Concern About My RE Agent - Posted by Hank (MD)

Real Estate Investing
1

Posted by Frank Chin on June 02, 2004 at 06:46:47:

Tom:

As I mentioned, it depends on the market. In NYC right now, everything is selling at, or over asking.

Legally, there’s nothing wrong DEMANDING an agent to submit 20 offers tonight at 10% below market to 20 listings, and say “you’re violating the law if you don’t”. Or an even better one “you have something against minorities”?? But, being a businessman, I believe in working with people, rather than cite the law and constitution every time I turn around.

I bought RE below market in the early 80’s, but I worked with an agent, and he’s told that I’m looking for something below market, and there’s something in it for him if he can locate such a property and make an offer for me. Paying someone is better than saying “do you want to jeopardize your license”??

He knew what I was looking for and found them for me.

Indeed, taking the latter approach, a good agent may suggest listings that’s been around a while, and say “I might talk to the listing agent about a reasonable offer”. Then, its HIS idea, not yours.

A little “child psychology” here???

Frank Chin

2

Concern About My RE Agent - Posted by Hank (MD)

Posted by Hank (MD) on June 01, 2004 at 01:10:11:

I found a RE agent who I think is a really knowledgeable and experienced. I’ve gone out twice with him looking at properties in my farm area, and both times I learned a lot from him about what to look for. Now I’m ready to make offers on three of them.

The problem is that on all three he told me that he didn’t think they would accept my offer. My offers are all about 10% below FMV (based on my goal of at least $200 a month cashflow).

I had originally told him that I wanted to make “low” offers because I was buying them to hold as rentals. He said no problem.

Finally, he said that he would mention my offer to the listing agents over the phone and if they didn’t say no, he would write up the offers.

I don’t blame him for not wanting to waste too much time on me, but I’m the one who has to live with the deals I make. Also, I didn’t think 10% below FMV was such a low offer.

I already have a preapproval letter to get a loan, so if my offer gets accepted, there shouldn’t be any reason not to close the deal.

My question is do most of you who make “low” offers use RE agents? And is it normal for agents to discourage such offers?

Thanks in advance for your help.

3

Thanks to everyone for the advice - Posted by Hank (MD)

Posted by Hank (MD) on June 01, 2004 at 22:55:35:

Based on what I read here I decided to raise my offers slightly to get closer to the asking prices. My agent is working with me, and we have a few possibilities, especially ones that will require repairs. I’m in Baltimore, BTW. Thanks again!

4

Re: Concern About My RE Agent - Posted by Dave T

Posted by Dave T on June 01, 2004 at 21:39:41:

If your area of MD is as hot as mine (Frederick), then you have a seller’s market with multiple offers on each listed property. Seller’s can afford to refuse less than full price offers because buyers often enter a bidding war. Eventually, in a multiple offer situation, the accepted offer is greater than the list price.

5

Re: Concern About My RE Agent - Posted by Tom Kirby ¶

Posted by Tom Kirby ¶ on June 01, 2004 at 11:50:37:

When I bought my home 4yrs ago the listing price was 240,000 I told my REA to offer 180,000, she did. I bought at 200,000.
Tom

6

Re: Concern About My RE Agent - Posted by Bob

Posted by Bob on June 01, 2004 at 08:51:27:

By law, agents are required to present every offer that a potential buyer wants to make. Even if the consideration is your old chevy. Of course, they can give you their opinion of whether or not they think it will be accepted.

7

Re: Concern About My RE Agent - Posted by TH

Posted by TH on June 01, 2004 at 06:42:20:

Get your agent to present the offer on PAPER! Verbal offers have their place, but when a seller can read the offer, contingencies, etc you are far more likely to succeed no matter the price. It is far to easy to say “NO” over the phone. If nothing else paper will open the door with a counter. If the agent thinks you may be wasting time, then it’s time to find another agent. Oh, by the way, I am an agent…

TH

8

Re: Concern About My RE Agent - Posted by Frank Chin

Posted by Frank Chin on June 01, 2004 at 04:41:31:

Hank:

I’ve sold RE thru RE brokers, and my wife was a RE agent for a while. I also bought bought undervalued properties thru RE brokers. I think there are several issues:

1- How hot is the market in the area?? If RE sells for close to market in a reasonable time, then the agents may find low ball offers of 10% below a problem.

2- When I use an agent they repeatedly told me their price is the FMV, and it’ll sell quickly at that price for me. What if she presented an offer 10% below one week after listing. How is she to explain the price she gave me is wrong. And if they try to tell me its a price for a quick sale, my anwer would be "I thought the price you gave me was for a quick sale?? If my house sat for 60 days, it might be different.

3- Then it all depends on the sellers. I find a majority of them going thru RE agents would rather sit on a property for months to get another 10%, rather than sell it quickly.

Some years back, I had a neighbor spend eight months selling a home for 89K, and had RE agents come every weekend months on end. Then, I got a new job, I was worried that I’m going to have the same problem. Went to see an agent, and she said the FMV was 85K. It was the identical house except for the color. Showed the house on a weekend, got an offer for 82K on Wendesday, counteroffered, and sold at 83.5K.

But the interesting thing my RE agent said was other sellers would let the house sit for months for another 2K.

BUT, I already bought the house I was moving to more than 15% below FMV, a multi than cost twice as much so I was more interested in wrapping things up than an extra 2K. When I told my RE agent that, she said “well that makes a big difference, because everyone wants to get the last dollar out of the house to put down on the next one.”

Currently, my mother in law, 80 years old and retired, wanted to sell her home and move to a co-op. We spoke to her on the phone, and she got quotes for different brokers on the FMV of her home. Knowing her, she’ll wait months to get her price. She live there 25 years, so what’s wrong with waiting another 8 months?? Her home is worth 600K, so wouldn’t sitting around eight months worth the wait for another 60K?? If I was her RE agent, I wouldn’t present an offer 10% below market unless the house sat for a while.

Frank Chin

9

Re: Concern About My RE Agent - Posted by Dave T

Posted by Dave T on June 01, 2004 at 21:36:32:

I think the law you cite only applies to WRITTEN offers.

10

Re: Concern About My RE Agent - Posted by Tom-FL

Posted by Tom-FL on June 01, 2004 at 23:05:15:

– If I was her RE agent, I wouldn’t present an offer 10% below market unless the house sat for a while. –

Why would you jeopardize your license in that manner?

11

Re: Concern About My RE Agent - Posted by Tom-FL

Posted by Tom-FL on June 01, 2004 at 23:07:28:

Technically, it’s not an offer unless it’s written.