Making offers to flip in a hot market

[Phillip Vaughan]

Hello,

My wife and I have recently wanted to try flipping as a way to gain capital to purchase rentals. However, we have hit a road block and we could use some advice/input from those with experience. 

The biggest problem is that we live in Southern California. The difference between the cost of distressed properties to market ready properties is too small. We started looking at properties that needed a lot of work but after getting rehab cost estimates, we realized we would have to make offers close to 70K-100K less than the asking price! My agent feels that will never happen and I think she is right. So now we are looking at properties that just need a little updating, maybe new kitchen cabinets, flooring, paint. The amount we have to offer is not as low from the  listing price as the other properties, but still low.

So what is the trick here? I would love to hear from other flippers in SoCal, or other markets like it. I know people are flipping in my area. Do I need to wait to save up more cash to purchase at auctions? Do I need to get a real estate license? Or do I need to convince my agent to make a lot of lowball offers and play the numbers game? I have heard Brandon Turner mention several times on the webinars that making low offers is a numbers game and you have to make a lot of them to get that one accepted. But are the offers I would have to make too low? Real estate agents seem to think that is unethical or even a waste of time. Are they right?

So what am I missing here?