Why do agents take it personal?? My Journey to find my first flip!!

Rehabbing & House Flipping
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Why do agents take it personal?? My Journey to find my first flip!!

Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

Okay so I have started putting my own offers out there.

Property

1.Located on main highway.House is a POC had it listed at 80k now expired and re-listed at 39,000.Old house on block foundation needing a ton of work.

Offered 5,000 cash close in 7 days.The land eventually in 4 to 5 years will go commercial but monthly rents will be low as house is right on the highway.40k for it is a pipe dream.Agents gets all mad in an e-mail and didn't even counter and said land value is worth more than that.You would think he would even ask for a counter for his client the bank but no.

2.Ranch house built in 70's about 1,200 sq ft.In a subdivision I grew up in and know well.Other homes have basements and are larger so ranch style is only 5 out of 100 in subdivision.

Needs new carpet,windows,roof,kitchen,baths,etc. Resale maybe 85k to 90k.They want 41k and I offered 5k cash.Agent is nicer and says bank recently rejected 21,000 for it.

This house at best is worth in the 20's.There is another house in the subdivision across the street asking 38,000 and has 1,954 sq ft with less work.

I have a bunch more cash than 5,000 but my thoughts are if I am going to buy and old house for commercial land to hold I don't want to pay a premium.If I am buying for a flip if I can get cheap enough I will use cash but if I have to go to a certain bid level then I will use hard money to preserve my capital.

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Ophelia Nicholson
Involved In Real Estate · Hyattsville , MD · Member since 2011 · 298 posts · 256 votes
15y

Hi Joel,
This is my first post here, I lurk alot but was encouraged to post by a post about participation earlier today and your post. So thank you!. I wanted to share my experience with the same issue if you don't mind and if you don't take it as my hijacking the thread ofcourse. We are in MD about 10 minutes from DC so the market here is diffrent than GA. Recently we were looking for our first flip we had a buyers agent and we only had about 60k so it not that we were trying to offend anyone with the offers but it was all we had at the time not including rehab.
My buyers agent every time I tried to put in an offer would verbally abuse me over the phone and by text about noone willing to look at our offers since we were underbidding. I literally felt like we will never get anything because my agent barely wanted to put in my offers and would scoff and laugh at them worst than the listing agents, would call me names I dare not repeat. So what did I do. I made changes and cut my agent and found one who didn't the 60k like toilet paper and we now have a contract and are closing in a few days. I saw this long post to say Don't pay attention to the agents - Thier goal is not your goal. Thier dream is not your dream. If the 5k is all you have to offer, then offer it and either they take it or leave it.. You will eventually get someone who will jump at your offer. Good Luck.

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  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y

    For some reason, some agents take low offers very personally, either because they can't separate business from personal life or because they feel the offer will reflect negatively on them.

    Regardless, it's not your problem, and you can't worry about how an agent responds to your offers...just move on...

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  • Jake C.
    Rental Property Investor · Chicago, IL · Member since 2011 · 73 posts · 48 votes
    15y

    Joel,

    I had that same reasoning as well and gave lowballing a try a few times. A house with major repairs in a great neighborhood wanted 130K, they dropped to 105K in 30 days. I offered 45K, they countered at 104K. I re-countered at 46K, they re-countered at 98K. I re-countered at 47.5K and I never heard from them again. With lowballing, it seems to be a real numbers game and Im assuming that there are many more aspects to it than just a low offer.

    0Reply
  • Joel OwensBusiness Member
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    OP
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Thanks J.

    Did you see my other question for you in another post??

    It was about the homes that flooded in Cobb county.The drywall is missing on the bottom half section.

    They are offering these properties cheap under 20k.I was wondering if you had bought or rehabbed any of those and would lenders have trouble loaning out on them to home buyers??

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  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Joel Owens:

    Did you see my other question for you in another post??

    It was about the homes that flooded in Cobb county.The drywall is missing on the bottom half section.

    Sorry, I didn't see that question...do you have a link to the thread?

    Since this is your thread (and therefore this isn't technically a hijack :), here's a quick answer...

    First, yes, I've bought one of these properties (check out House #19 on my blog -- The Flood House). Purchased for $31,500, put $35K into it and sold it to an FHA buyer for $97K with a total hold time of about 90 days. Sale was about 2 weeks ago.

    There are a lot of little nuances to purchasing/reselling houses in these areas these days, but the biggest point you should be aware of is that many of the flooded neighborhoods were NOT in flood zones prior to the flooding, but that SOME of them will be reclassified into flood zones in the next year or two. Basically, after the big flood in September 2009, the city of Austell (where most of worst flooding occurred in Cobb) started putting together a proposal for the revision of the FEMA flood maps. This proposal was submitted to FEMA about a month ago.

    Now, FEMA has three options:

    1. Accept the changes recommended by the City of Austell
    2. Deny the changes recommended by the City of Austell
    3. Modify the changes recommended by the City of Austell

    Ultimately, FEMA will probably make their decision of which of those three options to pursue sometime around January 2012. Assuming they decide to go with either 1 or 3, the actual changes (the revised flood maps) will likely be released sometime around January 2013.

    So, any flood house that you buy in Austell (where most of the flooding occurred) runs the risk of being reclassified into a FEMA flood zone come January 2013 (or sometime around then). Any houses that get reclassified will be required to have flood insurance when resold, but they currently don't require flood insurance if the houses weren't in flood zones previously (or currently).

    Also, the City of Austell Public Works Department has a list of houses that they have proposed get reclassified, so if you visit the Public Works Department (and can find someone to talk to), you should be able to get information about specific properties and what their likely fate will be.

    For us, we are ensuring that any properties we buy that were flooded are NOT proposed to be moved into a flood zone. This doesn’t mean that they won’t be (and also doesn’t mean that the ones that are proposed to be moved will be), but at least we can tell our buyers that to the best of our knowledge, the house won’t be reclassified anytime soon.

    If you have questions about any specific properties, let me know...I know most of those neighborhoods very well and have visited many of the properties currently listed...

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  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Thanks Jake.

    Yes I find it to be timing when the bank reaches a certain realization they must move the property.

    Many were ready at the end of last year to dump cheap to get off the books.Unfortunately I didn't have the funds at that time.

    I feel with summer approaching banks are going to start feeling better about getting higher prices.So I feel now is the time to lock in good buys that will be for flips.

    At the end of the day the numbers have to work for me.If they don't I will end up with a rental.

    Something I don't have time for and do not want.

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  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    3/2 on Hopkins Road in Powder Springs Ga.

    Has some flood issues.Sold in 2006 for 100,000.

    So I am think 80k to 90 k rehabbed is max value.Built in the 1990's brick.

    Any info appreciated.Next to a large Hopkins Rd subdivision.

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  • Matt Kearney
    Real Estate Investor · Springfield, MA · Member since 2009 · 142 posts · 103 votes
    15y

    Another thing to think about is that the agents commission is usually tied to the sales price, unless the bank or seller has agreed to pay them a flat fee.

    So when you're offering $5,000 for these properties the agent is looking at a commission of a few hundred bucks. If they have to split with their broker and they have transaction fees, they are really making very little....they might as well go work at McDonalds for that type of pay. :D

    This could be another reason why they take it personally.

    4Reply
  • Ophelia Nicholson
    Involved In Real Estate · Hyattsville , MD · Member since 2011 · 298 posts · 256 votes
    15y

    Hi Joel,
    This is my first post here, I lurk alot but was encouraged to post by a post about participation earlier today and your post. So thank you!. I wanted to share my experience with the same issue if you don't mind and if you don't take it as my hijacking the thread ofcourse. We are in MD about 10 minutes from DC so the market here is diffrent than GA. Recently we were looking for our first flip we had a buyers agent and we only had about 60k so it not that we were trying to offend anyone with the offers but it was all we had at the time not including rehab.
    My buyers agent every time I tried to put in an offer would verbally abuse me over the phone and by text about noone willing to look at our offers since we were underbidding. I literally felt like we will never get anything because my agent barely wanted to put in my offers and would scoff and laugh at them worst than the listing agents, would call me names I dare not repeat. So what did I do. I made changes and cut my agent and found one who didn't the 60k like toilet paper and we now have a contract and are closing in a few days. I saw this long post to say Don't pay attention to the agents - Thier goal is not your goal. Thier dream is not your dream. If the 5k is all you have to offer, then offer it and either they take it or leave it.. You will eventually get someone who will jump at your offer. Good Luck.

    8Reply
  • Alex K.
    Real Estate Investor · Sparks, NV · Member since 2008 · 45 posts · 28 votes
    15y

    From my limited experience a buyers agent is worse than useless. I was making lots of offers on REO properties using a buyers agent and always getting outbid and for one reason or another losing the properties even though I was willing to bid higher if necessary. Then I tried contacting the listing agent on a REO 4 plex I wanted. What a difference. I like the subtle "hints" about how much I need to offer and other things like "lets get this signed and submitted today because there is another offer coming in tomorrow morning".

    My strategy in the future is to always go directly to the listing agent. They have the ability to swing the sale one way or another and you want them on your side.

    2Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Joel Owens:
    3/2 on Hopkins Road in Powder Springs Ga.

    Has some flood issues.Sold in 2006 for 100,000.

    So I am think 80k to 90 k rehabbed is max value.Built in the 1990's brick.

    Any info appreciated.Next to a large Hopkins Rd subdivision.

    I know exactly which house you're talking about...

    That entire area got hit REALLY hard back in 2009. In fact, we owned a property in the subdivision you mentioned (Autumn Trace) during the flooding, and ours was one of four houses in that subdivision that didn't get wiped out.

    Some thoughts:

    - Powder Springs, in general, is a VERY tough market these days. After the floods, we actually stopped buying in Powder Springs, and if you look at houses in the $90-140K range on the MLS in Powder Springs, you'll see why. LOTS of inventory, much of it in very good condition.

    - The house I'm guessing your looking at is classified in the AE flood zone (100 year flood plain), and that combined with the 2009 flooding will probably make the property difficult to sell.

    - The buyers would be required to get flood insurance (assuming they get a mortgage) and I imagine insurance in that area would be rather expensive compared to the buyer's PITI, making it hard for a lower-income buyer to buy the house.

    In general, while you could probably make a profit reselling the property at $80K ($10K purchase, $40K rehab), I'm not sure you'd get a ton of interest at that price.

    Of course, if you're looking for rentals, the numbers may work out better, but I haven't run them...

    Personally, for flips, I like the flood areas of Austell better. The values are holding up better, there is less inventory in Austell, and many of the property won't get reclassified into flood zones.

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  • Joel OwensBusiness Member
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    OP
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Thanks J.

    There are some other properties in my neck of the woods around 1,950 sq ft built in the 80's with no water damage just outdated.

    Asking 39k and I can get in the 20's most likely.Resale in the 100's. Once I do look at purchasing I would want to get your thoughts on it.

    I just don't want to be stuck with a rental at all costs.The only rentals I would want to hold is retail and multifamily or an old house on future commercial land.

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  • Faisal Sami
    Investor · South Barrington, IL · Member since 2011 · 102 posts · 57 votes
    15y

    Joel
    some agents are very emotionally tied to their listings. If they had any influence on setting the price, they also have in mind how much commission they want to make. A lowball offer means a lowball commission and that makes em mad. A professional realtor shown comps and detracting factors should be open to look at your offer. When I lowball offers, I usually provide supporting documentation that help me make my case. I say go and lowball like you are doing. The worst they can say is no. A recent war story I heard from my realtor was of another investor who low balled a bank for a 3 bedroom 2 bath house in Rockford, IL for $8k in a nice area. The asking price was $35k from the bank but the investor held his ground for 3 weeks and only went up to $9k and got the property from the bank who kept saying they would not go lower with every counter offer they made. Only to go lower the next day all the way down to $9k three weeks later. The investor only took the $9k offer because he couldn't believe the bank actually came that far down and wanted to grab it before another investor swooped in.

    My own feeling is not to low ball just for low balling's sake. There needs to be a business case for the lower offer. If I can still make good money with a higher offer, I will go ahead and do it if it means closing the deal faster and actually getting it done. I have seen deals fall apart that were $1k away from each other. This in my opinion does not make sense. Good luck!

    1Reply
  • Mark Yuschak
    Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
    15y
    Originally posted by Matt Kearney:
    Another thing to think about is that the agents commission is usually tied to the sales price, unless the bank or seller has agreed to pay them a flat fee.

    So when you're offering $5,000 for these properties the agent is looking at a commission of a few hundred bucks. If they have to split with their broker and they have transaction fees, they are really making very little....they might as well go work at McDonalds for that type of pay. :D

    This could be another reason why they take it personally.

    Actually, most every bank pays a minimum commission to the listing and buying side. 99% of the time it's no less than $1,000, and sometimes as high as $1,250. If they follow the 3% commission to each side rule of thumb the properties will never sell because any agent simply won't work for so little.

    I see the same thing around here with agents becoming emotionally attached. If at all possible, the biggest thing I try to do is to offer no less than 50% of asking (if warranted), and put down a huge EMD. Less than 50% seems to be the threshold for an insult to the seller and the listing agent. I don't know why, it's just what it is. :lol: The agents who have properties with a high DOM don't typically get insulted by lowballs either.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Joel Owens:
    Thanks J.

    There are some other properties in my neck of the woods around 1,950 sq ft built in the 80's with no water damage just outdated.

    Asking 39k and I can get in the 20's most likely.Resale in the 100's. Once I do look at purchasing I would want to get your thoughts on it.

    I just don't want to be stuck with a rental at all costs.The only rentals I would want to hold is retail and multifamily or an old house on future commercial land.

    You're not too far away...let me know and I'm happy to make a trip up there and take a look and give you my thoughts...

    And I agree about rentals...they're great when they're planned, but I avoid having to hold a failed flip at all costs!

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  • Account Closed
    Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    15y

    to me it seems some agents dont like investors making money...i've had buyer's agents say it's not fair that i buy at X and list to sell at Y...so don't put an offer in....lol, pretty simple, right? on the buying side, i see the same thing..agents will undoubtedly know people who bought in that area for 100k a few years back, maybe an investor who bought for 60k last year, and now they're saying, "why should you buy in that neighborhood for 35k?? sometimes, people just have too much time on their hands and get worked worked up...they should just deliver the offers to the seller in my opinion.. :D

    0Reply
  • John C
    Real Estate Investor · SouthCentral, IA · Member since 2010 · 97 posts · 45 votes
    15y

    Lowballing is like dating on the internet. Send out 50 offers, 25 will reply back, 10 you will meet and 2 you will seal the deal. Just keep it up!!

    2Reply
  • Stan Jackson
    Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
    15y

    If I'm the buyers' agent, I put in the offer because it's your money, not mine!

    If I'm the listing agent, I put in the offer, advise my buyer (as I should) and let the seller make the decision because it's their money!

    In both cases, if the transaction happens, I get paid. My success is not predicated on one freaking deal.

    Joel, one interesting thing about property #1.
    You said you would hold for the commercial appreciation, even the agent said the land is worth more than the $5k, could the seller be aware of this opportunity? Which means they could just hold until the highway comes through or maybe you could speculate and offer a little more? Just a thought.

    Stan

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  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Hi Stan,

    If I had a couple hundred K right now then I might go up to say 20k on it.

    The seller is a bank but it's a (residential mortgage back security).Even though it is residential the land use plan will have it for commercial years down the road. The house could be rented on the main highway cheap for about 500 to 600 a month.

    It's a block house in okay shape.Being that it would go commercial one day and be torn down I wouldn't hardly put a dime in it just keep it functional for the tenant.

    It's 1 acre of level land on a corner of a highway.

    My issue is I don't want to sink a big portion of my capital into this property paying cash.Then I will be asset rich and cash poor.If I can pick it up cheap enough 5 to 10k then it make sense.

    If I have to spend 20k to 30k I would much rather save that for flips to grow my money to possibly 120k to 200k.Then I could allocate a portion of my funds for long term land banks while still having capital for my flips.

    It's a promising property but only for the right price.These security owners (banks) never know what they have.They use a bpo based on current land use and the house.

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  • David Foy
    SFR Investor · West Jordan, UT · Member since 2011 · 8 posts · 3 votes
    15y

    My wife and I have put out several offers on a variety fo flavors - REO, HUD, Short Sale.

    No luck in getting one accepted yet, but something will pop soon.

    I have a question for those that use a higher EM amount. Can you describe the impact that you think/hope it has with a Seller?

    With any of the due diligence issues in our state (Utah) the buyer has a ton of outs on the contract. In the most literal definition, the EM amount really has no technical value if the buyer jumps out of the deal after the home inspection.

    I realize there is more to it, I'd just like to hear some opinions on making offers with high Earnest Money amounts.

    Thanks,
    David

    0Reply
  • Shelly Swanzy
    Homeowner · Princeton, TX · Member since 2011 · 30 posts · 11 votes
    15y

    Hi David,

    Personally I don't know anything about HUD or short sales.

    However, we have purchased 2 REO's in the past that were listed on the MLS. On both (and they were the only two that we put in offers on) we put down earnest money of the amount we were offering.

    We chose to do this for 2 reasons:

    1) if you were selling X for $3000 and buyer shows up wanting X for $2250 cash in hand and you hadn't had anyone interested in X until now and all you had to do was say "yes" and the money was in your hands right now

    and

    2) it shows the bank that we are really interested and since they already have the money the only thing they need to do is say yes and set up the closing

    0Reply
  • John C
    Real Estate Investor · SouthCentral, IA · Member since 2010 · 97 posts · 45 votes
    15y

    Shelly, while that seems to work great for you I would rarely ever put more that $1k earnest money down and NEVER the full amount. Even if one has alot of cash to spare. What if there are title issues and it streches out to over 12 months like I have had multiple properties do. They arent paying you intrest on that money and to get any of it back means a forefiture of contract. There are many reasons why I only put the minimum earnest money down. But if that works for you, thats great.

    1Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by David Foy:

    I have a question for those that use a higher EM amount. Can you describe the impact that you think/hope it has with a Seller?

    With any of the due diligence issues in our state (Utah) the buyer has a ton of outs on the contract. In the most literal definition, the EM amount really has no technical value if the buyer jumps out of the deal after the home inspection.

    A couple things:

    - First, many investors will couple a higher EM deposit with no contingencies, meaning that if the buyer backs out for any reason, the bank keeps the deposit. This is risk free for the bank, other than having to relist the property if the deal falls through -- but the bank has a large EM deposit to sooth their disappointment... :)

    - Second, the bank is used to buyers backing out during inspection periods...the purpose of the EM is to ensure that buyers don't back out after the inspections, mostly due to financing issues. A big EM deposit is a security blanket for them, plus those who put down large EM deposits are often cash buyers without financing contingencies.

    - Third, larger EM deposits often mean that the buyer is more experienced and probably has more cash, making him more likely to be a qualified buyer and less likely to back out of the deal for any reason.

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  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    John you could add a contingency that covers SPECIFICALLY clear title and your right to cancel and receive the full earnest money back in that instance.The provision can also have a specific time limit for the seller to clear title or you back out.

    I set up contracts on short sales in a similar manner.I don't give earnest money until "upon acceptance" in writing from the bank.I also put a time limit on it.If the bank can get the short sale through in time great.If they can't I am not obligated to go through with the deal but I still can and I don't have the earnest money tied up in a contract forever.

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  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    J Scott on your flips what do you do with the existing appliances???

    The one property I am looking at flipping the appliances are mid-range and maybe 8 years old and okay for a rental but not nice or new enough for a flip.

    So do you give those to charity and take a tax write off?? Sell them on Ebay or Craigslist??Have an agreement with a used appliance seller/repair place to pick up for free and give you some cash as well for them??

    Thanks

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    15y

    For used appliances, all of the things you gave are good options. I'd try to get cash for them to fund the flip with, so CraigsList comes first. If no takers when I need them out, then either try to get used appliance dealer to buy (they like freebies in many cases) or donate to Goodwill Industries. If not really in good shape, then they go into the dumpster, or I find a scrap metal hauler to take them (again, only if they take it for free).

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