All Forum Posts by: Eddie Egelston

I'll tell you how. I had buyer clients who wanted to see a FSBO, and they eventually made an offer on it.

To set up the showing, I needed my commission agreement signed. So I had to call the owner, explain the process and the agreement, and then email it to him. He said he "needs his lawyer to read it before he would sign". This was a Friday, so now the showing gets delayed through the weekend until he could get a hold of his lawyer. He finally says "ok I signed it" so I show up with buyers, and first thing I do is ask if I can have the signed doc. It isn't signed, and when I request it be signed before we proceed, he mutters about "what's the big deal"? ...Oh nothing, this only the sole way I make a living that's all.-__-

So we stand there awkwardly for a couple minutes while he signs the thing. So the showing goes well. It took about 10 times more effort from me than a normal showing which is usually 3 clicks of a mouse. Feeww, glad that's over. Oh wait it's not, the buyers want to make an offer!

To make the offer I request a copy of the property disclosures. It takes him about 3 days to email them to me. When I get them they are not legible and are incomplete. It takes another few days to sort out. (These are the same property disclosures, by the way, that should be 3 mouse clicks away, pre-loaded on the MLS, in a "normal" transaction.) But no worries, I finally have the disclosures, so now with the RE contract we have a complete offer.

At this point I should be able to email the offer to a listing agent, and be done. But since this is FSBO, and since the guy has already displayed to us that he struggles with email, and reading things and signing things, I take it upon myself to present the offer in person. I must be a crap buyer's agent though, because his counter was "his asking price + my commission" hahaha FML.

My buyers made a FMV offer, but the guy just didn't want to budge. No worries, my buyers found something else, bought it with me, I listed their house, and they have referred people to me since then. So yeah, about 10 - 20 times more of a time commitment from me. If all showings took that much, buyer's agents would get paid 9%.

Illegal. That's RE 101

Similar options? Don't pay them a cut of the commission, but treat them rreeaallly well.

 Patient and disciplined yes. Chain yourself to a generic software calculator? No. Let deal after deal after deal pass you up because you're "smarter" than every other investor out there? Nah.

Here's a small sample of the deals my clients have passed up recently, because they were too conservative and wanted "their price". Their pockets are now lighter by over $100k.

819 Apache Trl , Lake Villa, Illinois 60046 - They wouldn't pay more than $125k for it. The folks that bought it did a C+ job of rehabbing. The rehab was dated the second they installed it; coulda sold for $10k more easy.

9672 Bennington Dr , Huntley, Illinois 60142 - We actually offered more than the eventual buyer but they were cash. The buyer easily made $60k. The house needed $25k in work and was the biggest steal I have ever seen on MLS.

700 Durham Ln , Hoffman Estates, Illinois 60169-4800 - There were 2 comps of the same model that sold before this one, 1 for $310k the other for $330k. They wanted to believe $310 was market value and not $330k. Guess what, someone else went aggressive instead of conservative and cashed in.

578 Cortland Dr , Lake Zurich, Illinois 60047 - for some reason my clients chose to bid $20k lower than any other flipper would have. Some other flipper easily cleared $60,000 as this sold for waayyy more than the comps.

This is all a subjective argument. When Ivy says her ARV is conservative, conservative compared to what? The comps? Other flippers? The eventual selling price- that's a guessimate of the future. I can only speak from my experience. My experience is that rehabbed houses are selling for tens of thousands over the comps, and that other flippers are paying more for properties than "the 70% rule" says they should, and they are laughing all the way to the bank.

You are assuming the listing agent contract will allow this. I collect 6% from seller regardless. I'm paid on results; most others are too.

I'm sure you already know, you'll want to do a lot more research on this topic than just posting on a forum.

From what I have read you must hold the property for at least a year and must have bought it for investment purposes. (Not a property you are flipping.)

Hi @Ivy Pierce,

I know I'm a little north of you, but I'd like to share my client's experience. They are trying to buy properties off the MLS, and yes it's tough here like everywhere. I am personally seeing retail houses and specifically other flips going for way more ARV than the comps said they were worth. ($10k -$25k above on $200k - $350k properties.)

So in my opinion, yes you should be less conservative on ARV, and yes you should assume you will make it up on the back end. Or else find another source of deals, because that's how hot the MLS market is. (Within reason, I'm not saying over pay, but there is a really fine line right now.) Also the BP calculator is just a guide and might be off base for your market. I use a customized Excel sheet that is tailored to my model.

I have been looking much further west, where the population density and therefore competition is less. Best of luck!

@Kenneth Cowan-

Are you sure you have a capital gain 13 months after buying new construction? Selling is going to cost you about 8%.

It sounds like you have desire, financing and a helpful father-in-law but do you have cash or equity? Where's down payment and rehab money coming from?

Is the fiance on board? Where will you guys live? Maybe tie the knot and get her "committed" before suggesting she move out of her new $330k house into a $100k fixer? haha

I'm just playing a lil devil's advocate and fleshing out more info on your post. You are the most entertaining thing at 2:15 am CST lol

@Account Closed thanks for sharing with the community! What is making you go to Texas?

As @Zachary H. said you can change your mind quickly, try to save EMD, apologize and get out.

As an alternative point of view, is the market you're in super hot? Maybe $130k is not a bad price to pay for the house.

Forget Zillow. Please. Zillow lets you know if you are in a 200k neighborhood or a $400k neighborhood if you were blind folded and dropped from a moving car without knowing where you are. Zillow is below garbage; I don't rely on them to be within $50k let alone the $2k you are worried about.

An agent in my office listed a condo for $99k recently and it sold for $109k with offers up to $117k. Maybe you are in a similar situation.

This is a question for your attorney. Theoretically this could have tax and other implications.

Your question of quitclaim versus an agent is not even a question. One does not substitute for the other.

The quitclaim is the method by which you transfer title. There are other options.

A "normal sale with an agent" would only be useful if you will try to sell on the open market. DO NOT let an agent take 3-6% of your family's equity to buy from your Mom haha! Perhaps consult an agent to review comps and explain closing costs.