My deal finder / agent tells me my offers are too low

[Jan Kutrzeba]

Hello BP family, Virgin multifam buy-and-hold investor here. I’m trying to buy a 2-4 -unit with conventional financing (already pre qualified) in Allentown, PA. My offers are based on healthy cash flow; min. $150/door. I’ve sent offers on six different properties, most of them in the same zip code. Asking prices are in the $110k-$140k range. My deal analysis results show $75k-$80k max would give me a positive cash flow, so I’m offering $70k-$75k to leave some room for negotiation. I’m sending these through my deal finder/broker, who’s also a major broker in the city, and an owner of a late prop mngmnt company I want to use to manage my properties. I’ve had a good rapport with them via email, phone calls, face to face meeting, and they’ve shared a wealth of knowledge about their market with me. All six of my offers have been rejected (which is fine), though I only found out about getting rejected after specifically asking my broker what the news was on my offers (I was expecting her to call/email/text me as soon as offers were rejected). What bothers me is my broker sending me the following email: “In general our market trades within 5% of the asking if priced right. Clearly there are variables to each but I can tell you that you will never find a 40% reduction on price on anything on market. It will never happen. Sometimes we can shoot for 10,15,20% reduction and will get activity and communication going but 40% is going to get rejected every time.” Firstly, buying the properties I’ve bid on at 5% under asking price would leave me with a negative cash flow, which means I’d be belly up in no time. Second, even if what she says is true, I feel like my broker’s job is to “fight for me” to get the price I want, not tell me not to offer low. Should I not work with this broker? Should I find a broker who’s mostly a buyer’s Broker? I’ve researched this market well and it makes sense for me in so many ways that I want to stick with it. Thanks for all the help and advice!