Off market offer on house needed

[David Gruszka]

Hi - I’m relatively new to the real estate game and am just starting to read multiple books involving this topic.

I noticed a house being cleaned up two weeks ago, talked to maintenance people, and was in the right place at the right time to talk to the owner. I tried to build up a relationship by making myself the problem solver but the house condition is rough. Potential ARV of 325k and rehab costs roughly 78k (these may be off slightly). He also has a loan of 94k that I teased out of him but I don't think he is interested in signing it over. After everything was said and done I gave a verbal offer of 150k and followed up with a tactic of Letter of Intent having three offers. Offer 1) 150k cash, fast closing, I take care of closing costs and trash at house; Offer 2) 165k, 7.5k down and Seller finance 5 years; Offer 3) 180k, 2.5k down and Seller finance 10 years. I told him to talk to me before signing with an agent as I know it will cost him 5-6% additional which would reflect on a price increase plus I have to deal with competition. He finally emailed me back tonight and gave me a number to call to talk to his realtor. I called him up to verify he still hasn't signed with the realtor yet but insisted I talk to the realtor. I have a call set up tomorrow morning to talk with the realtor. I have a feeling they are going to try to push me into a dual agency spot and probably make me use their title company as well. I already have a preferred real estate lawyer. Do you have any advice for me to prepare me for the conversation to secure this deal and not get talked up by the realtor? I just cannot understand why he wants me to talk to a realtor that he hasn't signed anything formally yet unless they are trying to be the "problem solver" as well. Thank you in advance.

[Sherry McQuage]

Hello,

I'm not in Pennsylvania, yet I've seen this type of thing before.  The seller might trust the realtor more than a stranger that walked up at the job site.  Don't know if they have a previous business relationship or not.  

Regardless, we're all in real estate to make money, and to serve others.  As an investor, your primary goal is probably to buy at the lowest price (you make your money when you buy at below market value), fix it up, and either hold or sell/flip.

The seller might realize they "don't know what they don't know"....in general, investors sometimes come across as "transactional" (they ran the numbers, and just want a yes or no from the seller).  Sounds like this seller wants someone who will get to know him, HELP him, PROTECT him from aggressive buyers/investors.  Or, there could be some other reason that you may never know.

You might not get this deal. You might talk with the realtor and decide the numbers don't work for you. You might talk with the realtor and feel "pushed"....like the seller probably already felt when you approached him (maybe?☺️)...you might talk with the realtor and it goes on the MLS and it sells to someone else....or it might sit on the MLS for a while and you eventually get it.

My point is, as a realtor and investor myself, put yourself in the other person's shoes...they don't want to feel "pushed" or like someone is trying to take advantage of them.  You might be offering a generous amount (I have not seen the property or run the comps).

Real estate is a relationship business.  My advice is to do as the seller instructed and talk to the realtor.  The more you push, the less progress you'll make is what I have found.

You seem to know what number you need to pay in order for this to work for you.  That's good.  The more deals you do, the more you'll learn.  Even though the seller may not have signed yet with the realtor, evidently he trusts the realtor more than he trusts you.  Can't push the seller in order to "get what you want"...that just proves the seller does need the agent to protect him from getting taken advantage of.

I'm not trying to be a "butt head" to you, just giving you my honest opinion.  If you went to a car dealership to look at cars, would you want a salesman trying to push you into buying by offering you 3 options? 

Get to know the agent, be friendly and professional...if the property goes on the market and doesn't sell for a while, that agent will probably call you back.

You might want to send out letters/mail campaign to find your own off market deals.  

Basically, the seller told you to communicate with his agent (not to contact him directly), so please do that.  I don't think you're going to change the person's mind by being aggressive.

Yes, money is important...but it's not the only thing.  People want to be heard and understood, not confronted by an aggressive investor...you can only control how you react to what happens.  However this goes, learn from it and you'll be better equipped when you find the next deal.

Sometimes, when we don't get to buy a property that we really want to, it turns out to be a blessing. Besides, if the real estate agent is honest and good, be nice and professional with them...they might come across a "deal" that wouldn't work for them to list and tell you about it.  

Best to you!  Would love to hear how this turns out.

[David Gruszka]

Quote from @Sherry McQuage:

Hello,

I'm not in Pennsylvania, yet I've seen this type of thing before.  The seller might trust the realtor more than a stranger that walked up at the job site.  Don't know if they have a previous business relationship or not.  

Regardless, we're all in real estate to make money, and to serve others.  As an investor, your primary goal is probably to buy at the lowest price (you make your money when you buy at below market value), fix it up, and either hold or sell/flip.

The seller might realize they "don't know what they don't know"....in general, investors sometimes come across as "transactional" (they ran the numbers, and just want a yes or no from the seller).  Sounds like this seller wants someone who will get to know him, HELP him, PROTECT him from aggressive buyers/investors.  Or, there could be some other reason that you may never know.

You might not get this deal. You might talk with the realtor and decide the numbers don't work for you. You might talk with the realtor and feel "pushed"....like the seller probably already felt when you approached him (maybe?☺️)...you might talk with the realtor and it goes on the MLS and it sells to someone else....or it might sit on the MLS for a while and you eventually get it.

My point is, as a realtor and investor myself, put yourself in the other person's shoes...they don't want to feel "pushed" or like someone is trying to take advantage of them.  You might be offering a generous amount (I have not seen the property or run the comps).

Real estate is a relationship business.  My advice is to do as the seller instructed and talk to the realtor.  The more you push, the less progress you'll make is what I have found.

You seem to know what number you need to pay in order for this to work for you.  That's good.  The more deals you do, the more you'll learn.  Even though the seller may not have signed yet with the realtor, evidently he trusts the realtor more than he trusts you.  Can't push the seller in order to "get what you want"...that just proves the seller does need the agent to protect him from getting taken advantage of.

I'm not trying to be a "butt head" to you, just giving you my honest opinion.  If you went to a car dealership to look at cars, would you want a salesman trying to push you into buying by offering you 3 options? 

Get to know the agent, be friendly and professional...if the property goes on the market and doesn't sell for a while, that agent will probably call you back.

You might want to send out letters/mail campaign to find your own off market deals.  

Basically, the seller told you to communicate with his agent (not to contact him directly), so please do that.  I don't think you're going to change the person's mind by being aggressive.

Yes, money is important...but it's not the only thing.  People want to be heard and understood, not confronted by an aggressive investor...you can only control how you react to what happens.  However this goes, learn from it and you'll be better equipped when you find the next deal.

Sometimes, when we don't get to buy a property that we really want to, it turns out to be a blessing. Besides, if the real estate agent is honest and good, be nice and professional with them...they might come across a "deal" that wouldn't work for them to list and tell you about it.  

Best to you!  Would love to hear how this turns out.

[David Gruszka]

Thank you - I’m going back and forth with the realtor now. I won’t be contacting the seller again directly based on your recommendation. I was definitely trying to approach as a friend and offer my information even if he doesn’t go with me (helping close a deal will still give me more knowledge that I’m in great need).

The realtor reviewed the LOI and is setting up a second talk tomorrow. I'll be respectful and nice to him even though I know how easy of a deal this is. The talk today proved he wanted dual agency. I personally don't care I just know how much he is being taken advantage of. If he accepts my offer of 150k cash then 6% goes right off immediate leaving him with 141k minus 94k loan to even less.

I’ll update after tomorrow.

[Russell Brazil]

Quote from @David Gruszka:

Thank you - I’m going back and forth with the realtor now. I won’t be contacting the seller again directly based on your recommendation. I was definitely trying to approach as a friend and offer my information even if he doesn’t go with me (helping close a deal will still give me more knowledge that I’m in great need).

The realtor reviewed the LOI and is setting up a second talk tomorrow. I'll be respectful and nice to him even though I know how easy of a deal this is. The talk today proved he wanted dual agency. I personally don't care I just know how much he is being taken advantage of. If he accepts my offer of 150k cash then 6% goes right off immediate leaving him with 141k minus 94k loan to even less.

I’ll update after tomorrow.

1) You have zero idea how much he'd be paying his agent
2) It sounds more likely that you are the one likely to take advantage of the seller since you're pushing for them not to be professionally represented when they clearly want representation.

[David Gruszka]

I’m not pushing them to be professionally represented or not. I just stated to him that I wanted him to be aware and I gave him the information to make an informed decision. It doesn’t matter to me if he is or isn’t represented and I told him that it only changes the terms of the deal and how much he gets, my offer is the same. I’ll budge and “grudgingly” give up to 155 to let them win but I’m also completely okay with losing this deal. 

[Sherry McQuage]

Sounds like you’re learning, that’s great! Learn before you earn.

Again, I am not trying to be “mean”, just keep in mind that you don’t know everything the seller is going through…from your side of the table this may look like an “easy deal” or a no brainer good deal the seller should jump on…seldom is this true.

You probably won’t ever know what the seller is dealing with (could be multiple sellers, family issues, health problems with a loved one, and a hundred other things). They might also be a different personality type than you. Some people make quick decisions based on a few bits of information; others take more time and want way more information before deciding.

Neither personality type is good or bad…just different. That might be what is happening here…

The good news is that you are open minded to trying to buy a property, and are happy to learn (even if this one doesn’t pan out). Keep listening and learning, and please continue to let us know how things turn out.

Oh, and if you don’t get to buy this property, you can (after the fact) ask the agent (politely and respectfully) why they think your offer was not the successful offer. You will learn something, and you might be memorable to the agent if another suitable property comes to the agent’s attention.

Real estate investing is a marathon, not a sprint. You are doing fine.

[David Gruszka]

Quote from @Sherry McQuage:

Sounds like you’re learning, that’s great! Learn before you earn.

Again, I am not trying to be “mean”, just keep in mind that you don’t know everything the seller is going through…from your side of the table this may look like an “easy deal” or a no brainer good deal the seller should jump on…seldom is this true.

You probably won’t ever know what the seller is dealing with (could be multiple sellers, family issues, health problems with a loved one, and a hundred other things). They might also be a different personality type than you. Some people make quick decisions based on a few bits of information; others take more time and want way more information before deciding.

Neither personality type is good or bad…just different. That might be what is happening here…

The good news is that you are open minded to trying to buy a property, and are happy to learn (even if this one doesn’t pan out). Keep listening and learning, and please continue to let us know how things turn out.

Oh, and if you don’t get to buy this property, you can (after the fact) ask the agent (politely and respectfully) why they think your offer was not the successful offer. You will learn something, and you might be memorable to the agent if another suitable property comes to the agent’s attention.

Real estate investing is a marathon, not a sprint. You are doing fine.

Unfortunately they wanted 200k+ and the place is still trashed. The realtor tried to talk me up to at least 175 but… that's cutting a bit into my profit margin and I'm not that eager to buy it because that'd also be my biggest renovation project. I'm sure there is stuff in there that I didn't find that would creep up as well. They now have a dumpster in front of it with plans to empty out the house in an attempt to make it more appealing when it gets on MLS. Next potential update is in 3 months if no one buys it on the market. Thank you for all the advice!