Investor Gave Up $30K Due To Bad Advice

You see it often in the blogs and articles on real estate investing that your team must include an ‘investor-friendly’ Realtor. We are told that success or failure often hinges on getting the right person in that role. That it is critical to identify someone who will help you find deals and bring buyers to them after you finish your project. But what does that mean in layman’s terms?

Let me begin by an illustration of what the ‘investor-friendly’ Realtor is NOT.

Last year I was hired as a contractor to finish a project for an investor. After making cost-saving adjustments to the design, we restarted the project.

Later, the house was complete and ready to go to market. Virtually the entire house had been rebuilt and the addition was 130% larger than the original house. The market was a strong sellers market. In this part of town, younger, professional Millennial home buyers were buying up well-executed houses at premium prices. However, the area also had a wealth of mediocre ‘flips’ which had a negative effect on the comp values.

Being very familiar with that neighborhood, I recommended a specific strategy to sell this property. List for $10k below the expected sales price and let multiple offers drive the sales price. On the other hand, the investor’s Realtor was afraid of the market in this neighborhood, believing that the local comps suggested a lower value, reducing the return on investment.

The house was listed at a slight discount to actual comp value. The initial open houses were disappointing for attendance, but those who came through were enthusiastic.

Eight days after listing, the investor followed the advice of the Realtor and accepted the first offer at $10k lower than asking, fearing that may be the only offer for months. Two days later, I received a call from a couple who saw our sign as the builder saying they REALLY wanted that house and was prepared to pay $20k OVER asking price for that or a similar one if our company would build it.

Lesson: Just because a Realtor has a license to sell does not mean they know How to Sell. In our example above, the investor gave up $30,000 due to bad advice.