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The Laurex Process:
Investment Selection
Dealing With Real Estate Agents
By Bill Bronchick
The real
estate agents have a valuable source of potential deals for the real
estate investor - the Multiple Listing Service. Unfortunately, real estate
agents have a monopoly on this information, so they may be a necessary
part of an investor’s game plan.
Dealing with real estate agents can be difficult as an investor. Agents prefer
home buyers with cash to put down, good credit and conventional buying
power. Their interest is getting a commission with as little hassle as
possible. Most agents have never done a creative real estate transaction
with an investor, so they are not often receptive to unusual offers.
Most agents equate a “nothing down” offer with a buyer who is not serious.
Offer a Reasonable Earnest Money. You cannot present an offer with a $50 earnest
money and expect an agent to take you seriously. You can expect to pay
at least $500 as earnest money to get their attention. If you are presenting
a solid cash offer, you should put up more money. If you are concerned
with losing your earnest money, consider using a promissory note.
Offer a Short Closing Date. Another way to get an agent to take you seriously
is to offer a fast closing. Nothing makes an agent salivate more than
the thought of a commission check in ten days. If the agent has another
offer presented to him, he will usually advise his client to take the
offer with a larger earnest money and faster close than an offer which
is higher in price.
Insist on Presenting Creative Offers in Person. If you present a creative offer
to an agent, it will not be represented to the owner in the same enthusiastic
fashion. As stated above, agents do not like creative offers - they like
conventional offers from solid buyers. If you want the owner to hear
all of the great benefits of your offer, insist on presenting the offer
in person.
Appeal to the Agent’s Greed Factor. Let’s face it . . . real estate agents are
in the game to make money, just like anyone else in any other business.
If you can offer the agent an incentive to make money out of the transaction,
you will get his cooperation. If you present an offer which does not
permit enough cash to come out of the deal to pay the agent, why would
he cooperate with you? If you present a lease/option offer on a listed
property, how will the agent receive a commission? You need to find a
way for the agent to get paid, even if you pay him out of your own pocket.
Do Your Own Comps. Sometimes you will get the opposite of an uncooperative agent
- an overzealous agent. Be suspicious of an agent who tells you what
a deal you are getting on a property. If it is such a good deal, why
didn’t he buy it? Don’t take his word as to the value. Ask for a printout
of comparable sales (not listed properties). Be aware that information
contained in the MLS computer was entered by the listing broker and may
be exaggerated. If a comparable sale shows the same square footage as
the house you are looking at, take a drive by and see if it is accurate.
Do your own assessment of value.
Fax Preliminary Offers First. Don’t waste your time filling out a contract offer
until you have preliminary approval. Most agents are not this formal
and will take any offer in writing to the seller. Simply summarize your
offer in writing and fax it to the listing agent. Once you have an oral
approval, then take the time to fill out a contract and an earnest money
check. NEVER put up earnest money until the offer is accepted!
Don't be Bullied by Uncooperative Agents. If you cannot finesse an agent, don’t
be afraid to stand up to him. Some agents are unethical and will refuse
to present your offer. Many times the agent will lie and tell you that
your offer was rejected when, in fact, it was never presented. If this
is the case, do not be afraid to go over his head to the listing broker.
If the listing broker is uncooperative, deal directly with the seller
(unless, of course, you are also an agent).
William Bronchick, CEO of Legalwiz Publications, is a Nationally-known
attorney, author, entrepreneur and speaker. Mr. Bronchick has been practicing
law
and real estate since 1990, having been involved in over 600 transactions.
He has appeared as a guest on numerous radio and television talk shows
including CNBC Power Lunch. He has been featured in Who's Who in American
Business, Money Magazine, the Los Angeles Times and the Denver Business
Journal. William Bronchick has served as President of the Colorado Association
of Real Estate Investors since 1996.
Article Provided by:
Bill Bronchick
Attorney, Author, Entrepreneur & Speaker |
