Why Do Some Realtors/ Agents Avoid Submitting Low Ball Offers?

[Lamont Mitchell]

It seems that most realtors/ agents I've worked with avoid submitting offers below market value even when the comps prove why I'm offering a certain amount. According to California law, aren't all realtors/ agents suppose to submit any and all offers on the behalf of their clients and isn't refusing to do so... breaking the law?

[Bill Gulley]

A good listing agent will ask an owner what break point they don't want to receive any offers, "Mr Owner, there are many out there that make low ball offers, some can be absurd and by law I will need to present such offers to you unless you give me a "stop order" at a price that is unacceptable to you". At that point the Realtor and agent find the bottom price and conditions that are acceptable. 

Now, any offer received below that number is in the domain of the Realtor to reject under the owner's instructions! 

Believe it or not, Realtors get a reputation among their peers, other Realtors!

If I'm the broker and have 200 active listings with 100 agents, I'm getting copies in my office of all buy offers or listings. I have to file this stuff and retain documents, it varies as to what must be kept but it's a legal requirement. 

Low ball offers waste my agent's time and mine, especially if my agents don't get a stop offers order, as they must be presented, even a phone call takes time and it also ticks off my owner client taking up their time, especially if they are busy. An agent can't tell a seller what to accept, they can say I know we can do better than this! 

On an MLS listing a listing agent may put additional details that only members can view, it could say the owner has a minimum for offers to be rejected. That's when a buyer's agent's experience comes in, they know the market and know that some low ball offer isn't going to fly. There may not be anything in the details of that listing, but the agent already knows a low ball without written justification isn't going to fly.

The agent that accepts such offers is basically saying, "hey, please waste my time and reputation" if that's the case, you have a dud for an agent. 

Then, when I see an agent's name on those low ball offers, swamping my office and wasting my time and my agent's I'm questioning the professionalism of that agent. Not only do I not want to work with that agent but I'd rather not have them trying to do business with us.

Then the "word" gets around in the office "stay away from that agent, all they do is waste your time". Now, that agent is cooked, s/he is being avoided! That's not a good place to be as an agent.

As to the make the offer yourself......LOL, if it's on the MLS the contract must be the one adopted by the Board of Realtors, it can be as an amendment to another contract but you're adding more work on the listing agent. Not having a buyer's agent as a new investor is a fool's game because you're usually unaware of the duties of the listing agent and the owner's instructions.

Generally, on a retail platform, 20% under the asking price is a low ball offer, but generally accepted to present. I'm talking about move in ready homes, not some gutted rehab project. 

Lastly, the OP is too far off saying rehab costs would be 20 to 30K (or whatever) I think he was off with a range about 50%, I can get closer than that in my head after a 10 minute walk through. I'd also suggest you dump that mentor.

New folks that use rules of thumb aren't going to be in business long. Throwing out offers 70+% of an asking price, you need to learn how to sharpen a pencil. You're passing up opportunities if you don't know how to value a property and understand the utility aspects of a property to force more appreciation by renovations. If you know what you're doing you can make money paying more than an asking price! If you have a hot market that usually means investors are there who know what they are doing, if you don't know, you can't compete!

Learn the basics of real estate and you'll understand how to use other professionals and how to seek out opportunities. Good luck :)