All Forum Posts by: Fred Engh

@Chuck Mader The offer price is irrelevant to the REA's role as the buyer's agent. As it is, I will probably have to raise my price as I knew my offer was low. 

One sign of intelligence is the ability to look at situation from a variety of perspectives. Asking for others' insights is giving me different perspectives. It is no surprise ALL realtors think they are worth every penny and I should be giving THEM gifts (someone said that). 

The other issue raised was putting an offer in offer with a contingency off a buyer rebate. @Sam Shueh (I think that's what you were saying). 2 different issues (one is the offer, the other is the agreement with the REA). The offer to the credit union would never have had that contingency (it would have been an e-mail). 

I did not ask for the rebate and I made the offer. 

I probably will list it with a flat fee broker to save money to put into my beat up truck. If I were to get the property, I'd probably ask the broker for her thoughts on the price and remind her of the double commission she received (here comes the onslaught of wasting a realtor's time asking for free help or I should give this poor, starving, hard working realtor more money for the half hour she has invested with me). That was my thought. 

Good or bad, I do appreciate the feedback. I may not agree with all of it, but I do appreciate you guys taking the time to reply. 

@Joel Owens thanks for putting things into perspective in the big picture.

I think people are confusing, "Asking the REA for a buyer rebate on a small sale" and "Asking the REA who is making money on both sides of the transaction for a buyer rebate."

I agree with the $10k profit minimum being too small. I am familiar with a $20k minimum (it's a good baseline). On such a low dollar house, $20k is unlikely. I went long on my estimates for rehab. I figure there is a 4 - 6 weeks of work before being brought to market. 

@Matt M. with 30 minutes she has spent with me, I think she will be netting more than $8 per hour as she is the seller broker, seller agent, buyer broker and buyer agent, all in one. $2k. I am spending 4 - 6 weeks on a project and skin in the game. She's had it on the market 2 weeks with 2 offers (granted, she's had more work on the seller side). $2k in 2 weeks is not chump change and I believe "values her time" as so many have pointed out. 

In WA, buyer's rebate is legal. I bought a house and the REA flaked on two appointments. I called the broker and asked for someone else. They offered (I didn't even ask or knew at the time) to rebate part of their commission. 

Many people suggested using a buyer's agent. Food for thought. I did not, hence, contemplating asking for a buyer's rebate. 

It's a 1/1 that needs work. It is not livable. ARV is around $50k. That is the market here.

@Lynnette E. I agree the listing agent doesn't always receive the 6%. I believe she is the broker/agent so there would be no fees in this particular transaction.

@Brandon Carriere had I asked for the refund, it would be a reduction in pay because there was a reduction in services on this particular transaction, not exactly her whole paycheck.

@Anthony Dooley everything is negotiable. I can present any offer that I'd like. I did not elect to use a buyer's agent; therefore, I posed the question of asking for that portion of the commission refunded should my offer be accepted. I hope I can make a bundle, that is the goal.

@Russell Brazil that is a good point that they may have done a flat fee listing. Given that theory, the flat fee listing would have been higher (I've had REA want 10% for raw land). This would give more credence to my argument (say there was a $2,500 listing fee) that I should ask for a buyer's rebate.

@Michael T. Thank you for the input. That was the conclusion I came to: it would have amounted to a couple of hundred bucks. 

I posed a question and asked for feedback (boy, did I get some feedback. No, tell me how you really feel). Again, I made the offer without a buyer's rebate request. 

For homeowners (not so much investors), they suggest you never let a REA represent the seller and the buyer because of conflicting interests. 

As many have pointed out, it's not uncommon for the buyer's agent to refund part of their commission. If it were a larger dollar transaction with the same set of facts, I would probably ask for the rebate. 

Full service listing is 6%. She will receive all of that. As I do not have an agent, she is representing both buyers. Ok, update: I finished the e-signing and made no requirement of a buyer's concession. Also, the point was the buyer's commission issue, not is the deal worth it.

Two different issues @Anthony Dooley. One is the buyer's rebate. The other is, at this point, it would be a moot point as this offer won't likely be accepted. 

Wasting her time? I made an offer after a 20 - 30 minute inspection of the house. 

As she has a fiduciary duty to represent the seller (a credit union), she doesn't have my best interests in mind. 

She has not done any work for me from the buyer's side. Her role was minimal.

I expected to get slam from realtors because they have a self-interest (no offense).  I'm trying to make money in a C/D neighborhood. There are no half million dollar homes here.

Not presenting my offer? I'm not worried about that. I offered all cash and no contingencies other than a clear title. She would probably make more money on someone else's offer, but I have no doubt my offer will be presented.

Look at it from my perspective: making $10k on the flip (all new kitchen, floors, bathroom rehab, replace missing vinyl siding, ridgecap on metal roof, paint trim, pain inside, minor electrical, minor plumbing, etc.) is my goal and it's a fair amount of work.  Asking for a $500 credit when my expected profit is $10k is not as outlandish as you guys are making it out to be. 

She drives a nicer car than my beat up pickup truck.

I called the listing agent on a foreclosure listed at $35k. 

I told her I'd make an offer (not at $35k). Mine was significantly lower.

She told me she'd e-mail me the documents to e-sign. 

She had everything filled out (convenient). 

They already have an offer that I know is more than mine (it's cash as well). 

Am I being too cheap asking for a buyer's rebate on such a low dollar transaction? She's representing both of us. I looked at the house once. 

Although it was convenient having everything filled out, there was nowhere to change anything on the Authentisign document. 

What would you guys do?

Pass!

Why are the expenses so high? The numbers don't  justify that purchase.

@Amy Kendall stated, you would be receiving no return on your cash.

You need a signed contract and earnest money to seal the deal. Otherwise, you may be giving a free tip to someone else.

*Try to close the deal with the least amount of money as possible ($1,000)

*Always ask about seller financing

*Make sure your contract is assignable

*Complete a detailed scope of work for potential investors and be honest & forthright about the necessary repairs

*Use some BP calculators to run ARV flip potential and for a rental. KNOW YOUR NUMBERS

*Schedule closing as far as possible to give you the most time to shop the deal around

*Create a buyer's list (people who are investors in your area who want off-market deals)

*Have a backup plan - execute the deal yourself to flip so you don't lose your earnest money

*Consider upgrading to BP PRO, as this would allow you to post the deal in the marketplace.

*Check out the marketplace to see how deals are pitched (price, repairs, comps listed)

These are the first things that come to mind. I'm sure others will offer their insights.

Me thinks you are over thinking it.

Look at each deal on a case-by-base basis. I would focus more on the numbers.

There could be a million different reasons why properties were rented and re-listed. You'll drive yourself nuts speculating. You could always ask the owner on the specific house you're interested in.

$3,950 in rents and $2,100 in PTMI makes sense. Make the deal happen. 

Would you be willing to sacrifice your cash flow for 5 years (to pay back a loan) to maintain 100% ownership. 

10% return to investors is more than fair for them. It's not a risky bet. The property is fully rehabbed and rented out. Is there any way you can sell that aspect to them for a lower rate?

Can you borrow from your own IRA?

Your actual cash flow for capex your first year might be lower than anticipated and you could potentially repay the borrowed funds faster (shorting your capex fund as the tradeoff).

I remember reading an article where the date of closing for a multiplex was strategically chosen. For example, you close on March 1. You then receive tenants' rents for March on the first, but your first mortgage payment isn't due until April 1, but you had the benefit of utilizing the rent from the first month before your first mortgage payment was due. You then have April's rent (thus giving you 2 months of rent when your first payment is due).