What's the worst advice you've ever received?

What's the worst advice you've ever received?

Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes

So in taking a break from the seriousness of real estate, what's the worst advice you've ever received (or seen if it wasn't directly to you) and where did you get it? No need to name names unless you are referring to someone who is in the public eye (they wrote a book or something). I expect some of you will think some of the advice you read in this thread isn't the worst (or even bad). Everyone has their own comfort level. I slapped this in the Starting Out section because I feel the people new to real estate would receive the most benefit from a thread like this.

To get you started, here are a few I've seen:
You don't need an entity for your investments, umbrella insurance is all you need - Right here on Bigger Pockets
You don't need umbrella insurance, all you need is an entity (LLC) - Again, here on bigger pockets
Negative cash flow is ok as long as (I'll stop here because I've seen about 10 "as long as" statements :) - Almost everywhere.
Borrow money from a credit card or 401k to fund your real estate - Lots of places (Quick note: In the right circumstances, I don't think this is necessarily bad advice but for the general public, I believe it is).

I have lots more but that should get you started. I'll chime in with more as the thread drives on.

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Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
12y

"Money doesn't buy happiness."

Sure, then let me have all of your money.

See this reply in the discussion

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  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y
    Originally posted by @Sharad M.:
    Originally posted by @K. Marie Poe:

    Actually I make tons of really lowball offers. One of my gifts is getting really low offers accepted. My point is that using embarrassment or shame as an indicator of an offer well made is stupid. I can do nothing about how my offer is perceived, so it's a waste of time to take that into consideration. I can be sympathetic and understanding to the seller's disappointment. But building shame or embarrassment into the formula (or trying to get everyone to like me) just smacks of original sin theory. Not my thing.

    I'm guessing that 95% of BP members have never been a motivated seller. By trying not to offend a seller you may be cutting them off from a last chance at a solution. Listen to sellers, think as as clearly as you can and worry way less about rules and manners.

    I think that's the whole point that you should make an offer that you feel comfortable with, no matter how low that number is. Whether or not you feel embarrassed or ashamed about that number shouldn't have anything to do with how much you feel comfortable offering.

    I agree that you shouldn't make an offer to make sure you feel embarrassed about it, but make an offer that you feel comfortable with and let the seller perceive it how he or she might.

    If a house is listed for $1 mil and it really should sell for $10k for it to work for me. Some people might just pass on it thinking that they will offend the seller. I will make an offer of $7k so that I leave some room to negotiate and come up to $10k.

    I have gotten to the point in my career where the houses are strictly numbers and I offer what works me. Some houses I have picked up at 30% of List Price, some over List Price and some free as part of a package. It just comes down to how comfortable you are with making an offer.

    This reminds me of an offer I made last year. The sellers had gotten my marketing and called me. The property was listed at the time at $60K and I told them I would not be interested at that price. They had received no offers in 30 days. My market is weird in that most buyers and buyer's agents don't make lowball offers on the MLS. Not sure why that is. I told the sellers I was not interested and that they might want to talk to their agent about revising the price so they would get some offers. They begged me to call their agent and make an offer, any offer. I called the agent 3 times and she didn't call me back. I let the sellers know about that. Obviously they called the agent and then she feels compelled to call me. I offer $30K and she just huffs and puffs and is so rude and says it's too low and she won't present it. More calls to the sellers and then the agent is compelled to call me again. Her sellers wanted the offer for $30K and accepted it. If I used the list price or listened to the agent, there would be no deal.

  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y

    @Account Closed I agree with this. I buy mostly REOs, so the agents don't care what my offer is, they just want a cash offer and get the deal closed.

    I don't really pay attention to list price that much. There are deals that are sometimes listed too high, sometimes just right and something too low. You gotta know your market really well and be prepared to offer the number that works for you.

    I closed on a deal today where I paid 20% over asking and lost another one where I offered 20% over asking.

  • Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    12y

    Isn't the agent legally obligated to present every offer to the seller?

  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Sylvia B.:
    Isn't the agent legally obligated to present every offer to the seller?

    The agent is but the seller might give instructions to the agent to not accept any offers with the wording where the buyer will pay a little over the next best offer.

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y
    Originally posted by @Sylvia B.:
    Isn't the agent legally obligated to present every offer to the seller?

    Of course they are. But put yourself in the agent's shoes. If you have an impatient or anxious client and you think you know the market better than they do, it's not in your best interest to present the offer. Hence, no returning calls to the buyer and slow to write the offer.

  • Contractor · Valparaiso , IN · Member since 2013 · 604 posts · 327 votes
    12y

    We have to pass the bill to see whats in it...............

  • Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Account Closed:
    Originally posted by @Sylvia B.:
    Isn't the agent legally obligated to present every offer to the seller?

    Of course they are. But put yourself in the agent's shoes. If you have an impatient or anxious client and you think you know the market better than they do, it's not in your best interest to present the offer. Hence, no returning calls to the buyer and slow to write the offer.

    No offense to RE agents here, but I have found that most of them should be treated like used car salesmen and venomous snakes. Don't believe half of what the say, and never turn your back on them.

  • Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Sharad M.:
    Originally posted by @Sylvia B.:
    Isn't the agent legally obligated to present every offer to the seller?

    The agent is but the seller might give instructions to the agent to not accept any offers with the wording where the buyer will pay a little over the next best offer.

    But in K. Marie Poe's case, the seller practically had to force the agent to do their job.

  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Sylvia B.:
    Originally posted by @Sharad M.:
    Originally posted by @Sylvia B.:
    Isn't the agent legally obligated to present every offer to the seller?

    The agent is but the seller might give instructions to the agent to not accept any offers with the wording where the buyer will pay a little over the next best offer.

    But in K. Marie Poe's case, the seller practically had to force the agent to do their job.

    Agreed, I wasn't referring to K. Marie Poe's deal in my reply. I was talking particularly about making an offer contingent on the next best offer.

    No two agents are alike. Just because they go through the same class doesn't mean they will have the same work ethics. 10% of the agents make 90% of the money and there's a reason for it.

  • Investor · Bellingham, WA · Member since 2013 · 210 posts · 138 votes
    12y

    "You're not college material..." said the ex, who never went to college, about me, who now has multiple degrees.

    "Don't worry about your student loan debt...you'll be making plenty of money to pay it off in just a couple years!" (my loans will be paid off when I'm SEVENTY TWO, if I make minimum payments only)

    "Your student loans won't count in your debt to income ratio"...

    If you're a young, college bound person reading this....student loans are TEH DEBIL! (Even when you make a lot of money...)

  • Real Estate Investor · Phoenix, AZ · Member since 2013 · 58 posts · 32 votes
    12y

    In early 2007 I was on the fence about closing on a new home. I was seeing many cracks in the market, and asked my broker for advice. "How much could the market fall?" was his response. Turns out that 60% is how much.

  • Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    "The 70% Rule"

  • Real Estate Investor · salem, OR · Member since 2013 · 105 posts · 32 votes
    12y
    Real estate values here in Santa Barbara county California will NEVER go down. Heard it a lot in 2006! Lucky for me I didn't listen and sold everything!!
  • Benton City, WA · Member since 2014 · 135 posts · 50 votes
    11y

    "get a business degree",  and "the bank will never loan on that" 

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