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?

[Jay Hinrichs]

@Ryan Harthan  operative word is you work for yourself...

[David Veikune]

I'd just find a new agent Lamont. There is no reason that you should be having to deal with that before the deal has even happened. Or if you cant find a good agent in your area and you and your partner are going to continue to submitting a lot of "low offers" maybe one of you could get your license so you don't need to deal with anyone. Then you get to keep that buy and sell commission 6% for yourself or you two could split it appropriately. 

[Jay Hinrichs]

@David Veikune  EXACTLY what they should do ... drive your own boat. 

[Account Closed]

Originally posted by @Jay Hinrichs:

@David Veikune  EXACTLY what they should do ... drive your own boat. 

 Aptly named SS Minnow.

[Account Closed]

[Leigh C]

Over the years I've had a few clients armed with "shotguns" They would just spray the MLS with hundreds of contracts and then look at counter offers or the rare acceptance.

I use to charge them 25/contract and then credit back to them any commissions earned towards future contracts.   It was basically a way to protect myself from being a paperwork slave.    

My memory is a little foggy but one guy did a few hundred properties, bought one and then quit.    I allowed him to use the commission earned on that accepted contract towards previously written deals and he quit using me after that deal.    He probably paid me an additional 2500 or so to buy that 60k house.     He did his own drive bys so i didn't actually have to show the houses except the 1.   

Another guy did 200 contracts and figured out this business wasn't for him.    He looked at 5 in person.    

The third ended up buying 4 properties and he kept about even with the 25/contract fee.     I looked at maybe 50 homes with him.    

I more than likely made the least per hour on the last customer, i roughly put my earnings at 35-40/hr before my broker's fee of 33%.    So 25-30 an hr was what i could expect from investors bottom fishing.

[Anna Tai]

Several months ago, while shopping for a rental property from the MLS, I asked my agent to put an offer for me. I did my research, I know the market price in the neighborhood, the rental income, repair cost, previous sold history, potential cashflow, etc. My agent told me my offer price was too low because, he said, the seller would not make any money after all closing cost, and paying the agents' commission. My thought was "who do you work for?" The seller was an investor, who has purchased the property dirty cheap gazillion years ago, and have made money over the years, and is selling because the building is converting from leasehold to fee simple, and she did not want to buy the fee. So I quickly found another agent who happily put in an offer of the same price for me. Long story short, I ended-up purchasing another property from an excellent agent.

[Henry M.]

Lamont Mitchell,

I believe Jay Hinrichs, Derek Jones, and Victor Saumarez have hit the nail on the head in their posts.

If you have submitted your offers, only to be rejected or never presented, yet the homes sold for your asking price or better, then it may be the EM as Jay alluded to. However, as Victor stated, this tactic may work normally in distressed areas... If the areas you are offering these estimated prices are less than the average sales price in your targeted area, then Derek makes a great point.

Now here is another curve ball that you may not have thought about, if none of the above is true... The issue may be with your mentor. If he's been in the game around, he may have burnt many bridges. It may sound far fetched, but maybe try on your own and see what the results are.

In my opinion, I believe all of the above is true... More so, Jay's take, which is true. Here in Texas, you normally don't have to deposit the money into escrow until the offer is accepted... Not sure how CA is, but I have used Jay's technique, even with banks in doing a shortsale or deals such as what you are pursuing, and it will work like a charm from time to time. One time, I sent the bank a copy of my entire offer in a cashier's form... It was accepted.

Lastly, you stated the following:

"For example, two weeks ago we submitted an offer of $88k for a property that was listed for $106k with a $250 EM. I estimated that the property needed about $30k to $50k in repairs, so in my opinion, our offer was too high."

If you may indulge me, what was your estimated ARV for the above quote?

Just my two pesos of reinforcement...

Big Henry

[Katie Rogers]

There are agents who will not submit so-called low ball offers even if the comps, repair cost and other info support the offer.  I have noticed that sometimes these houses sit on the market for a very long time, until that same low-ball offer is finally accepted....from a buyer other than you.  Even if your offer was submitted, if the seller rejects it, their pride will not let them come back to you, so they often end up accepting an offer even lower than yours.

[Melissa Searing]

Lamont Mitchell I think it would be great if you got your real estate license. My partner just got hers and I cannot even tell you how great it is to be able to search MLS, see properties and submit offers without needing anyone else. SUCH a great decision for us and worth every penny. Best of luck to you! (And try not to take people's condescending comments personally or let it discourage you from posting).

[Carl Dean]

Lamont Mitchell my rule #1 (unless a personal house that your wife wants Aka happy wife happy life) I never submit at asking. If I can't get a deal I don't want it. Many guys don't want to sum it them because you can build a reputation of being the low ball guy. Either way be aggressive and keep in mind... Retail real estate agents suck for guys looking to invest. They just don't get it. Find a realtor or better yet a broker that specializes in investment properties and is familiar with battling for deals. I know some good ones depending on where you are at. Let me know if I can help.

[Jay Hinrichs]

@Melissa Searing now that you have a license on your team please sell some of our new construction there in Charleston :)... great job... Its such a HUGE advantage in my mind having access to MLS ... being able to list your own deals. ( one you save money) two in a skinny deal you don't take a loss because you saved money.)...

And you never know when you will pick up a good buyer or in your market a very nice high end listing and make 20k...

Great step forward from were you started