Baltimore, MD · Member since 2013 · 19 posts · 4 votes
Hey everyone,
We did a direct mail campaign to out of state owners, and we got a call from someone who has had their house listed with an agent for 5 months. It was originally listed for 275K and now is it at 225K. My first biggest concern is that since it is listed with a realtor that I loose the bargaining chip of being able to close with no fees. My second concern is though they said it is in good shape for an 1850's house (new floors/paint ect) that they may think that my being able to purchase "as is" is not that big of a bonus. Nonetheless, assuming they are motivated, how should approach this? They game me the contact info of the listing agent. Should I call him to set up an appt and explain to him that one of my partners will be purchasing the property and assure that the contract used is assignable?
As a follow up question, we arent able to just do the deal ourselves and go around the agent are we?
No - that's bad business. You'd be legally OK but they would be in violation of their listing agreement. And the agent would curse your name if given the chance. If it's listed, it's listed. We play by the rules and reward the hard work of RE agents (even if we found the house via OUR marketing efforts).
Of course, we prefer to deal with properties that are NOT listed, but just because it's listed that doesn't take it out of play. If the house has been on the market for a long time, the seller may be willing to take a "wholesale" price AND pay their commission. Depends on their motivation and equity position.
As a follow up question, we arent able to just do the deal ourselves and go around the agent are we?
No - that's bad business. You'd be legally OK but they would be in violation of their listing agreement. And the agent would curse your name if given the chance. If it's listed, it's listed. We play by the rules and reward the hard work of RE agents (even if we found the house via OUR marketing efforts).
Of course, we prefer to deal with properties that are NOT listed, but just because it's listed that doesn't take it out of play. If the house has been on the market for a long time, the seller may be willing to take a "wholesale" price AND pay their commission. Depends on their motivation and equity position.
P.S. Being listed and it not being a "distressed" property - this may not be a good "investor" deal - but call the agent anyway, tell her/him you're an investor and that the owner contacted you. Discuss the house a bit. You may or may not want to take the time to pursue a viewing/inspection...
HOWEVER... that listing agent will ask you about your criteria and they will start sending you good investor deals as they hit the MLS.
So, maybe this isn't a deal, but it could be an opportunity to meet an agent that might help you down the road! (I am not an agent but have 2 that send me possible deals and I love 'em!)
We had a similar situation with a seller whose house had been listed forever. We were honest with her and told her that honestly we couldn't and wouldn't do anything behind her agents back. We told her to have an honest conversation with her agent and tell him she was thinking about selling to an investor she had contacted. She did and her agent terminated the listing agreement and she was able to move forward with us.
Thanks for the fast response! How would we approach the agent in regards to assignment if we wanted to avoid having to a double closing?
When I purchased a house there was tons of paperwork to sign as opposed to a standard two page contract that is used with a FSBO. Just worried about assignment when the agent and all that paperwork is in play.
Google up a copy of the local Realtor contract. You will see if it addresses assignments, or not, then have the conversation with the agent. But frankly since it's obviously not worth the current listing price. getting it at a wholesale price doesn't sound likely. Most sellers are just not motivated enough for you to wholesale.
I would check with the local board of realtors for listing options in your area. I not sure how all states handle listing agreements, but in NJ there are a few types and only one guarantees the agent commission upon sale of the property, which is an exclusive-right-to-sell listing. Under an exclusive right to sale listing the agent gets commission on the sale no matter what, even if the owner sells the property without the agent being involved in finding the buyer.
There is also a listing agreement called an exclusive agency. Under an exclusive agency listing the agent only gets paid if they're involved in facilitating the meeting of minds. Under this listing, if the homeowner finds a buyer on their own without the agents help, then the agent does not get paid a commission.
If the deal is so close that a six per cent commission is the difference between good deal and bad deal, lower your offer. What difference does it make to you that the Realtor is making a few shekels. Probably before you get to closing, he will earn his fee. Just buy it . The Realtor is not part of the problem. He is part of and often the biggest part of the solution .