How I Negotiate Deals On The MLS In Seattle

[Ryland Taniguchi]

In my market here in Seattle, I have yet find one deal for flips or BRRRR on the MLS that fit my investing criteria. I have been through the 2000 and 2008 crashes so from experience I think flipping outside of Seattle or the Eastside is risky. There are other areas like Olympia, Lacey, Lakewood and Tacoma that could be good flips but I prefer to BRRRR these areas. But I haven't found a single one of these BRRRR deals that fit my criteria.

But I do find land development deals on the MLS. I have posted elsewhere how I structure my land development deals but here I will discuss how I negotiate them on the MLS.

By the way, I have been an active agent since 2005 and no I don't work with investors LOL (although the listing agent on my team is very good and I do refer stuff to her). But being a buyer's agent makes no sense to me. Why would I give all my good deals to someone else for just a 3% commission? 

In a hot market, your reputation as a buyer's agent matters. The listing agents want to make sure you close. Unfortunately, this puts you at odds with being an investor. Multiple low ball offers... Not so good for your reputation as a buyer's agent. In my best year, I sold 152 houses from my Keller William's real estate team and agents know who I am. So I don't put my name on the offers I make although legally we are required to disclose that the buyer's partner is a licensed real estate agent. I am no longer at Keller Williams and I make offers through a broker in another office. Offers are made by my partner but I negotiate deals behind the scenes. 

The MLS deals I go after are high density urban development in Seattle. Often these come in the form of houses that are in high demand.

So some tips on negotiating on the MLS.

1) Make sure your agent takes the "best friends for the day" approach to working with listing agents. It is amazing how much info you can get by being friendly. 

2) Know your numbers inside and out. I have so much experience doing urban townhouse development that I do 80% of the feasibility myself before an offer goes in. 

3) Have a plan. In a very competitive market, I have to be prepared to put 3% to 5% EM down. If there are multiple offers, I have zero chance to get a feasibility clause in for development. As a matter of fact, I usually have to waive title and inspection contingencies as well to have a fair fighting chance.

4) I usually get 3-weeks to close. So I now have my building feasibility systems down to 14-days. Not easy to do this. I paid my architect over a $1 million last year and so you can probably say that they would be happy to help me out with feasibility. I get an architect site visit and sketches within 48-hours of getting an offer accepted. In Seattle, I get a PAR report that tells me what curb cuts I need to do and other development requirements within 14-days. So I can get my feasibility done very fast.

5) So here is the old negotiation trick that keeps working and I almost hate to publish this in public. But as a buyer I am entitled to protect my earnest money to the best of my abilities and so there is no harm in doing that. I usually have to waive every contigency in multiple offer situations but there is one contingency that I can often get in. That is the financial contingency from 22.

The financial contingency spells out what lender you use and how much downpayment. I always put the hard money lender on there at 15% down. For some reason, most listing agents don't think that the hard money construction lender is an asset based lender. They are not going to lend money on a house that is not feasible to build. Don't let the secret out. So I structure my deals this way. The listing agents are supposed to fill out a form 22-AR when the financial contingency period expires, but from my experience they don't. Form 22-AR gets the buyer to go hard on their EM or "get off the pot." I am not sure why most listing agents don't do their job, but from my experience they either don't know their contracts or are just not organized in details. In any case, this often provides me with a free "out" card even when I waived everything else.