The right Realtor (Connecticut)

[Mark Campo]

All,

I currently have a realtor searching for multi-family properties as an investment in Connecticut. I have several concerns:

1. I currently have been pre-approved by a conventional lender (up to 500k), and I also have a hard money lender. My realtor insists that I need a pre-approval letter provided for all offers I submit. The conventional lender provided me with a pre-approval letter, but the hard money lender stated he would only provide me with a pre-approval letter on a house by house basis, which means it would be unreasonable for him to give me one for each of the 20 offers I plan on submitting. He will provide the funds AFTER I have an accepted offer, and he stated that he would have them to me quickly (week or so). My realtor is also insisting that I have to use the conventional lender if I use that in my initial offer. My plan is to use the conventional pre-approval letter for my offers. In the case where I need considerable funds for rehab (which is the case for 90% of them), I am going to actually have the hard money lender provide the funds. My realtor is stating I can't do this, and I am stating I can. Thoughts?

2. My realtor has requested I sign a contract with him allowing him to exclusively represent me. He is also requesting a 2.5% fee that will be paid for by seller, but I am to make up the difference if the seller doesn't agree. Thoughts on this?

Anyway, should I start looking for a new realtor? I picked him because he has owned many investment properties (at least 20 according to him). He is older and seems stuck in his ways. I know I am tough to deal with because I am very head strong and like things done my way, and he is head strong also. I was actually thinking about finding some young motivated realtor that I can "bully" around a little (just kidding for you politically correct wackos concerned about bullying) and have things done my way - I would be willing to pay dearly for that extra motivation.

Any feedback would be welcomed!

[Michael Noto]

@Mark Campo

1. Technically you can submit offers without a pre qual letter here in CT, but there is a 99% chance they will not be considered by the seller, especially in the multi-family space. Think about it, would you consider an offer from a buyer as a seller if you had no idea how they were going to pay for the property? 

2. Your realtor is correct in that you have to declare which type of financing you are using to purchase the property in the purchase and sale contract. However, this can be changed during the transaction by an addendum. So let's say you get a property under contract with a conventional loan and then change to a hard money loan. You would just say in an addendum that due to the condition of the property (not financiable) you will be buying the property with cash via a hard money lender. At that point you would then provide the pre qual from a hard money lender. Could the seller balk at this? Technically yes, but by that time you are so deep into the contract period that they are unlikely to back out because of it. Another option would be if you have personal funds to cover the purchase price, just submit offers with a POF from that money. It would make it much easier for the seller to swallow to go from actual cash to hard money because they know you have the funds to close if need be.

3. It is not uncommon for a realtor to require a potential client to sign a buyer rep agreement. There is a lot of time that goes into representing a buyer and most agents want to assure they are eventually paid for that time and effort. However the you making up the difference part is not typical. There is a buyer agent compensation declared on the MLS listing that is paid by the seller. With all that said, I only make my clients sign a buyer rep for properties that I show them or offer on for them. The agreement is specific to those properties and basically says that if you end up purchasing one of those properties I am entitled to a commission paid by the seller for the amount stated in the listing.

Hopefully this response helps.