I currently own several properties and work as a Realtor full time, so I am pretty well versed in how income property transactions should occur, however I have run into a snag with the seller of an apartment complex I would like to purchase and would like some advice from some of the seasoned professionals out there.
The property (18 unit complex) has been on the market for three weeks, and I have been working with the listing agent (father of the seller) to get their financial docs. I have already verified their utility costs, taxes, insurance, and have spent a decent amount of time at the property poking around and checking out the tenants. After three weeks of asking for docs I finally received the last three years of 8825's, but none of them match what the listing agent is telling me (red flag!). Additionally, the seller's agent is refusing to allow me to speak with property manager to get a rent roll, copies of leases, etc, until he receives an offer, as he is worried someone will spook the property manager and they will jump ship. I have worked with this property manager in the past, and they will definitely not release any information without the owners say so.
So, I am at a dead end. Short of writing an offer writing with a due diligence period requiring this information, I have nothing really to base an offer on. Additionally, the listing agent is claiming an 8% cap rate for the price, but no matter what numbers I use (the ones from the 8825 come out $100K less in value or what he claims it makes which come out $35K higher in value) I still cannot figure out his price, which makes me believe he has no idea how to value this property. In short, how do I deal with a listing agent who has no idea what he is doing?
Any help on this would be greatly appreciated,
Q: "In short, how do I deal with a listing agent who has no idea what he is doing?"
A: Join the club.
Sounds like you have several contingencies to input in your offer to purchase. Such as a strict deadline for them to hand over the rent roll etc with consequences plainly stated. Since the listing agent is a relative of the seller, its conflicting interest so you might not want to hand the EMD to them. Being as though you already see red flags you want to be able to secure your EMD should the seller not fulfill the demands in the contract. My coin.
Write an offer based on the numbers the listing agent has provided you and reasonable assumptions for the numbers that are missing. Renegotiate when the numbers don't match up during your due diligence. Remember, you based your original offer off of what the seller and listing agent provided. If those numbers are off, it's reasonable that you have to change your offer.
Until a buyer submits a written offer, everything is just talk and can be just a waste of time. Maybe the listing agent has this attitude and wants to know that you're serious.
@Mary B. and @Andreas Mirza thanks for confirming my thinking. Whenever I have dealt with these larger deals in the past most folks seem a little more interested in selling the property by providing basic documentation. I guess this is a good sign of poor management, and that there is some forced appreciation to be had.
Hi Mike. I am interested to know if this deal came together for you. I am located just over the Blues from you. I live on highway 204 and work in Walla Walla.
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