Using and Abusing Realtors

[Dan Tracy]

Relative newbie here.

Very close to sealing the deal on two 5-plexes (awaiting inspection on one and getting a verbal agreement in writing). The only problem is the quality of these deals is seeming to crumble before my eyes. They're not separately metered (landlord was paying every penny of utilities), there are a couple things I think would not pass inspection, and I'm feeling more and more skittish about having to use a commercial loan in this current economic climate.

I realized the main thing holding me back from pulling out of these deals is my desire to treat the realtors with respect. My agent in particular has been bending over backwards to help me find a place, even more so because I'm out of state and investing long distance. He's put together offers for several places that ended up getting scooped up. He's overall just a super nice guy and hasn't taken a dime from me, and now that we're this close on closing something I feel like I would be letting him down in a huge way. Same with the listing agent; he's seems to be a very accommodating guy and has let me do walkthroughs via FaceTime since I couldn't be there.

I don't even know how good or bad these deals are anymore, but if I dropped them I feel like I would be letting my hard-working agent down in a big way. What is kosher and what is not in these situations?

[Mike Dymski]

The best way to respect an agent's time is to be systematic about your process and decisive.  For example, properly and quickly underwrite the deal to include fully loaded income, vacancy, expenses, management, cap ex, etc. and quickly make an offer.  Then be systematic about your inspection and due diligence.  If something comes up during due diligence that could not be known prior to going under contract, then negotiate with the seller to perform the repairs and/or reduce the price.  Known items like separate metering and commercial loan terms should be addressed ahead of time, not after going under contract.

In the end, I would recommend being unemotional and making the decision on whether or not this is a wise investment independent of the agent's feelings and then just learn from the experience to know how to handle it differently on the next one.  There is a reason why agents like to work with experienced investors and closers.  You just have to figure out how to be one.  Good luck and keep posting here.