Submitting Offers on House Flips

[Rob B.]

My question is in regards to getting your offer accepted when trying to buy a house to flip. I have been a landlord since 2012; I'm up to four houses and a sixteen unit apartment complex. I live in the East Bay Area (Oakland area). I got my real estate license in 2014 since I do a lot of of transactions and it has saved me $30,000 in the last 12 months in commissions. 

I've got some cash available to invest into some additional real estate. I'm debating between purchasing another apartment complex or trying to flip a few houses. I have read dozens of books about people who flip houses with little money, having an agent work with them and I continually think that if they can do it, I can do it. I have the cash to purchase and repair properties all cash; I also have my license, so I can save over half of the commission. 

My question is this: how in the world do you get your offer accepted if you're doing to follow the 70% rule? As a listing agent, I would be insulted (and have been insulted) by some truly ludicrous offers sent in by people who had done no research on the property. Aside from not wanting to be obnoxious, I also have to think of my reputation. If I become known as the agent who always lowballs, my clients will be hurt whenever I submit offers on their behalf. Is it just a matter of submitting enough offers until one gets accepted? Or do you wait until a house has been on the market for a long enough time? We're in a strong sellers market out here and I can't imagine accepting anything that was 70% of ARV. In fact, I just closed on a house in Hayward that we discovered needed $80,000 in repairs, and I still managed to close it within $20,000 of asking price.

Any thoughts on this would be appreciated. Aside from repairs, commission and loan costs are the two most expensive parts of a house flip, and I could avoid both, so it would be very lucrative for me. 

[Eric Z.]

@Rob B. RE agent and Buy & Hold investor here.  

Welcome to BP!

I'd approach things with a slightly different mindset. I want to help others make money rather than cutting them out. That includes agents, loan brokers, etc.  

Anyway, you probably guessed it, lowball offers rarely works in our local market(or in any market). If you are looking at MLS, you probably won't see distressed property either - the moment they hit the market, they gets bid to around 80% - 85% ARV - mostly by contractors/agents who probably think they can afford to go that high because they are 'saving' on repairs and commissions. (sound familiar huh ;)

So how do you find deals? 

Most folks still finding deals through agents - their pocket deals. But why will they give it to you if you are going to cut them out? They give it to the investor who will list the house for sale with them after the it's been fixed up. 

You can also find deals from wholesalers, and other investors in local network events.