 259 votes
    5y

    If your agent doesn't want to low ball and present your offer they better have a damn good reason, if not take your business elsewhere. have you submitted a couple lowball offers with no luck w this guy already?

    0Reply
  • Patrick Britton
    Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes
    5y

    some genius here said find a new agent.  "nothing wrong with making an aggressive offer."  with respect, only someone who doesn't know what they are doing would say something like that.  

    1.) lowball does not mean aggressive.  

    2.) there's a lot wrong when buyers try to waste other people's time while insulting sellers.  How do you get what you want?  By pissing of your representative and the seller at the same time?  unlikely...

    3.)  what fly-by-night "bank" will offer $40k loan on what is likely a property that should be donated to the fire department?  

    4.) only newbie, inexperienced and dumb agents would bother working with someone trying to buy a house that will earn them $500 in commission at the cost of 50 hours of work.  

    5.) if you really want a deal while also taking advantage of elderly people you should be a wholesaler. 

    3Reply
  • John Clark
    Member since 2018 · 1k+ posts · 1k+ votes
    5y
    "I offered $18,500. Listing agent came back and said they won’t entertain anything that’s not in the 20s."
    -------------------------------------------------
    Then the agent is following the seller's instructions. The rule is NOT that an agent has to submit all offers. It is a common misconception. The rule is that an agent must submit all offers THAT CONFORM TO THE SELLER'S INSTRUCTIONS.

    Now, a smart agent would certainly notify the seller that he has received a non-conforming offer ("Boss, your instruction was no bids below $100k. I just got an offer for $99,999. Do you want me to pass it on to you?"), but he won't be violating any ethics rules or codes of conduct if he doesn't. Stupid yes, but not in violation (if stupid was a crime we'd all be felons).

    Let us know your ultimate offer and whether you got the property. Good luck.

    0Reply
  • Nick Shri
    Rental Property Investor · VA · Member since 2020 · 218 posts · 133 votes
    5y

    @Thomas Ingrao Did you put in the offer? I wasn't clear from the posts that you had enough data to decide on a price point, except that Seller agent not entertaining below 20K and your agent suggesting you 22+K. Did you consider writing a letter explaining your POV for the purchase price? And how you don't mean to offend the Seller, and so on? If the property is really lucrative then you too ought go that extra mile I had say.

    I would also have gone to the Seller agent and recommend to reduce price by 2.5-3% if your REA wasn't going to listen to you.

    0Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    5y

    @Thomas Ingrao Where are the Jamestown, NY agents at? 

    I'm sure there is one on BiggerPockets!!! 

    You don't offer you don't get!

    0Reply
  • Juan Carlos GastelumPro Member
    Rental Property Investor · Mexico · Member since 2020 · 50 posts · 16 votes
    5y

    I am newbie in REI myself, but been around a while to understand that if you have a good enough deal you should slam dunk it before it gets away... I would offer the $20K and move forward... Best of luck!

    JCG

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

    @Ola Dantis I wish we could find some! Where ya at Jamestown agents?

    1Reply
  • Jessica Smith
    New to Real Estate · 14701 · Member since 2020 · 9 posts · 5 votes
    5y

    Hey all, Dropping an agent recommendation for Jamestown, NY: Victor Flores

    NYS Licensed Real Estate Sales Agent

    Cellular: (716) 401-4943





    0Reply
  • Jordan Clark
    Member since 2019 · 1 post · 0 votes
    5y

    @Thomas Ingrao , realtors have an obligation to submit all offers. If you’re not satisfied, I’d talk to the agent about it and if it’s not resolved call another agent to submit your offer.

    0Reply
  • Charles E Nielsen
    Rental Property Investor · Malad City, ID · Member since 2020 · 18 posts · 9 votes
    5y

    @Thomas Ingrao What market is this in?

    0Reply
  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    5y

    @Thomas Ingrao I think the bigger question here is where the heck are you finding $27k properties that will rent for a total of $1100 a month?? Sign me up!

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    1Reply
  • Sherry McQuageBusiness Member
    Real Estate Broker · Moore County, NC · Member since 2020 · 169 posts · 141 votes
    5y

    At the end of day, is getting a "killer deal" by creating a win-lose situation more important to you, or getting a "good deal" with a win-win situation?  

    In 20 years would you be better off doing the deal (buying in the $20k's), or losing the deal to another buyer who offered just a little bit more than you?

    2Reply
  • Zachary Bellinghausen
    Member since 2017 · 143 posts · 76 votes
    5y

    Find new agent, or if time crunch is on and your under the gun, light a fire under current agent to make the offer. 

    0Reply
  • Tyrone Marson
    Rental Property Investor · Baltimore, MD · Member since 2020 · 223 posts · 89 votes
    5y

    @Thomas Ingrao are you low balling just for the sake of low balling, or you doing it because that’s the number that works? If the deal works even at asking why is it an issue to pay that price? I think you have to 1) know your numbers, 2) Build in a safety margin for sure, but there is no need to go overboard with it.. If I see a deal that works for me all day everyday even after stress testing the deal, then I’m going to pay the asking price once it works. Lowballing sounds like you just throwing out a number with the hopes of the owners giving away their property, it’s not going to happen.

    3Reply
  • Nelson Sandidge
    Rental Property Investor · Cartersville, GA · Member since 2019 · 11 posts · 7 votes
    5y

    @Thomas Ingrao find a new agent. This happened to me last year when I was looking for my first property. It as a 2/1 asking price was $85,000 I wanted to offer $75,000 and the agent said "don't waste my time. Well later I found out the property sold for $72,000. Also, my lender told me that the agent is required by law to submit your offer regardless of how silly it might seem to them.

    0Reply
  • Jonathan Oh
    Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
    5y

    Doesn't seem like this agent is on the same page as you. Either you need to talk with your agent or find a new one. Agent works for you, not the other way around.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Patrick Britton:

    some genius here said find a new agent.  "nothing wrong with making an aggressive offer."  with respect, only someone who doesn't know what they are doing would say something like that.  

    1.) lowball does not mean aggressive.  

    2.) there's a lot wrong when buyers try to waste other people's time while insulting sellers.  How do you get what you want?  By pissing of your representative and the seller at the same time?  unlikely...

    3.)  what fly-by-night "bank" will offer $40k loan on what is likely a property that should be donated to the fire department?  

    4.) only newbie, inexperienced and dumb agents would bother working with someone trying to buy a house that will earn them $500 in commission at the cost of 50 hours of work.  

    5.) if you really want a deal while also taking advantage of elderly people you should be a wholesaler.

    LOL  love it 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    A buyers agent is not required by law to submit offers for a buyer..  A listing broker is required by law in most states to submit all offers to their seller..  the buyers agent can simply FIRE the buyer and refuse to work with them.  

    Now some will have buyers brokers agreements up front and then things are clearly spelled out..  but in a normal scenario there is NO obligation to work for a buyer.. NONE..   And this is one reason why these price points are dominated by wholesalers.. the wholesaler will tie it up for 15k and sell it for 20k and make 5k  that is reasonable comp for something like this.. Agents can charge a flat fee also.. I see it all the time on really low value stuff

    IE bank owned house in the mid west selling for 10k and the brokerage has a 2500.00 minimum..  Commissions are negotiable up and down.
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