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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  • Terry Hynicker
    Wholesaler · Elizabethtown, PA · Member since 2017 · 8 posts · 0 votes
    5y

    @Thomas Ingrao is that for investment properties? Is so can I ask what bank it is? Looking for a good bank

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

    @Terry Hynicker I’m using lake shore savings bank. They are local. I asked them if I could use them if I found a property in Warren, PA and they said no

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    Find a new agent or submit direct via the listing agent and let them have both sides.

    0Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Samuel Sorinwa:

    @Steven Wilson

    Well said. But as both RE agent and investor, I will like to know why he won’t? If he is a disclosed dual agency he won’t.

    I believe its important to find an agent who also owns property and understands the investing life.  

    0Reply
  • Kate Barry
    Real Estate Agent · Vermont and New Hampshire · Member since 2019 · 117 posts · 78 votes
    5y

    Are you sure your agent isn't just making sure you don't lose out to another offer?  In our market the competition is so intense, if you really find a good deal you are working to beat out 6-12 other offers.  If they were already UC someone else is probably trying to jump on it too.  They may just be trying to help you get the deal at still what would be a good price

    2Reply
  • Stacee Evans
    Investor · Canoga Park, CA · Member since 2016 · 114 posts · 50 votes
    5y

    I have made lots of low offers this year and not all were accepted. The "lowball" ones were on properties that needed quite a bit of work and even though they were low, I thought the offer was fair.  My agent just made a verbal offer to the other agent so if there was no way it would be accepted, he didn't have to waste his time writing it up.  You may need a new agent, but if you like the one you have, ask if your agent will just make a verbal offer first to see where the seller is. 

    0Reply
  • Ashley Byington
    Rental Property Investor · Victor, ID · Member since 2017 · 51 posts · 31 votes
    5y

    @Thomas Ingrao

    Ask Agent for comps so you know what the market value is. Assessed value relates to taxes and isn’t something that correlates with appraised value or the market value. Good luck!

    0Reply
  • Luis Valles
    Rental Property Investor · King of Prussia, PA · Member since 2019 · 17 posts · 8 votes
    5y

    @Thomas Ingrao

    Sounds like you do not have a REI- friendly agent, that's all. The agent does not know the game well enough to go with the program. No one's fault, just replace them. No harm, no foul.

    0Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    5y
    Originally posted by @Wayne Brooks:

    @Kevin Leonce @Thomas Ingrao Just to be clear....a Listing agent has to present all offers, written on the realtor contract forms but a Buyers agent is not required to actually Create said offer....they can choose Who to work with and what offers they are willing to submit.

    As an aside, the commission on a $20k deal is less than peanuts and I never could have imagined working on such a low priced deal as an agent.  Most agents will have a minimum commission amount they are willing to for, so it is to Your advantage to offer additional commission to a buyer agent working on such deals.

    I almost NEVER disagree with Wayne. (And even this isn't a disagreement so much as a clarification.) 

    The sellers may have told the listing agent that they didn't even want to SEE offers below $X. I've done that as the seller, when I received 3 ultra low-ball offers in row. (And no, I wasn't priced too high.) 

    So while the listing agent is obligated to present all offers, directives from the sellers overrules that, so long as they are legal.

    He is totally correct about the buyer's agent not being obligated to work with someone.

    The Listing Agent told you their minimum offer threshold. It's a waste of time for the Buyer's Agent to write up anything below that number.

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    2Reply
  • Paul KubinPro Member
    Rental Property Investor · Fort Smith, AR · Member since 2020 · 53 posts · 48 votes
    5y

    @Dan Maciejewski

    $20,000 or $20,500 and the peace of mind that you will get the deal

    Versus

    $18,500 and the potential risk of losing the deal.

    That’s easy math where I come from.

    1Reply
  • David Locker
    Residential Landlord · Lacombe, LA · Member since 2013 · 4 posts · 0 votes
    5y

    This is great topic... the agent works for YOU and is generally obligated as a fiduciary to put your needs before theirs. I'll stop there. :)

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

    @Paul Kubin ended up with the offer accepted at $23,000

    0Reply
  • Zander Kempf
    Developer · Honolulu, HI · Member since 2018 · 111 posts · 93 votes
    5y

    Oftentimes agents don't want to get themselves a reputation of always doing lowball offers. Others just generally don't like conflict and don't want to insult people. It's a fine line to walk but there's not much harm in being aggressive, as long as you justify your offer. Layout what your expected costs and risks would be in a letter to accompany your offer. This can help "soften the blow" of a low number.

    0Reply
  • Sante A.
    Investor · Woodside, NY · Member since 2016 · 5 posts · 1 vote
    5y

    @Thomas Ingrao

    Great share Tom, congratulations on wrapping this up in 2021, wishing you much success!

    I see there are a few properties for sale from $20Ks to right below $80ks in the Jamestown area. Pop is declining, crime index seems higher than state avg. Timeline seems to be in your favor going toward the spring; how long do you anticipate the work will take? How long do you think it will take to sell once work is done? Could you share your scope of work with cost breakdown and how you plan to control the quality of work? Thank you.

    0Reply
  • Brian Ploszay
    Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
    5y

    The agent cannot reject presenting your offer, if they still want to represent you.   I get agents don't want to mess with low-ball type of clients.  Then they have to exit the representation of that client.

    Don't give up.

    Make the offer directly to the seller's agent.  Or seller.   You can agree to pay them a commission anyway if such a claim comes up.  The commission rate is low, so I'd pay them anyway.

    0Reply
  • Joe Bertolino
    Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
    5y

    Just listen to your agent.   It is a $20K deal with very little commission involved.  Neither side is breaking out the poker face for this one. 

    If you plan on being a long term investor in that area with a lot of units... a good reputation as an easy buyer will be more valuable to you than getting an extra $300 off of this deal.  Agents do looks like crap when they blast low ball offers all over the place.  They are better off making a phone call and getting a feel for the situation.  When something good comes up... its not steered to them.   

    0Reply
  • Robin Hopkins
    Investor · Norton, MA · Member since 2021 · 23 posts · 5 votes
    5y

    @Thomas Ingrao

    I don’t know if my opinion is too late to matter or help but I would suggest doing some research and find out who the fiduciary agent is, if they both have gone into a home either a relative or an attorney will be in charge of their estates and I would suggest getting in contact with them directly, my husband and I had a problem similar to what you are describing several years ago when he was buying a piece of property, being a Paralegal I did my background research found out everything about the property and the owner including finding their contact information, because when we tried attempting to submit our offer (because it was low) the broker told us the owner wouldn’t accept it. So I went and contacted the owner directly talked to him told him what we were looking to offer and he said yes he would accept it, but for some reason he insisted that we attempt to try and go through the agent again now knowing he would accept it, but we were not going to tell the agent we had contacted the owner ourselves we all kept that between us. So we tried it again and this time we were more forceful and so the broker said she would review the offer with the owner and get back to us. About a day or so later the broker called us back and said sorry the seller said no they would not accept the offer, now we knew this was a complete lie because we had already talked to the owner and he said yes. So I called the owner again and asked him if he had spoken to the broker about our offer or if she had even called him about the offer we submitted and he told us she never even contacted him... We learned right there that this Broker was a lying B??ch... and this lying went on and on for weeks and weeks meanwhile we kept in steady contact with the owner regarding the entire terms of our deal even though we would then have to go back to the liar and include her in some of the details... and despite the fact she did nothing to help the entire situation but try to sabotage it (we think it was because we were not offering enough to make it worthwhile for her commission) but she made sure she was front and center on closing day to get her commission check that’s for sure.... some Brokers S?CK, not all but some do.... SO I WOULD JUST SAY MAKE YOUR ORIGINAL OFFER DIRECTLY TO THE OWNER’S REPRESENTATIVE NOT THE BROKER.

    0Reply
  • Dan Maciejewski
    Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
    5y
    Originally posted by @David Locker:

    This is great topic... the agent works for YOU and is generally obligated as a fiduciary to put your needs before theirs. I'll stop there. :)

     That definitely varies by state!  Unfortunately, there are a ton of buyers that think that's the case.

    In FL, the default is transaction broker, which is actually the opposite of what you stated.  The default representation is that the selling agent (buyer's broker) works for the seller.  That's why the seller pays them. 


    A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent.

    Single agent is when (in FL) there is a fiduciary duty to a client.  There MUST be a notice that is given when you act as a single agent.  If there isn't one, then you don't have a single agent.  At least in FL.  It helps to know the laws where you are.  

    1Reply
  • David Locker
    Residential Landlord · Lacombe, LA · Member since 2013 · 4 posts · 0 votes
    5y
    Thanks for the clarification Dan!

    Originally posted by @Dan Maciejewski:
    Originally posted by @David Locker:

    This is great topic... the agent works for YOU and is generally obligated as a fiduciary to put your needs before theirs. I'll stop there. :)

     That definitely varies by state!  Unfortunately, there are a ton of buyers that think that's the case.

    In FL, the default is transaction broker, which is actually the opposite of what you stated.  The default representation is that the selling agent (buyer's broker) works for the seller.  That's why the seller pays them. 


    A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent.

    Single agent is when (in FL) there is a fiduciary duty to a client.  There MUST be a notice that is given when you act as a single agent.  If there isn't one, then you don't have a single agent.  At least in FL.  It helps to know the laws where you are.  

    0Reply
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