Agent listed property for 125K, now demanding 170K?

Question

This is my first time taking a wack at a Pre-forclosure\forclosure. The property is listed at 125K, comps come in around 200 is but it's on a busy road so I think the ARV would be around 180K. I offered the full asking price of 125K. It's been a few months and I got a call from the agent saying that the bank countered my offer @ 170K, the bank did an appraisal and it came in @ 178K (according to the listing agent) because the property doesn't need much work I told the agent I would meet the bank in the middle @ 150K. The listing agent told me that the lowest the bank would go was 165K, and he isn't willing to take my counter offer to the asset manager or bank, but isn't he required to take any and all offers?? I just ask because it seems like he might be saying that to get a bigger commission. Should I go above his head and speak with the lead broker?

Thanks for the help!!!

Wayne Brooks · Answer

This is a short sale, an animal all to itself.  Some agents list at a low ball price just to get a contract in front of the bank to start the process, knowing full well the bank won't accept it....that is where you are now. This should not have been a surprise.  No, an agent won't risk blowing up a deal for a slightly higher commission, they want it to close.  The "agent must submit all offers theory" doesn't really apply here.....this is a negotiation with the bank.  Give him your top offer, and be done.

Mindy Jensen · Answer

@Dan Lukens , it is possible the bank told the agent they would not entertain offers below a certain threshold.

I did this personally when I kept getting severly lowballed on a property I was trying to sell. I told the agent to refuse without counter offer anything below $235.

Adam Christopher Zaleski · Answer

Going above the listing agents head might work, but I personally wouldn't do it based on the fact that it wouldn't be worth my time. I would just give your best and final offer and leave it at that. I think that would be the most efficient use of my time.

However, my mom has a story of going over someone's head to get a deal done. Her and my father bought their second home around 1983. Interest rates were really high and they had difficulty finding something that they could afford. They found a builder that finished about 5 houses about 90% of the way. He ran out of money and was trying to sell them 90% finished. If I am ball parking, let's say the house is worth 100K finished. It's 90% done, so the builder wants 90K. My mom offers 75K and the offer gets rejected. She finds out the name of the builders lender and explains to them that she offered 75K and the guy won't even negotiate. Basically, the bank forced the builder to sell her the house for 75K because he was behind on his loan to build the houses.

Although successful, the process did require some of her time to do all the digging and contact the bank. However, it was worth it to her to invest the time because they didn't really have any other options at the time.

Andrew Johnson · Answer

@Dan Lukens You're right that it's best to always have a positive interaction.  That said it doesn't seem like you like/trust/etc. the interaction with this particular agent in the first place.  Regardless, a pain-in-the-rear-buyer that closes a deal is worth money.  The nicest-buyer-in-the-world that doesn't close a deal is worthless.  And, yes, realize that some of this has to do with the bank and not just the listing agent.  Then again if this is the niche of the particular agent then likely future deals will progress the same way: low listing price -> bank refuses -> "high" counter -> negotiation.  It's unlikely he's doing this strategy without the full knowledge of the firm he works for.  So, like I said, you can try going above his head but on a practical level I'd leave your $150K offer as a best and final.  If it is some (unlikely) bluff to boost of commission he'll come back to you if he can't find a better offer pretty quick.

Dan Lukens · Answer

Thanks @Adam Christopher for sharing that story. I agree it wont be worth my time. I'm going to give it a week then follow up with the agent.

Dan Lukens · Answer

Thanks @Wayne Brooks Will do.

Dan Lukens · Answer

I'm just a little skeptical because I am using the listing agent for this property so no matter what I get the property for, he gets the full 6%. @Mindy Jensen I would like to think that would be the case but just wasn't sure. I've been burned in the past for taking the word of a listing agent.

@Andrew Johnson being new to the investment arena I didn't want to leave anyone with a bad taste from working with me. I want to make sure when possible that every interaction I have with others is a positive one. Do you think going above the agents head will make this agent never send me deals again?

@Franco Li Thanks for your reassurance, I get so nervous sometimes that its good reminder to trust my numbers :-)

Thanks Everyone!

Agent listed property for 125K, now demanding 170K?

Most Popular Reply