THIS is why you should sell through a good real estate agent!

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

9y

that's a hot market.. usually agents who use this scheme or strategy start the list price FAR below true market value.

so when you say 60k over list.. how much over actual true market value..

IE would it have comped at 300k and you listed it at 260k to get the bidding war started.. that's what I see happening.

just curious.. all in all everyone is happy though right ?

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4 Reply

OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Jay Hinrichs My comps showed true market value at $400K, so we listed at $25,000 below true value.

We came in $34,600 over the true value, with a waiver of the home inspection contingency.

Podcast Guest on Show #222

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

9y

OK thought that might be the case ... one always wonders is the true market value 434k or 400k.

one of my clients just bought a home in SF and bid 220k over ask.. really puts the apprasisers in a tough spot sometimes.

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5 Reply

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

9y

Originally posted by @Jay Hinrichs:

OK thought that might be the case ... one always wonders is the true market value 434k or 400k.

one of my clients just bought a home in SF and bid 220k over ask.. really puts the apprasisers in a tough spot sometimes.

Something I've seen done is to look at the listing agent's sales for the last 12 months, compare list price to closed sale price, and spot the pattern. Some agents consistently list $100k under true value, some 15% under, some $75k under, etc. Spot the pattern, and hand that data to the appraiser. It's not a standard part of appraisal analysis, but at the same time appraisers are human.

Chris Isaacson

Real Estate Agent · Rocklin, CA · Member since 2016 · 79 posts · 50 votes

9y

Not to be petty but the Marines didn't storm the beaches at Normandy it was the US Army and allied forces.

13 Reply

Brian Pulaski

Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes

9y

Are you or your client concerned about it appraising? I assume a good realtor will be there at the appraisal with 3-5 comps confirming the sale price?

OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Jay Hinrichs You could make the argument that the fact that a buyer paid $434,600 means that this was the true market value. The comps really didn't support it though - they really were at $400K. In fact mot of the offers were slightly below that.

@Brian Pulaski The buyer came in with a massive down payment, so we were good. It was a concern though. And yes, I came up with some - shall we say, "optimistic" appraisals to support the price!

3 Reply

OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Chris Isaacson No pettiness received - correction noted. Of course, my hat is off to all of them. All better men than me.

Podcast Guest on Show #222

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

9y

@Chris Isaacson yes lots of Canadians and Aussies and GB.... when you stand on those pill box's and look down on what those boys went through it really makes you feel proud of our boys...

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OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Chris Mason That could sorta work, but it is very dependent on the micro-market.

For example, in my home town of Plymouth, MA, 2 and 3 BR SFRs are selling with an average of 80 DOM.

In Quincy Center, where this delightful bidding war took place, 3 BR homes are under agreement in an average of 6 days.

Shanell Lightfoot

Real Estate Agent · Kennesaw, GA · Member since 2015 · 16 posts · 4 votes

9y

@Charlie MacPherson When you say you "retained an attorney as my broker of record," what does that mean?

OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Shanell Lightfoot I own the company. When I formed it, I didn't have enough time in the business to get my broker's license, so I worked out a deal with a good real estate attorney to serve as my broker of record.

I could get my broker's license now, and I'm probably going to do so. However, having an attorney on my staff has been a tremendous help. So much so that I plan to continue paying him the broker's split and keeping him on board.

For example, we also will do business brokering. I just closed on a gas station where the owner decided not to pay the commission, in spite of the fact that he had signed a contract stating that he would.

Having our own attorney means that I can haul his sorry butt to District Court without having to pay for an attorney.

Likewise on the property we just closed on in Quincy. It was a 1031 exchange and our attorney handled it flawlessly, even when a few wrinkles (tenant not leaving when the lease was up, cash for keys, a cleanup holdback at closing that could have triggered capital gains on the holdback amount).

It all eventually worked out for our client's benefit and a big part of that was having a staff attorney.

3 Reply

Dave FosterBusiness Member

Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes

9y

Don't feel bad @Charlie MacPherson, It was John Belushi who's inspiring speech about the "Germans bombing Pearl Harbor" provided the climax for "Animal House" (Gimme a break I was young and stupid - now I'm just stupid).

I'm curious about your how your in-house legal works though if he is actually an on staff (broker of record) attorney and acting as QI for exchanges for his clients. That seems to contradict the specific unrelated 3rd party regs of sec 1031. Have you found a work around?

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OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Dave Foster He has an independent law practice, but also serves as our broker of record.

He's been in the business for 25 years, so I'm sure he's complying with the law. I leave the specifics to him.

I always tell my clients that I'm happy to give them bad legal advice. I also offer in bad medical advice.

Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

9y

Sounds like you did offer true value to your client @Charlie MacPherson. Lots of moving parts in this deal. Wish I had a rockstar agent that knows more than sales in my market.

I was afraid this was another realtor rah-rah, 'under contract in one day' thread. Those just tell me the realtor was probably unnecessary for a seller that can price their home right.

I just went under contract on my FSBO after 10 days at full asking. Most of that time was letting the grass heal from a 4-yr tenant beating. I won't 'net' more than I would have had I had an agent, but I was able to let the first-time buyer start out with about $15k in instant equity. That makes me smile. He's a nice kid.

Congrats on a very successful sale that involved a tenant holdover and a 1031. Bravo!

Ed B.

Real Estate Investor · Sacramento, CA · Member since 2010 · 292 posts · 103 votes

9y

Let this story be a reminder that an agent's job is not to sell for "true value" but for more if he can conjure up a strategy and timing to entice a buyer into offering more. It's a total scam, imo, and those who deny it are being dishonest. Consider the would-be buyers who got euchered out of being able to buy at fair value because some dumb a** buyer was willing to pay about $35k over true value. Congratulations on the overly high selling price, you managed to screw the buying public on this one, while greatly benefitting the seller, which is exactly what you should have done. Seller's interests come first. Just don't complain when you encounter the same nasty strategy when you're a buyer.

OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

@Ed B. Specifically, what is it that you see as a "scam"? And how did I "screw" the buyer?

Those are not words to be thrown around lightly, especially when they affect someone's reputation.

Robert Hudson

Crossville, TN · Member since 2017 · 121 posts · 168 votes

9y

@Ed B.i wouldn't call this a scam, more like an auction. Unless the property was misrepresented, or the buyers in some way are mentally deficient, I see no problem there. I personally don't care for the used car sales approach where the potential buyer is shown a price that they will never be able to buy for. Bidding wars like this where the property is sold over market value is just another sign of an impending crash.

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

9y

Originally posted by @Ed B.:

Let this story be a reminder that an agent's job is not to sell for "true value" but for more if he can conjure up a strategy and timing to entice a buyer into offering more. It's a total scam, imo, and those who deny it are being dishonest. Consider the would-be buyers who got euchered out of being able to buy at fair value because some dumb a** buyer was willing to pay about $35k over true value. Congratulations on the overly high selling price, you managed to screw the buying public on this one, while greatly benefitting the seller, which is exactly what you should have done. Seller's interests come first. Just don't complain when you encounter the same nasty strategy when you're a buyer.

Completely uncalled for

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

9y

The relators job is to get the best net to the client and a smooth timely transaction unless the client has other goals (iMho). Since there is no inspection contingency the net to seller I anticipate is not falsely inflated which is the most impressive part. However to me over list price isn't impressive- it means it was listed too low.

Marian Smith

Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes

9y

I presume the buyers had an agent, would the agent be a party to the "scam?" The area sales data is available and moreover, value is in the eye of the beholder. Do people who over remodel after purchase scam themselves? Are scammed by their GM? They essentially owe over market value at the end. And who is to say what is over market...markets move.

OP

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

9y

Since @Ed B. has not seen fit to clarify what could be interpreted as his libelous description of me "screwing the buying public" and engaging in a "total scam", and I want to offer the following comments:

These are the facts:

In Massachusetts - and as far as I know, every other state - a client's real estate agent, whether buyer's or seller's agent, is required both by law and by ethics to represent the client's best interests. We are in a fiduciary relationship.

That means that the fate of the "would-be buyers who got euchered (cheated or swindled) out of being able to buy at fair value" is not the concern of the seller's agent. It is the concern of their agent.

This is the very nature of representation.

These are opinions:

1. I did a spectacular job for my client. I netted him $34,600 above the value supported by the comps. I would wager that if you were the seller, we would be exchanging high-fives, rather than terse comments.

2. Not that it's especially relevant, but the buyer had an agent, who is also the president of her brokerage as well as the broker of record for her company.

3. It took knowledge of the local market as well as timing and strategy to create the buyer's frenzy that I did. It took skill in negotiating to get the buyer to waive the home inspection contingency.

Those combined are what resulted in the seller obtaining 7 offers in 1 day and the fantastic successful offer.

4. It also took our attorney / broker of record a lot of legal gymnastics to navigate a tenant who wouldn't leave and a 1031 exchange to get our buyer out whole. As a previous commenter stated, that is delivering real value.

5. Using terms such as "scam", "screwing the buying public" and "euchered" - all of which point to unfair and unethical dealings are libelous. A smart person would apologize and retract, unless you have objective evidence (not opinion) to the contrary.

A smarter person would refrain from attacking the character of others, especially when it's without benefit of the facts.

3 Reply

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

9y

Originally posted by @Charlie MacPherson:

Since @Ed B. has not seen fit to clarify what could be interpreted as his libelous description of me "screwing the buying public" and engaging in a "total scam", and I want to offer the following comments:

These are the facts:

In Massachusetts - and as far as I know, every other state - a client's real estate agent, whether buyer's or seller's agent, is required both by law and by ethics to represent the client's best interests. We are in a fiduciary relationship.

That means that the fate of the "would-be buyers who got euchered (cheated or swindled) out of being able to buy at fair value" is not the concern of the seller's agent. It is the concern of their agent.

This is the very nature of representation.

These are opinions:

1. I did a spectacular job for my client. I netted him $34,600 above the value supported by the comps. I would wager that if you were the seller, we would be exchanging high-fives, rather than terse comments.

2. Not that it's especially relevant, but the buyer had an agent, who is also the president of her brokerage as well as the broker of record for her company.

3. It took knowledge of the local market as well as timing and strategy to create the buyer's frenzy that I did. It took skill in negotiating to get the buyer to waive the home inspection contingency.

Those combined are what resulted in the seller obtaining 7 offers in 1 day and the fantastic successful offer.

4. It also took our attorney / broker of record a lot of legal gymnastics to navigate a tenant who wouldn't leave and a 1031 exchange to get our buyer out whole. As a previous commenter stated, that is delivering real value.

5. Using terms such as "scam", "screwing the buying public" and "euchered" - all of which point to unfair and unethical dealings are libelous. A smart person would apologize and retract, unless you have objective evidence (not opinion) to the contrary.

A smarter person would refrain from attacking the character of others, especially when it's without benefit of the facts.

It is my understanding it is the same in NY, NC and FL

I think you acted with integrity and professionalism and would think the same as seller or buyer

Brian Vaughan

Real Estate Consultant · Texas Hill Country · Member since 2017 · 56 posts · 58 votes

9y

Originally posted by @Brian Pulaski:

Are you or your client concerned about it appraising? I assume a good realtor will be there at the appraisal with 3-5 comps confirming the sale price?

At least in my market, that is an extremely rare thing for a Realtor to do.