Anyone use a Buyers Agent to offer on REO's?
Real Estate Investor · North Central Arkansas · Member since 2009 · 509 posts · 178 votes
I'm curious how many people use a Buyers Agent to flip REO's instead of going directly through the Listing Agent? If so, are you having success?
I'm NOT trying to go the route of making 100's of lowball offers and burning out a realtor...I know a buyers agent that is ok with wholesaling and basically just wants to get deals done. Before talking to him I was curious if anyone has had success going that route.
Jeff
Ok since my previous post here about listing or selling agents and me harping on using the listing agent I have bought and closed on a deal through a buyers agent.
B U T .... that buyers agent was a listing agent who I met through cold calling listing agents (he was a listing agent who I called about some of the properties he had for sale).
I find a lot of deals doing what I call (I am sure others call it this to) circle prospecting.
I locate an area I either want to buy in, currently own property in, selling property in, etc. and pull up all the listings in the area.
I pull up all the active & pending for a similar bedroom mix. i.e 2/1 & 2/2 baths, 3/1 and 3/2 etc.
Let's use pending as an example since it is my favorite for finding deals off the MLS and building relationships with agents who get good deals.
I specifically pull up the bedrooms so the 2 and 3 bedrooms don't get mixed up. I do this because I like to sort the lists by price from lowest to highest and start calling the lowest price first.
If I have the 3 bedrooms mixed up with the 2 bedrooms it makes it more difficult to sort quickly.
By sorting by bedrooms only (and approx sq. footage) I can see real quick how much cheaper the lowest priced 2 bedroom is than the average 2 bedroom.
So back to pendings.... I usually will find a bunch of properties that on the surface I would have offered on but are currently under contract.
I start with these pending first. I like to start my "pitch" by letting them know that I am an investor and just got done watching a carlton sheets infomercial last night at 2 AM and wanted to buy there pending property for zero down and get cash back at closing.
Once the tension gets really thick I then tell them I am totally kidding (which they are relieved about and are now smiling most of the time) I then go on to tell them my criteria (which is very specific) and that it looks like I just missed out on the deal they have that is pending and am wondering if there is any chance it may fall out.
At first they tell me it's solid until I let them know that I ALWAYS buy through whomever tells me about a deal first and sell from that same person usually within 30 days me buying and rehabing it.
I follow up with a template email letting them know my criteria and a link to my website (to hopefully establish some credibility) and then follow up on a regular basis to see if 1) if the deal I originally called about fell out 2) if they have anything new coming to market, any price reductions or know of any other agents that have good deals.
This leads me to my buyers agent (wow that was a long winded way to get to the actual subject eh?). What I find happens is that if an agent feels you are credible, won't waste their time, can close they will call you on deals. AND if they are good listing agents who sell a lot of property they have good relationships with other who sell a lot of property and these agents have an inner circle going a lot of times where they give each other more insight than they would to other agents.
So moral of the story - Listing agents are the way to go in most situations (if you are not experienced I would find a good buyers agent you can trust) and many times they turn into your buying agents because of deals they run across from their colleagues.
I hope this made sense and apologize if I rambled but it is late and I don't have the time or energy to re-edit this post so it makes more sense but hope some people get the point.
I understand the merits of both, a buyers agent will do the legwork and also submit the offers, going through the listing agent requires you to find the property then lock it up. Either that, or find a buyers agent who will find the deals, and get paid out of your wholesale proceeds?
I've done it both ways, but am currently making all of my offers directly to the listing agents.
My offers tend to get a little more attention when the listing agent is getting both sides of the commission, plus, it's a great chance to build rapport..
Steph
I literally just got off the phone with a "buyers agent" to put in 9 of my offers today...
Let me give you my experience. I first worked with his partner which is my brothers friend... he didnt want to work so he passed me off to his understudy agent who's been an agent longer than him? anyway.... So i went out the last week and met all these investors in a target area. talked to them on what they want, what they paid, i even had the list of cash purchases from the last 2 months. thats how i knew where they were.
then i got an reo list. figured out what things are selling for retail and i knew what investors paid. It came out to an average of $71 per sq ft. just because a few sold for more but most sold between 60-70k. 3/1/1 and 3/2/1 or 2.
I take the list and drive around all day yesterday (by the way the guy wouldnt show me properties? probably cause he didnt have faith already) to look in windows and see what kind of damage was done on the homes. Most needed atleast 20k in work! floors along would be $5k and then you have the cabinets, paint in AND out. all appliances and counter tops.
i sent him the list of how much i wanted to offer on each, proof of funds for each, and what to put in the addendum. Well he emailed me with each property i felt was kind of rude. Putting things like SOLD at list price. Most people wouldnt take it that way. Well i knew, because then he called. he also sent along a list of properties that sold in the last 6 months.
Well i looked over the list and the entire first page had 50 properties that sold under 78k to 45k!! my offers were all at 50-70k depending on the property. WELL there was another page where you start to get to conventional buys and FHA buyers where it goes to 150K.
he tries to tell me im "Crazy" because my offers are 50-70% of list price. Then tries to say look at the properties they all sold withing 80% of list price and most around 100%. and a good amount over. But the probelm was he was comparing a property the bank lists at 50k and sells for 50k or 51k and then a property listed at 100k and sold conventional for 100k. So this makes every property thats listed worth 100% of list price.
How could this be? Whats that have to do with it i said? then i said, ok so if i had a 3/1/1 at 1000 sq ft completely remodeled what would you list it at there? 125-135k? he agreed. SO why would i buy a house listed at 116-125k that needs so much work? Why would any investor?
he went on to say show me a property that sold for 50-70 of list price! IT DOESNT MATTER is what i was trying to tell him because i could simply list a property at 126k that needs 20k in work and only worth 130k and im suppose to pay 126k? or even 80% at 107k.. How does that work for an investor? Then he tried to tell me its not an investor area and like almost 1 or 4 houses has been rehabbed. and there is contractor after contractor there workin on flips that i drove around and met!!!
So basically he thinks my offers are out of whack because the places i offered on arent 100% of list price. So he said if he could get them at 50-70% of list then he would be buying to. So i told him no, he wouldn't be able to get them, because he wouldnt try. So we parted ways and LUCKLY i found a broker here im looking to work with thats working on reo flips too! FINALLY!!! i just waiting on the DRE for my paper so i can take my test to be an agent and for not i hope to work with her since she understands and is doing the same thing PLUS give me access to the MLS and properties.
I would suggest you either find a broker that IS an investor and has done fix and flips OR be an agent yourself. Otherwise use a listing agent. Sometimes they wont put in your offer though because they say the bank wont take it. Dont know if its ever true or not but its better than the pitch of a buyers agent that you need someone to negotiate because the listing agents wont give you the best price.....
Lol please someone tell me im not crazy? would you buy a house that needs a ton of work and is only worth 125k but you have to buy then sell to a rehabber via back to back for 90k? including all your holding costs?
then its like shameful if i build in the "cost of money" because it drives my price lower to buy at if i sold to someone that is using hard money. I had to tell him there is always a cost to money. No matter what. Right?
Would love to be a buyers agent, most REO list agents are overloaded, sure your getting the good deal by going to the listing agent, as long as your agent is willing to work hard for you...then they are the right agent!!!
Elaine Kingman Arizona Realtor.....
You're not crazy, Dwight, you had a bad agent.
I do use an my own agent to make offers like this. Perhaps it makes my offers less attractive, but I have managed to get a couple of good deals. Its a ton of work, even so, and I do wonder if the REO agent do hand off their better deals to their direct investors and take both sides of the commission.
good deal! I studied the market the best i could think of and i hate when that happens because it makes you feel like maybe your doing something wrong, and it will never work. The number dont lie though. I need to start studying some shortsale stuff to because that area is about 3 to 1 shortsales now. it flipped! Alot of REOs held off the market here right now.
Steph, your book is great by the way! (she didnt ask me to say that!)
Ill say it just depends on the agent that you recrute. I use an agent for all my offers so far. He's a busy man but about half his time is dedicated to his investors. Sometimes it takes him half a day to get back to me but is always willing to write offers....he understands the game and that is the key.. He sometimes writes 15 offers for his guys to get 1 house. THATS HIS JOB and he likes his job. You must find someone like that.
Build a relationship with someone who wants to be on your team and you'll be fine!!! Good luck!!!
Great replies everyone.
Dwight,
Your experience with that agent is similar to what I've had so far...my wife and I met with a realtor for an hour and it seemed like she understood investors and what we wanted to do...then we never heard back from her...ever! Oh well.
I brought up this question because there is a realtor (happens to be a buyers agent) that I know that has expressed interest in working with us. I'm thinking about giving him a shot but I'm still on the fence about it.
Jeff
I totally agree about building rapport, that's a must in any business relationship.
Jeff
Jon,
On average, how many offers do you make to get one accepted? You bring up a great point about commission, realtors love to double dip. Also a very good point about listing agents giving the best deals to the investors that they have rapport with, im sure that happens all the time.
Jeff
I have a relationship with the listing broker and he basically tells me (in not so many words) wether or not my offer is a waste of time. He works with a lot of banks and says they all work differently. Some will take a certain % of the BPO and others will look at all offers. This information is a huge time saver. Thats why I choose to work with only the listing agent and my personal agent gives me comps and I use her to sell them.
Thats my two cents.
well i now have a really cool broker who is allowing me access to the MLS and giving me her key to get into properties. But i have to call her to use the MLS everythime i guess because it changes her password every so often or something. That might slow me down a bit but hey.
we are meeting tomorrow but im confused because shes talking about partnering.... The problem is im only looking at $5k in profit then there is short term capital gains for back to back closings. so i hope she doesnt think shes getting any of my profit? She can have her commission all day. What would you guys suggest?
They do, at least this is my experience. I get a call directly from the REO listing agent concerning deals in my farm area. I am closing on one such deal in two weeks.
I attempted to work with a buyers agent once... no go... he was afraid to put in the offers I gave him because HE felt they were too low. Only thing you can do is move on :idea: the market is crazy right now and the weird thing is there are agents out there that would rather NOT get paid than put in an investors "low ball" offer.
Example: I just offered 17,000 for a HUD home that was listed at $27,000. The Realtor took all my info and said she would put in the offer... she didn't. I had someone else do it and the offer was accepted, meanwhile this lady... "any Agent Smith" we'll call her, insists she put in the offer and it was rejected. I am still playing along with her... " oh look 17,000 the offer was accepted, was that the offer you put in?" I ask her holding back from a deep gut laugh. Needless to say, i haven't heard from her again... My new agent will now get commission on the HUD sale and what I resell the home for.
Poor Any Agent Smith She Lost out! Who knows what these guys are thinking these days!
In my opinion I would always work with the listing agent. I'm an agent and could possibly pick up the 2.5-3% but I guarantee the offers where the listing agent gets both sides get preferential treatment, most of them will give you the last look at the very least.
I think using the listing agent makes sense, you all make strong arguments that are hard to contest. I would have to agree that an offer from a buyers agent does look weaker then the direct offer, especially since they get to double dip....ALL realtors like that.
Jeff
As the saying goes, money talks and BS walks!
You got that right.
Jeff
See i understand this too. But then your own access to the mls would be great IF you dont already have connections with the agents listing in that area and they are calling you first. I wouldnt want to have an agent sending me all this info then not let him put in the offer.
i just decided to take my license test. i probably failed horribly because im pretty much retarded when it comes to reading comprehension. pros and cons with having your license, and one bad thing is, a broker has to have you under him to have access to the mls here!! and if im just investing (not being an agent) he doesnt want anything to do with me! AHHHH! such a pain
I have my real estate license.
I make my own offers.
In commissions in my tenure of investing I have received probably over 100k from the 3% buyer agent commission.
I can't believe you guys who are buyer's agents are letting the listing agent double dip and take your 3%.
Do you think by doing so you have made it up? It is very interesting for me reading your philosophy. I have to mentally knock it as being absurd, but maybe I am the one wrong.
If I had my license, I would probably make my own offers and collect the 3% as well but that is just me. Just because other people don't do it that way doesn't mean they're philosophy is wrong. There are multiple ways to be successful in this business and whatever way someone chooses to go, if they find success I say ROLL WITH IT!
Jeff
I'm a buyer's agent myself. I work with all of my clients diligently to get them the best deals and with the most favorable of terms using both on market and off market properties and listening "between the lines" when speaking with the other agent to lend the proper "color" to the deal...
I read that some of you have had pretty rotten experiences with buyer's agents.
Not all of us are bad and some of us (myself included) truly do work 15-20 hours a day keeping up on properties for our clients.
Very truly yours,
Heidi Arndt
SF Waranch Company
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