Skip to content

Posted over 5 years ago

Let Me Talk You Out Of It

How would you feel if someone talked you out of a real estate transaction? Would you feel annoyed or relieved? I sometimes find myself in a position to advise people not to buy and it's not easy to do, but I feel obligated in some cases. Seems a little self-destructive, right? Well not really. In my opinion I would rather talk someone out of something that, in my opinion isn't a sound investment. Of course I will still respect and support a client's decision to proceed...it's your money! As a Realtor and advocate, it's necessary to provide a objective opinion especially after being a part of the real estate industry for many years. I just wouldn't want anyone to make a hasty decision just because they are under time constraints, for example from a 1031 exchange, etc. Now by the same token, I'm not going to talk anyone out of a deal that looks solid, but if something seems too good to be true, it usually is for a reason or several of them. Go with your gut and/or let me talk you out of it. Because if it's that bad of a prospect, I will.

Talkuout1

So aside from the obvious that will make anyone say "Pass", I have been in properties that have had hidden or obscure issues. If I had not advised walking away, someone might have lost a lot of money or at the very least would have been very disappointed with their purchase. Granted, I have walked in with Investors where properties smell like a lovely combination of urine and mold but that can be remediated. I have seen support beams that have been chewed through, in splinters, by an obvious termite infestation. Also something that can be fixed, but at what cost? When a property is in such disrepair, with walls crumbling, foundations bowing, the house itself sloping and teetering off of a hill, it's time to rethink the validity of putting in an offer and going through the cost of repairs. Check your ARV as there are other properties out there. There are many calculations that go into determining a viable option.

Arv

"So sit right back and you'll hear a tale".....or two. Following are some real world events where I talked someone out of buying a property here in Pittsburgh PA and/or relied on a professional to confirm my suspicions.

We toured a single family home that was beautiful on the surface. It even had an open concept into the kitchen. Buyer loved it, however when we walked the perimeter, I noticed that the sunroom was sitting directly on the soil and that raised a red flag. Still my Buyer was so infatuated they wanted to proceed against my advice to pass and make their offer. Later, an Inspector confirmed my doubts and we backed out. The cost of repairs over $20k far outweighed the Investor's desires. We moved on and finally found them a better property.

Bowed Basement Walls

One of my Investors wanted to purchase a triplex in the south hills of Pittsburgh, but when we toured the basement I saw that the front wall appeared to be bowed. Buyer was enticed by the cashflow and rightfully so. However, I strongly suggested that a structural engineer review the property and after receiving the cost of repairs we walked and he bought something else. This goes to show you that although important, cash flow isn't everything. In general, some bowed walls can be fixed but every situation is different. Sometimes it's too far gone. Seeking the advice of a Structural Engineer can prove very helpful.

Meth Lab 2 B 25281 2529

And probably my most "exciting" tour was a property that I went to check out with an eager first time Investor. It was located near a major medical center here in Pittsburgh. The listing indicated there had been a small fire. No problem, right? We walked into unit #2 of this duplex and I immediately directed my client out to the front porch and very clearly suggested "we are not buying this!" The fire had been centered only in the bathroom...it was solid black. He wanted to keep looking and I warned "We can't go back in there". What did I see that warranted such a strong reaction? First off a very strange chemical smell, then I saw bullet shells and what appeared to be bullet holes in the walls. I had a bad feeling and it turned out to be right. We found out it had been a meth lab and the fire was caused by this. Not a good option for my Investor though it was in a fairly decent neighborhood.

Location2

I 'm always discussing neighborhoods with investors--good areas to invest in and those that are not. I'm here to point out properties that may be of interest to them, that are not in war zones, so they can make a determination on the validity of actually touring them with me. I stay away from certain areas. Not everyone does and that's ok. I'm very much interested in and firmly believe in that old axiom...."Location, Location, Location". In Pittsburgh, some investors are looking at the lower price range in less than desirable neighborhoods. Yes, the opportunity to make money is great but at what cost? My points to them are not just cash flow, but quality of tenants who will take care of their properties for a better return on that investment. Again, I'm not negatively judging those that want off market or perhaps in "rougher" neighborhoods. There's a market for all types of properties that appeal to all types of investors. And that's what makes the world of REI so interesting.

Behind 2 Bthe 2 Bscenes 2 B7

Perhaps with some of these scenarios, a few of you may feel that I should not have talked my investors out of some of these. Maybe you feel they could have been overhauled in a way that would turn a profit. Possibly yes, but in these situations highly unlikely as a great deal of thought and resources were used to reach the decision to walk away and that's why I always advise to take the time to evaluate a property, even enlisting outside resources to assist.

Choose a Realtor who is a consultant, not just a salesperson that's only interested in closing the deal. Look behind the scenes! Your Realtor should offer advice based on years of experience being in properties. I will never talk you out of your dreams and if you are adamant about putting in an offer, I will put in the offer, but if it sets off multiple alarms, Let Me Talk You Out of it First!!!

[Ever had an interesting experience to share? Please add your comment below. Thanks!]



Comments