how to present low-ball offers?

Question

Hi BP

I've been an agent about 1.5 months now.

Quick background:
 I'm a small buy/hold investor for 12 yrs, got my license bc I'm always looking.
And others has asked me to do flip projects for them.

Anyways, I have been working purely with investor.
As an agent, that is not a good strategy, but I can't help it, its my passion and we don't need the income to eat. Starting to understand agents frustration with investors.

But I have made offer after offers, granted they are "low-ball" in the eyes of the listing agents, to no result.

As an investor I totally get that that is the price that makes sense for investor to buy in....

HOW DO YOU PRESENT INVESTOR OFFER WITH SUCCESS???

Thanks in advance

Glenn Espinosa · Answer

Cash, no contingencies, proof of funds, 21 day close, EMD 5%-25%.

I know of one investor who writes EMD's as high as 50%. I mean talk about trying to make an impression.

Gotta have your ducks in a row and due diligence completed ahead of time, however.

MLS is tough nowadays so I wouldn't worry too much about it. Let others overpay all day.

Account Closed · Answer

Since you realize that making offers on other Realtors listings is a bad statagy, what do you suppose would happen if you started spending your time calling FSBO and expired listings?  If you approached these people with the intention of getting a listing, but you also kept your eyes open for super bargains.  I will tell you what would happen.  You would list about five houses a month and find at least one super bargain.

If you are intently studying the kind of information that is on Bigger Pockets, you knowledge level will vey quickly move you to the front of the crowd among Realtors. Ninety two per cent of those FSBOs are going to list with someone. If you don't know how to approach them, watch this video.  http://www.youtube.com/watch?v=7BYAiA7ayLw

If you are going to pay your dues to the Assn of Realtors, you might as  well do the most productive thing possible.  List bargains.  You have probably already had this experience and you don't even know it.  You see a Realtor's listing in the MLS for $100,000.  Your investor offers $70,000.  You turn that offer over to Bozo the listing agent.  The seller turns it down.  What you don't know because you were not part of that conversation is that the seller told Bozo that he will take $72,000. Bozo sells the listiing to his investor for $72,000.

Start listing. You will make a lot more money.  You are more in control.

Mark Brian · Answer

What he said!

Be a closer and not a poser.

Matt Devincenzo · Answer

Are these REAL investors, or wanna be investors?

I have a full time job and invest out of state on the side and I just had an offer accepted for 30% off list. All I did was offer cash closing in 10 days 3 day inspection was my only contingency and I would have gotten rid of that for the deal I was getting.

I wonder if it's because you don't have strong investors who can put in the strong offers necessary to get the discounts they're trying for?

Could you give an example of what kind of list price, comps, contingencies ect you're using that might clue someone in to a specific issue with your offers. Also what kind of sale traditional, REO, SS.

Hopefully you'll get a good idea once you give some information to look over something might jump out to someone not involved in the deal.

John Chin · Answer

Hi, Jennifer. First of all, I think your strategy to only work with investors is actually a good one. LOTS of investors out there and a lot less cab-driving with emotional buyers. But as you know, institutional investors are creating a hyper-competitive buying environment.

A couple things I do for my investor clients to "detach from the pack" in addition to some of the great recommendations above:

1. The investor pays me outside of the transaction and I make offers to the listing agent with ZERO co-broke. The listing agent keeps both sides. This does more than anything to make our offer stand out, especially, if the agent is someone I've performed for (closed with) in the past. My investor has no problem paying me on the side because I get them into deals they couldn't otherwise get in the first place.

2. Don't compete for inventory on the public channels (e.g. MLS, foreclosure auctions, tax deed/lien sales). If it's public, the institutions are hawking. Not fun. I pick up short sale listings and contract properties by literally knocking on doors and talking to property owners who are confronting an upcoming foreclosure sale. It's a very intimate and friendly approach. No mass mail. Too impersonal. When I land the listing, I can work with the home owner to do some creative things with the short sale that benefit both my client and the homeowner.

It's easier to compete where fewer are playing. Otherwise, it's very difficult to find equity in deals.

- Chinny

Jennifer Lee · Answer

thank you!!! ok so I got the HAND MONEY this time ;p
thank you so much!!! offer is in. it's b/c it's REO.

Ron Climer as you can tell, I am a new agent:

how would you present an "investor" offer? not to be confused with low ball offers
 
I wouldn't consider this a low ball offer. arv is 140K, renov is 52K. offer is 47.5K with 3K EMD, Cash, 27 days close.

I know that 2 offers are already on the table.
This is a foreclosure. 
What am I allowed to ask the listing agent?

Thanks any advise would be helpful. I want to be able to provide the best service.

My business plan (investor agent part) doesn't  sync with my brokers ideas (mainstream, what are you doing with these fools attitude LOL)

I see investors as RETURNING clients, and FUTURE listings ;p am I wrong to think that?

Jennifer Lee · Answer

Thank you! Got him to cut a chk for this one. Fingers crossed

Mark Ferguson · Answer

Most Reo agents will require a copy of the earnest money check with then offer.  Many font want the actual check just a copy.  The bank will require that copy of the check when they sign the offer.   Having earnest money after MEC is not a good idea.

Matt Devincenzo · Answer

I think you definitely need to start getting rid of this. If they aren't getting accepted it could be because the bank is seeing that they're getting an offer but there's no teeth to it because they could accept and the next day you could back out and never put the EMD up and they'd have no recourse.

Since you said your market is hot like a lot of others out there right now, it might not make any difference but it might. Otherwise I think your offers were decent so maybe it's just a fact of being in a busy market.

Jennifer Lee · Answer

Thank you I need to talk to my buyer then!!
EMD at time of offer, Thx new agent

how to present low-ball offers?

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