Cool MLS Hack

24 Replies

Recently I started using this tactic when making offers directly to the MLS and it works. It has some drawbacks that I will outline later. I can't say I'm the originator of this but here's the deal.

  • I have the broker on my Power team pull up a list using the MLS in the zip code of my choosing. There is some list criteria that I use as well. (repairs needed, fixer upper, etc)
  • I then email that list to my VA.
  • She goes though the list and calculates my offer by simply reducing the list price by 40%.
  • She then emails the listing agent the offer using my "letter of intent" at a 40% discount.
  • The agents email the counters back to us and then the fun starts.

Now is the success rate high with this tactic...heck no. But here's what we have accomplished with about 100 offers.

1 flip that'll net around $30,000

3 new real estate agents that now know who we are, what we do and are actively looking for deals to bring us.

1 agent that's willing to reduce his commission on the back end down to 3% on the deals that we buy from him and re-list with him after the rehab.

Couple of new cash buyers for wholesaling

A very cheap way of generating leads

Note: Yes, I've managed to piss off a bunch of cranky agents, been called the devil, a vampire, some other naughty words and probably made life long enemies. But all in all, pretty good success. 

Good luck. I worry that it's not a sustainable model. It might be a good way to catch some low hanging fruit, but it really will stigmatize your business in those markets that you run your campaign. So much of real estate requires cooperation, and it sounds like you will alienate 96 out of 100 agents, as you only have 4 that would work with you again after your campaign. I guess you could go through a new market every month and it wouldn't really harm you, but it doesn't seem like the most effective way to find deals.

Keep us posted with your success, I hope the flip goes well.

1 agent that's willing to reduce his commission on the back end down to 3% on the deals that we buy from him and re-list with him after the rehab.

I'm a newbie.  So maybe I'm missing something here, or maybe I am just naive.  But this seems a little shady to me.  Isn't an agent's #1 priority supposed to be his/her clients and not swinging a deal to make money on a house twice?

I absolutely disagree, it's extremely sustainable. You're an agent so I will defer to you and how you'd personally react. You know yourself that you can't get emotionally wrapped up in these transactions. 

My "LOI" states that we are real estate investors and know the offer is low. Please email or call us back with any questions. We aren't trying to be insulting to your client or waste your time. We offer a very valuable service to sellers that want to close fast for cash or simply want to just get the house sold for any other reason.

Some will get upset, but surely you'd agree that as an agent, you can't control the monetary size of the offers submitted whether it's an investor or anyone else looking for a deal. 

So would you get equally upset towards a first time home buyer looking for a deal? 

I never said it's the most effective way to find deals, as there is no one "best way", I simply wanted to help any other investor that needed a cheap way to generate leads.  

Nothing shady here Mike. The broker represents his seller ethically and professionally as he should. My deal is simply a commission reduction on the "re-selling" of the flips. It has nothing to do with the seller. 

Originally posted by @Brad Jordan :

Nothing shady here Mike. The broker represents his seller ethically and professionally as he should. My deal is simply a commission reduction on the "re-selling" of the flips. It has nothing to do with the seller. 

 At 3% how much is would the agent split with the buyers agent?

 @Brad Jordan

Does the seller know their agent has reduced their commission in anticipation of a deal with you? Does the seller need to know? It seems like they should in the interest of full disclosure.

Again, I'm a newbie and mean no offense.  My knee-jerk reaction is to think this unethical, but that's not a fair judgement without fully understanding the situation.

And I apologize if I am steering this away from the original intent of your post.  I guess the little philosopher in me is trying to understand the ethical implications (if any).

@Brad Jordan

I'm curious if you're keeping track of how long this is taking to do vs. your reward? 

I'd have to check the laws in my area, but I don't think I would be required as an agent to present a LOI versus a written offer. I presume you're doing a LOI because it takes significantly less time?

Mark Gallagher, Real Estate Agent in New Jersey (#1221341) and Pennsylvania (#RS314542)
215-490-4851

Mike,

It has nothing to do with the seller, nothing at all. Commissions are reduced all the time, so I can't see how ethics come into play at all. This is simply the terms of "future" real estate transactions between me and the listing broker if I choose to use him. 

Mark,

I don't think the agents have to present the LOI. Some do and some don't. But in this particular situation, I'm just not comfortable having my VA fill out a "formal" offer.

As far as time, it doesn't take the VA but a few hours to go through the entire list.

Jesse,

Not sure I understand the question?

Originally posted by @Brad Jordan :

Mike,

It has nothing to do with the seller, nothing at all. Commissions are reduced all the time, so I can't see how ethics come into play at all. This is simply the terms of "future" real estate transactions between me and the listing broker if I choose to use him. 

 Does this broker disclose his agreement with you to his clients? That's where I could see the issue coming up, particularly if a seller finds out about this later and takes it to the RE commissions. This is of course the broker's problem, not yours. He's the one not fully disclosing (assuming he's not) his arrangement with you. 

As for not seeing how the ethics plays into this.....assume you have a nice old lady who hires this broker as her agent. This broker, sees the opportunity to "triple-dip" on one house (buy/sell side on this deal, sell side when you flip). He doesn't disclose and convinces nice old lady to sell 30 to 40% under market value. 

 I've thought about this before, but haven't done it. If you're up front like you are, they only spend 10 seconds on it, and they probably spend more time picking their nose in a day..

I think it was Grant Cordone that said on a BP Podcast,

"If you can get about half the entire country to hate you, you could be president of these United States!"

So you're on your way!

Btw, back when I used to use agents to buy property, I had one who refused to put in an offer significantly lower than list price - a loft condo that had all legal issues, insufficient owner-occupants, HOA disaster, structural issues, etc. He refused. I got rid of him. The loft sold for just below what I asked him to offer a bit later.. Never know until you try!

J. Martin,

thanks

The broker commission reduction deal is getting a little clouded here and I'm not sure why. This has nothing to do with the seller.

Rusty, 

I still can't see why everyone is getting hung up on the broker commission reduction. This particular deal was a bank owned property. 

But in any case, I have never known an agent to reduce the sellers asking price, therefore reducing their commission on purpose hinged upon a deal that may or may not happen in the future.

Originally posted by @Brad Jordan :

The broker commission reduction deal is getting a little clouded here and I'm not sure why. This has nothing to do with the seller.

 It doesn't have anything to do with you or what you are doing. I don't agree that it has "nothing" to do with the seller. The seller has hired the broker as a trusted agent, who is now making side deals with you about the future of the seller's property. The broker should be disclosing to his client this agreement he has made with you...that's all anyone is saying. I think its very probable that the broker could get into some trouble with his state commission if he doesn't disclose that to his client that he this agreement with you. If all is disclosed to all parties I doubt there would be a problem. 

Originally posted by @Brad Jordan :

Rusty, 

I still can't see why everyone is getting hung up on the broker commission reduction. This particular deal was a bank owned property. 

But in any case, I have never known an agent to reduce the sellers asking price, therefore reducing their commission on purpose hinged upon a deal that may or may not happen in the future.

 Brad, is a case of a bank-owned, I agree it doesn't much matter, as the broker is unlikely to have much of any influence on their sales price. I was thinking more along the line of a private seller. 

Anyway, I found it an interesting strategy. I don't have any issue with what you are doing, good luck. 

Originally posted by @Jesse T. :
Originally posted by @Brad Jordan:

Nothing shady here Mike. The broker represents his seller ethically and professionally as he should. My deal is simply a commission reduction on the "re-selling" of the flips. It has nothing to do with the seller. 

 At 3% how much is would the agent split with the buyers agent?

I'm not Jesse, but maybe I can offer a view on this. The customary commission is 6% split equally among the seller's agent and the buyer's agent; so the seller's agent is getting 3%. Now, in your agreement to re-list, is your agent saying he will take 3%, or is he saying he will split the 3% with the buyer's agent?  It makes a difference, because if it is the former, well that is just a restatement of the customary 6%; if it is the latter, then agents with buyers might avoid going to your listings, because the pay day isn't up to their expectations. 

Originally posted by @Brad Jordan :

Mike,

It has nothing to do with the seller, nothing at all. Commissions are reduced all the time, so I can't see how ethics come into play at all. This is simply the terms of "future" real estate transactions between me and the listing broker if I choose to use him. 

 OK.  I misunderstood who was getting the discount.  You are getting the discount on the resell?  I thought the agent was giving it to the seller to help seal the deal.  

Still, as the seller, I'd want to know that my agent and the buyer had a "gentleman's agreement" in place.  Because unless I just want out of the house no questions asked, I'd expect my agent to suggest that spending "X" amount of dollars to fix a few things will raise my value "X" amount.

Originally posted by @Brad Jordan :

Rusty, 

I still can't see why everyone is getting hung up on the broker commission reduction. This particular deal was a bank owned property. 

But in any case, I have never known an agent to reduce the sellers asking price, therefore reducing their commission on purpose hinged upon a deal that may or may not happen in the future.

 OK, I was watching baseball while typing my last reply and missed your explanation.  I thought the worst, that this was some deal you had going with an agent to buy private owner's properties.

Taking a smaller commission as an agent if the buyer will list with you is fairly common, at least in my area. I know agents that offer to list for less because many buyer's leads come from buyers calling on an agent's sign or ad. I think it makes sense, an agent should always be looking for more listings.

I also don't have a problem with using the listing agent to write the offer after they get the LOI, I know many investors that do that for a variety of reasons.

Ideally you'll want agents in your target markets that are looking out for you, and watching for deals. If you have an agent that can bring good deals to you, I'd give him a raise, not ask for him to share the commission! If he is the one who offers the discount, then he's giving you a raise as his client. To me, it's all in offering, not asking. If you were to take that to Grant Cardone, he would absolutely agree, I guarantee it.

Hi Brad,

As a real estate broker for 16 years I love what you're doing. Great idea. Rather than a full offer contract written up I would do a "letter of intent" to offer to buy at a below market price (what ever price that might be). It's quick and simple. If there is interest you'll know without having to invest a lot of time. 

Who cares what the listing agents think. If you do one deal a year and make an extra $1,000,000 or two over time you can look back and thumb your nose at them. :)

You might want to think about getting your real estate license. That'll nip in the bud the commission issue other people on this board have. I love the fact I can make several thousand $$ buying a property for myself.

Don

Don,

Yea, I have a pretty good letter of intent and I actually know of another investor that shoots a quick video to serve as the letter of intent along with an email. Kinda makes the broker feel a little better about who you are and definitely more personal. 

Good Stuff Brad! 

I have to scratch my head a little when folks don't quite seem to grasp what you're talking about here, and some simply overcomplicate things. Too many of us tend to over analyze, worry, procrastinate, "what-if" and so on. A mentor of mine recently said, "I don't make any decisions based in fear, I make them based on ROI". I love that. Roughly 90% of all real estate transactions occur through the MLS and every serious investor should be taking advantage of the resource, and no you don't need to be a realtor or even have MLS access. Obviously, it's important to have an exit strategy that makes sense when you're making offers, a means to close transactions with personal or borrowed funds, and to have an "out clause" to protect yourself, no different than if buying a house to live in. But he who makes the most offers wins. Grand Cardone points out in his awesome book 10X, that when you're reaching for massive success you'll naturally create new or different problems for yourself - and you want that. I literally have altered my own perspective and recognize that fear is like a sign post screaming "here is where the opportunity is, come on!", and new, different and bigger problems means I've gotten off my butt, and am doing something right.

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