Broker playing mind game with me?

42 Replies

Have you ever been under contract, and doing your due diligence, and you find a bunch of problems. You ask for a concession, but the seller's broker keeps telling you that they don't really care if you back out because they have a waiting list of buyers. They tell me the problems I find are not things experienced investors would find as problems. Are they just playing with my mind and trying to make me doubt myself? Thoughts? What other tricks do brokers play on your mind?

They are likely telling you the truth.  When you opt out, they will take your finding, send it along to the next buyers who may be glad to now buy it after the disappointment of missing out the first time. 

The most annoying part is they keep telling me that its fine, its normal, experienced investors don't do this, you are asking stupid questions etc.. my gut feeling us that they are lying. But any thoughts on this?

Originally posted by @Jingwen Dunford :

@Mike Dymski tenants were evicted but didn't disclose beforehand. Permit issues. Inaccurate financials.

 Tenants being evicted are not your concern.

Permits may or may not be a real issue depending on your location.

Inaccurate financials on a 200 unit, bigger deal. Inaccurate financials on a 4 unit mean absolutely nothing.

Originally posted by @Jingwen Dunford :

@Russell Brazil the thing is that eviction would be on me after closing.. that is my thing.

Then simply dont close until its finished.

Youd likely be equally unhappy if the seller was letting them live there rent free.

 

Either call their bluff and present an offer that works for you or back out.  Don't let their words dictate your actions.  The seller broker's job is to get the best deal for the seller, not you.  Good luck!

@Jengwen Dunford 

I hear your pain, but if you have asked tons of questions and made a deal over small things then chances are you used up your ammonium on rabbits before you got to the big bear. 

@Jingwen Dunford

Since you look like new to real estate, eviction is not an easy process and will cause you a lot of trouble if you close the escrow before the tenant move out.

You can insist to close escrow after the tenant move out. Just don’t close escrow before tenant move out.

If the seller is not willing to postpone the closing date to after the tenant move out, just walk out from the deal and look for the next one.

@Jingwen Dunford you need to put all of your repair requests and any other conditional requests in writing so the the seller has to give a written response. This way you get it directly from the seller and not what the broker says or thinks.

The bottom line is you need to be prepared to walk if you do not get the terms you are looking for. You don't have to do the deal. There will always be more deals.

@David Stone Agreed! No one is forcing you to close on this particular property. As someone looking for my first property in the town I have moved to I’d be nervous to have any first buy be dramatic or a headache.

@Jingwen Dunford

IMHO a “No Deal” is always better than a “Bad Deal”.

Stick to your criteria, walk when there is no spark in the deal for you. Deals are like buses, another will come along.

@Jingwen Dunford

Welcome to a seller's market. They aren't worried about you bailing, especially if you have money that has already gone hard.

Also, most of what you are saying the issues are, to me, aren't big deals. An experienced investor understands how to deal with what you are finding. As an experienced investor I know how to build my own expense proforma so not too worried about the numbers they present. 

If, however, they are off by a lot in their income that could be a big deal. When you do your lease file audit during the DD period you will find what is off and if it's not too bad I move forward even if they want to be difficult and not credit me the difference that I find.

Being new to this you don't know what is acceptable which puts you at a disadvantage. You have anyone experienced you can pass these things by to know if they truly are a big deal? 

Bottom line, if the deal still works in spite of your findings but you are hung up on the "fairness" of it you should probably close. Again, being new you might not know what is an acceptable finding, this is why it's really important you find an experienced partner or at least someone to lean on (unless you already have that) on your first deal or two.

Good luck with this deal and I hope it works out for you.


  

Originally posted by @Jingwen Dunford :

@Mike Dymski tenants were evicted but didn't disclose beforehand. Permit issues. Inaccurate financials.

 Honestly, those are normal things that most of us experienced investors would be fine with. Markets are extremely tight. I would not let those issues affect a good deal for me. Maybe on borderline deals, I would push back. Those issues are usually pennies in terms of cost relative to a whole deal. 

Tenants being evicted- Annoying, but if your in a good state, the cost/time is minuscule. 

Permit Issues- Depends on what, but most things can get cleared up relatively simply. Also depends on the municipality. 

Inaccurate financials- Experienced guys throw away most of the financials provided by the seller. It’s nonsense. My proforma is solely built on my own inputs. 

    @Syed H. You can readjust your vacancy from the evictions in process and see if it affects your offer. Also, during the financial due diligence you should compare the sellers T12 numbers with bank statements and the rents listed on the lease.

    Originally posted by @Chuck Klinger :

    @Syed H. You can readjust your vacancy from the evictions in process and see if it affects your offer. Also, during the financial due diligence you should compare the sellers T12 numbers with bank statements and the rents listed on the lease.

    Prior owner evictions don’t affect my vacancy at all.

    Also, I'm use to ultra competitive markets where you will get laughed at if you ask for a T12/bank statements/tax returns etc. There is no due diligence period. DD is done before a contract signing, which is almost always non-contingent.

    Only thing that matters are the leases (only somewhat) and your own assumptions. That's how everyone should operate IMO. T12, bank statements, tax returns; etc are nice to have but cannot be depended on.