Broker playing mind game with me?
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?
@Charlotte Dunford not sure if the broker is playing mind games with you or not. But from my experience brokers don't like when buyers come back to re-trade for petty reasons. It must reveal extensive unknown damage in your inspection reports typically that can amount to fifty to hundreds of thousands of dollars. If it's a petty situation you are talking about, then more than likely you won't get any concessions for that. On our end we try our best not to re-trade on petty stuff. This will not help your credibility as a buyer, only tarnish it.
Thank you all for your comments.
@Charlotte Dunford If it's truly a good deal, in this market they will have more buyers. If you're a particularly prudent buyer, or one who is hypervigilant on the accumulation of small to mid sized issues that arize, I wouldn't doubt there are buyers less concerned with these matters than yourself.
Permitting issues certainly concern me, depending on the magnitude.
Leases are all I really want accuracy from, they tell the true tale. I write up my own financials and trust them far more than a seller's in most cases anyways.
How big is this property?
Unfortunately, the broker more than likely is not playing mind games. If you are calling out "problems" that are generally normal issues, you may be perceived as a buyer that will drag out a closing and ask for unreasonable concessions. WIth that said, it is easier to negotiate with buyers that focus on items that may be potential finance issues or issues that deal with the major mechanical and structural components. When long laundry lists of "problems" are presented that are related to regular wear and tear, it is easier to not accommodate any requests and let the buyer go to work with a more reasonable buyer.
@Lyn Garrison Thanks for your post. What are some very reasonable things that could truly justify a concession other than the ones you mentioned?
@Tj Hines thanks. What are some examples of major problems that an experienced investor would truly see as a huge risk requiring a concession?
Many have said that the issues I mentioned are petty. As experienced investors, what are some things that count as major issues that would make your cringe and ask for concessions?
@Charlotte Dunford I have asked for concessions for having to evict a tenant. It doesn't cost that much too evict here but you never
know if the tenant will do malicious damage either or it could be possible that you could work something out with the tenant. If you have a decent deal add a couple thousand onto the purchase price and if the deal still makes sense you go for it, if it doesn't pass, it was probably too close anyway. I don't know about permitting issues where you are, up here in most old buildings, so much unpermitted work has been done over many, many decades and most buyers and sellers just ignore it unless it constitutes an unusual safety hazard. On the seller financials, I always assume the seller numbers are BS
@Charlotte Dunford structural and mechanical functionality issues.
It all depends on how good the numbers are in your analysis. If the price is low enough at asking, then there is a lot I would accept before asking for concessions because they wouldn't be necessary. But it all depends on how the numbers look in your spreadsheet analysis. I've accepted mold, raw sewage in the crawlspace, structural issues, etc. and the numbers just have to be close where you need them to be to close.
You haven't given us any of the numbers...do you have a handle on any of that? You have to give us those details...
I would not call the broker and try to verbally talk about concessions...that is definitely a tell that you are relatively unsophisticated as an investor and could potentially waste the broker's/seller's time. Think of it from their point of view...time is money and they just want to get it closed quickly with minimal hassles. If you think your numbers warrant concessions, put it together in writing and submit it...period...don't spend a lot of time back and forthing verbally. And if not move on to the next deal immediately...do not waste time wondering...there's always another deal to consider somewhere or you wait until there is one...
@Dante Pirouz where did I mention that I called them? I always put everything in writing.....
@Jingwen Dunford
Walk away! I had a gut feeling a deal was right and it ruined my life because of a simple mistake. There are more deals, your mental health is worth far more than a building!
@Charlotte Dunford Did you present him with a written addendum to the PA with the new conditions/terms you wanted for whatever deficiency you have discovered? That's the type of written I meant...not something like a letter or an email where you want to discuss back and forth some answers to questions you have. To be honest, no seller I have ever worked with (and that of course includes their brokers/agents) have ever been totally "open kimono" regarding questions or concerns and I don't really bother with that anymore. If you want to know something you usually have to hire your inspectors or investigators and find them out for yourself and even then there is ALWAYS some horrible issue that you wish you had known about and that you figure the seller should have disclosed but the deal closed and you're stuck with it. That's the nature of the game. If there's something "wrong" with the property, get your compensation for that in the $$ and move on.
And if the broker is truly being rude to you, move on to the next hot deal (there always is one). Your money is just as green as anyone else's and being treated rudely is not something you have to put up with whether this is your 1st deal or your 100th deal!
@Jingwen Dunford
Go with your gut
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#2 Multi-Family and Apartment Investing Contributor
- Rental Property Investor
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Originally posted by @Charlotte Dunford:@Mike Dymski tenants were evicted but didn't disclose beforehand. Permit issues. Inaccurate financials.
Those are simple issues, so either get over them and close or walk away. Do the numbers work after uncovering the issues? If yes, then close. If no, then walk away.
Thanks everyone. I closed. :)