Unhappy RE agent

[Robert Miller]

Hi you said in a previous post of mine what to tell a realtor to get an accurate ARV.This was a reply by one of the realtors.This was her 1st reply.

Hi Robert,

Thanks for the offer, but I don't think I'm the realtor for you. I am a full time associate broker who has been successful for many years and business is hard enough without working for a guaranteed NO Commission. I'm sure you can find someone to take the offer. I have taken enough time already to help you for free and don't look forward to doing more of it. The offer you are giving is unrealistic in todays market.
I know you want to succeed and I wish you a lot of luck.
If you want to pay me for my time, I would be glad to help you in your efforts.

Thanks Robert,
Maria

Here`s her second reply,before I even replied to the previous one.

Robert,

I just wanted to add to my prior response to your email. I did not mean that your offer was unrealistic in todays market...it's pretty much unrealistic in the world of real estate. On behalf of all my fellow realtors, I can say that it is truly insulting that you feel that someone would be interested in your offer. You have a lot to learn about the business and realtors.
I would not be interested in your pursuits even if I were paid by the hour.

Truly insulted,

Maria

I have no idea why she`d be insulted.Below is the Original Email.

I will be using you for the purchase of the property,if I purchase it.Need to get the ARV and written work estimates before I know whether or not the numbers are good.

This is how I want you to determine the ARV,I need to know what you can sell it for fixed.

I will be listing it with you for the ARV you give me on a 90 day listing. But if it sells for less than 95% of that value, you get no commission. If it sells for less than 90% of the ARV,you get no commission and pay for the buyer's agents commission. If it doesn't sell in 90 days,I relist with another agent,and you pay all the commissions.So please give me an ARV that you know you can sell it for after it is repaired.After it is repaired it will be like new.

Thanks

R.Miller
RE Investor

Is that insulting the way I wrote it?I don`t see it as being insulting but if it is I`d like to know.Thanks

[Bill Gulley]

Oh My, Jon, I guess he is asking for your comment, I'm sure you didn't suggest that! Bill

[Robert Miller]

Well anyone`s comment will do.I just want to know if that seems insulting.It doesn`t seem insulting to me,then again I`m not a Realtor.The only thing I was implying with the email was I wanted an accurate CMA done.Her being insulted makes me think she`s the type of agent that will jack up the ARV to get the sale.
Don`t know maybe I`m ignorant when it comes to realtors and Real Estate like she says.

[Jon Holdman]

Here's the referenced thread:

http://www.biggerpockets.com/forums/110/topics/43845-can-someone-please-help-me-with-to-get-my-first-deal-done-

Hmmm. Guess she didn't like that commission plan. Not too surprising, though her choice of words "guaranteed NO Commission" is tells me she wasn't confident about the value she gave you. If the $230K value initially proposed was a good one, the commission scheme is certainly not "guaranteed NO Commission".

Later in that same thread, I proposed a less harsh scheme:

Less harsh, but still has the same effect. Maybe a bit more diplomatic.

The reality is that an agent has less skin in the game than you do. If you go into a deal based on one price, and it turns out the real price is much less, you can lose a LOT of money. You were originally told $230K. Later you had a value of $176K. In a situation where you were into this deal for 70% of the $230K, hoping for a profit of 25-40K, and the real selling price was only $176K, you would have lost $14K, maybe more. The agent, OTOH, at worst wastes some time and perhaps some marketing expenses. Unfortunate, but it goes with the territory. A $14K loss is never a risk.

Recall my other bit of advice in that thread - learn to do your own ARVs. An agent can be a big help since they can provide you data is difficult to get from any other source. But YOU must use that data. There's too much at stake to rely on someone else' valuation.

[Brian Wall]

You seem to putting demands on her right away, seems kind of harsh.

Realtors do not work like how you asked her to.

You tried to set the rules too much up front.

Also, it was not clear to me, and probably to her, if you expected her to find you a property, or you had a property in mind.

Being a RE agent, and investor, here is I would have like to seen an email sent to me:

Dear Mr. Agent,
I have done my research, and it appears that you are one of the leading agents in the ZYX area.
I am a real estate investor, specializing in finding fixer uppers, and have located a possible property to purchase and rehab, then immediately resell. I could use your help.

I am not currently working with any real estate agent, and am looking for an agent that can help me do a few quick desktop valuations. If I end up purchasing the property I will list the property with you, once it has been rehabbed.

The property address is 123 Hill st., Whatevertown, CA.

When would be a good time for me to come to your office, so we can discuss this further
Thank you,
Joe Investor [/i]

[Jon Holdman]

Just saw your comments, Bill & Robert. Yeah, I did propose that pretty hairbrained scheme. Outrageous, but doesn't really seem insulting.

And, yes, I do think agents will cough up unrealistically high prices to try to get a listing. Once you're on the hook, especially for a long listing, then the price can be pushed down.

[Scott R.]

Originally posted by Jon Holdman:

Just saw your comments, Bill & Robert. Yeah, I did propose that pretty hairbrained scheme. Outrageous, but doesn't really seem insulting.

And, yes, I do think agents will cough up unrealistically high prices to try to get a listing. Once you're on the hook, especially for a long listing, then the price can be pushed down.

It does to me in the fact that you request the agent pay fees if you sell for such price, or if it doesnt sell in such a time frame, no one can guarantee you a house will sell at ARV, If I ever had a client offer this to me I'd tell them to kiss my ***.

Theres almost nothing good for the agent with this offer, and theres a possibility that they could lose money, the agent states theres no guaranteed comission, but theres a possibility of actually losing money. There is money/time involved with listing a property, so if it doesnt sell the agent is already out of those fees, little alone recieving no comission or paying comission, thats rediculous.

I have seen tons of houses listed at ARV or less that sit on the market, depends on your specific market, This agent doesnt have much to gain and could possibly loose money and time if they took this offer, why would one be willing to do this, the only way that most agents would be willing to possibly do that is if you were giving the house away. Houses do take some time to sell at ARV.
-Scott

[Robert Miller]

Yeah I didn`t really like that agent anyway.It took her between 2 and 3 weeks just to get me the CMA I needed and I lost 2 other potential properties while I waited for her.This email wasn`t in regards to the $230k property,this was for a different CMA I needed done,this agent was the one that gave me the $176k ARV on the other property.Here`s what my reply was to her.The 1st reply she sent didn`t bother me,but the second reply was unprofessional and uncalled for.

How was my offer insulting?
I just want an accurate ARV.
Is that impossible for you to give me?
If you`re worried about your commission give
me the lowest ARV that it would sell for.
You being insulted tells me you`re one of those
realtors that would jack up the ARV to get the sale.

Funny no other realtor that I emailed the same requirements
to had anything negative to say about it.I`m not insulting anyone
I just want an accurate ARV,if you can`t give me one,I`d rather
not do business with you anyway.I have other realtors to give me
CMA`s.Your loss

Thank You,

R.Miller.

[Robert Miller]

I wasn`t actually going to hold her to it.I just want her to keep that in mind when determining ARV.If it`s off by a couple thousand,no biggie,but like Jon said one agent gave me a $230k ARV and another gave me a $176k ARV.That is a HUGE difference.I just want an accurate ARV,nothing more.Just lowball the damn ARV if you`re worried about your commission.

[Scott R.]

Get your own license and calculate your own CMA's, or get MLS access yourself. As a Realtor in Tucson, Az right before the boom everyone and there dog wanted CMA's, me being a new agent did them for everyone, yet this generated VERY LITTLE business if any business at all. I do agree alot of agents over value the property to get the listing, youd rather list with an agent saying 200 then 175, but realtors are constently asked for CMA's by "investors" who turn out to be nobodys and generate no business. I dont know what you do for a living, but im willing to bet you dont do it for free.
List a deal or two with this or any agent and im sure they'll be alot more helpful once theyve made some money and can see your actually going to generate business.

[Scott R.]

Correct, but first, you approached them saying you were going to make them pay comission if it isnt sold in 90 days. I bet i can sell your $100k house for $50k in 90 days, maybe 60, much more im not going to take the offer, so youd rather them give you stupid low numbers, then you wouldnt end up using them anyways, or not buying the property, again generating no comission. Realtors are comission only, if im not selling your house or your not buying one through me, im working for free. Most realtors dont do that, the ones that WILL work for free are normally newbies and arent going to be the agent for you anyways. Plus realtors are not apprisers, and theres no document i could see holding up in court if you didnt sell in 90 days to get the agent to pay your fees with another agent.

[Scott R.]

Im willing to bet you wont find an agent willing to wave there comission if it didnt sell, little alone paying any type of comission. Theres alot of time involved with listing/selling a property, I cannot guarantee you your house will sell for around ARV in any time frame, little alone 90 days, average DOM for most areas is 60+ esp. now a days.
Although In this case you were dealing with a broker, and agent cant wave ALL COST of the comission without broker approval, and the broker would most likely not allow this, it does nothing for there business.

[Robert Miller]

How would I get access to the MLS?
I`d rather pull comps myself off the MLS.I want to be able to search it by Area,Square Footage etc..how would I go about doing that?

[Steve L.]

Robert -

I think your proposal is not the right way to start a relationship with a real estate agent.

What is her reward to take the risk you are asking her too?

Even if she does agree, if you're not comfortable pulling your own comps, find a different business. REO agents call me often with "great deals," if I put my money behind everyone of their "great deals" I would surely lose a lot of money. Some RE agents think a 10% spread is a 10% profit.

Go look at a lot of properties and get real comfortable with the market. Go find the deals from there. I'd suggest you search CASH buys (closed sales, with cash as the financing type) in the MLS and drive the properties. That is typically a good way to see what successful investors are buying.

[Jim Wineinger]

Possibly a little different tact might be helpful.

Since there seems to be a difference between the listing price and the ARV. I might ask for both of these figures and hold the realtor to the figure that she gives you that they feel they can sell the house for.

There should also be an incentive where if the realtor sells the house above the ARV (closer to the listing price) they receive a larger commission percentage.

This might just give you an accurate picture of what to expect. Such as "We believe we can sell that house for 230K but have seen similar houses only go for 176K."

But because time is money, just like they get to receive a higher percentage for quick performance, slow performance would require an lower percentage and possibly an absorbtion of the buyers realtors commission from their commissions.

I feel todays economy should be performance based. You save me money and you share in that savings, but you cost me money and you share in that cost as well.

[Robert Miller]

How would I get access to the MLS?

[James Harkness]

Robert,

I think that your wording in the email was a little insulting to be honest. I would have said something more to the tone of, "Assuming the following scenario (then go into your proposal about commissions and percentages of ARV), what would you say the ARV is?"

In your email, while I do believe after reading it several times that this was your intention, it does not come across this way. It instead insinuates that you are going to use her for the listing and that those are the terms. I can understand that if this is how she read it, she would be insulted.

[Scott R.]

I agree with what was said above, why not offer them 5% on THERE side if they sell it at ARV? that'd give them more motivation to get an accurate ARV and sell at that ARV, then 3% if it sells for less. As I said above, your not going to find agents selling properties for free, no bodys. Personally I cant even sell a property I own for free, theres still broker fees, why would I sell yours?
You dont get access without cost and some kind of reason to obtain MLS access, Realtor, Appraiser, or some other affiliate who needs access, all of these people who have access have schooling requirements and pay hefty fees to obtain this information. Why would I pay $1500 to obtain this info, plus weeks in school, exams, ect to give away the info i can obtain from there? I wouldnt, and no longer do.
MLS is membership only.

Regarding the different comps, different realtors look at different stuff, maybe one gave you the ARV for the most expensive sales matching your criteria and the area, while the other gave you the least expensive sales, they'd both be ARV's, Generally you can choose which houses to add to your CMA, so as a realtor they're normally going to show you the most expensive ones. The more it sells for the more money they make, so obviously theyd wanna sell it for as much as possible

You have NO CLUE how many listings I've lost because I said there house was worth less then the next agent said, but when its all done, normally they sold for LESS than I orignally said, sometimes $30k less then they listed for, would of been better off using me and selling for around that same number, in a shorter time then keep lowering your price, lowering your price doesnt generate the appeal that a new listing does, therefor price right and get it sold from the get go, saves everyone money in the long run, but people ALWAYS want as much as possible and "joe blow" said it was worth this much..

[Robert Miller]

Yeah I agree I could`ve worded it differently.Yes I would definitly not have a problem rewarding agents that do right by me.I offer double commission and Cash bonuses at closing for agents that bring me cash buyers that close within a time frame.But I did send her another email apologizing and letting her know what I was trying to say,but obviously worded it wrong.Thanks for all the replies.It`s all very helpful.

[Tony Salazar]

I think your demands are out of wack, and any wise person would be insulted.
You want to write something that has more of a win-win situation, not "let's do business together, but you may lose money and have to pay commissions."
There are 1000's of better methods, so on to the next.

[Jim Wineinger]

Sorry, Tony, but there is nothing out of whack with holding someone to their word.

If someone tells you that your house will sell for 230K and they end up selling it for 176K are you going to accept their saying, "Oh well I guessed wrong."

It is time that everyone be held accountable for thier word. That is what ones reputation is built upon. Be true to your word and you will do well.

Having to pay someone regardless of wheather they do good or bad is a thing of the past. Personal responsibility is once again on the rise and should be rewarded as well as punished.

[Shane Plant]

Actually the entertaining part is when an investor gets to watch a realtor play with their own cash. Kinda rare.

[Bill Gulley]

Hi, OK, I see what's going on, but, I'm not sure the Realtor even got it. She could have thought you wanted another BPO under those terms. A little more explanation to her as to why you were making that offer might hav made the point clearer, but after she go it, the result would probably be the same. Too bad they can't be held accountable for some degree of expertise as an appraiser is. IMO Bill

[Jon Holdman]

Originally posted by Scott Ricenbaw:

You have NO CLUE how many listings I've lost because I said there house was worth less then the next agent said, but when its all done, normally they sold for LESS than I orignally said, sometimes $30k less then they listed for, would of been better off using me and selling for around that same number, in a shorter time then keep lowering your price, lowering your price doesnt generate the appeal that a new listing does, therefor price right and get it sold from the get go, saves everyone money in the long run, but people ALWAYS want as much as possible and "joe blow" said it was worth this much..

EXACTLY! Recall the context of my original comments or go read that thread. Robert was asking for help with a deal he had on the hook. He was being given a ARV, $230K, that none of us was buying. My scheme was directed to the agent who was giving him the $230K number. It appeared to be a crazy number, and was indeed later shown to be a bad number. My scheme was intended strictly for the agent offering the $230K valuation and was intended to get past the insanity.

Robert, you need to find an agent you like and who will work with you, knowing you're an investor. They should clearly expect to get something out of that relationship. You should get something, too, which would be enough information (comps) to form your own opinion of the price. CMAs and appraisals are nothing buy opinions. Most areas have so much variation in comps, especially with REOs and short sales in the mix, that a wide range of numbers can be justified. Once upon a time, like back in 2003-2006, you could count on a lender believing the most outrageous lie and so appraisals could use the best possible comps. No more. You're lucky if they don't use the three worst possible comps. Any particular appraisal or CMA is suspect because it only uses SOME of the information available. You need a good working relationship with an agent, an appraiser or both to you have more of the information.

[Jeff B.]

I say you move pass it quickly. You've learned a valuable lesson and will be a lot more skilled and how to sculpt the deal with your next RE agent.

We can all debate what you would have done but this is already done and in the past.

RE agents want to make the most profit, it helps you with the price and them with commish. When I start building my relationship with a potential RE agent I first explain what I do, then explain how I need to turn this property in a maximum set amount of days. Definately let them know that if they perform well that there will be much more to come and that as you learn the process will get smoother from your end.

[Bill Gulley]

Hi, this thought may not have much to do with the subject, but sort of, while a BPO is not an appraisal (LOL) the BPO is usually based on comps of properties, and they stay away from using REO/forclosure sales, generally. So when is an REO sold with the same seller warranties and disclosures offered with those comps? Do banks provide warranty deeds, no, they are special warranty deeds limiting their liability. So, if you went to Ed's TV and bought a 60" plasma, don't you want the manufacture warranty, and if it came without warranty, would it be worth the same as the one that did?
OK, I'm done! Bill