All Forum Posts by: Joe Facenda

It depends on where you think the deal flow will come from. If for what you want to do, the deals are coming from the MLS, you should only work with one agent.

If they are off market deals, you MUST have multiple sources.  One agent will not know all of the off market opportunities.

For me - a Realtor in Northern Virginia - if I am working with a buy and hold Realtor where the majority of the deals come from the MLS, I expect exclusivity with regard to listed properties. I realize they may find an off market deal but if I find out they bought a listed property from another agent, our relationship is over.

For fix and flips, I assume they will be checking multiple sources.  My only expectation is that if I bring them the deal, I get the listing on the back side. 

Hope that helps. 

I agree with @Chris T. - TAKE ACTION  and @Jay Helms - don't enroll in a guru course. 

Too many first time investors are looking for a "great" deal and never even do a deal.  Just find a good deal that makes money.  It may not be as much as you want but it gets you in the game.  You will learn your tolerances and how to do better the next time.  

Mentors, bigger pockets, an investor agent and a good REIA can really go a long way. You don't need a guru. Expensive education courses can not replace street sense.

Just don't lose money.  I think in your market you should be able to find cash flowing properties in most price ranges. 

Just do it.  

@Steven Gillmer You mortgage number seems high.  20% down at 4.5% over 30 years is $446 a month.  Hopefully you are not using hard money for a buy and hold. ( For personal reasons, can you PM me with the name of your investor friendly Realtor, let me know what you think to date and why you think they are investor friendly?  Thanks.)

Agree with @Corby Goade, @Russell Brazil and @Joe Villeneuve .  Throwing out dozens and dozens of offers appears to me a waste of time.  When investors come to me with that strategy, I thank them for their time and suggest they go to some other agent who is an order taker and not a consultant.  

Much depends upon your individual market but a good agent knows how to win deals and what will work. Most markets around the country are struggling with low inventory. There is no way 99% of those sellers will accept a 70% LTV etc type offer especially when they are new on the market.

So you say why not throw out 100 offers to find that one who will accept?  Because while you are wasting time - and it does take time to write, distribute and respond to offers - the smart agent has focused on that one that will work and it will be gone by the time you get to it. 

Scour listings on the MLS. Look at dozens or hundreds of homes. Look at comments, time on market, ARVs, etc and narrow it down to the few that have a chance for success and attack those.

I list quite a few estate homes . A healthy percentage of those are, well, to put it kindly, outdated and in disrepair. If I put a home on the market for $525,000 with an ARV of $600,000 that needs $50,000 of work, that is not, initially, a flip home but one priced to attract an owner occupant looking for sweat equity. Ballpark I would say a flipper, looking for a $25,000 profit would need to buy at a maximum $465,000 - maybe lower.

There is no way I  - or the seller - will accept that offer after a week or two on the market. If $525,000 doesn't get a contract, we reduce to $510,000 or so.  If that doesn't work, we then go to $495,000 and maybe then the $465,000 gets attention. 

But really why waste time and energy submitting $465,000 on a newly listed $525,000?  But I get those offers all the time.  It wastes my time, the other agents time and the buyer and sellers time as I need to present all offers.

If I was going to go to a casino to gamble (I don't), I could keep putting money into a slot machine and I might hit a big one but will probably go home broke.  However, if I worked on learning how to count cards, I could sit at a blackjack table and have pretty good odds of walking away a winner.   (Okay, I know multiple decks - probably would get thrown out, etc but you get the point.)

@Joshua Hilliard I don't know how this plays our on your side of the river but on my side in Northern Virginia, it is extremely tough to make money at foreclosure auctions.  (Fairfax County, Prince William, Loudoun) First there are a number of experienced investors at every auction who know the good stuff and will lay off the bad stuff.  But more importantly, there are tons of new investors who will make crazy unprofitable bids on properties.  Will they be "one and done"?  Usually. But new ones always take their place.  My experience there (I do not buy but have worked closely with a few of the big players) is that in a strong market like we have now, there are just too many bidders.

One of the posters mentioned knowing title issues. This may differ state by state but in VA, that is not as much of a concern. You need to know basically 2 things - the position of the loan foreclosing and if there are any IRS or tax liens. Everything else pretty much goes away.

If there are clouds on the title, I am pretty sure the deal will be voided. But IRS liens, tax liens and having to pay off a 1st trust are not clouds on the title. If that is why you don't proceed your EMD is gone.

And, yes, you are bidding blind. You can not see the property. Some are great (Once had a client buy a home that needed a little carpet and paint and generated a $100,000 profit. He also got a car which I think he eventually sold.) Others are full of surprises - pipes that burst over the winter and filled the home with mold. The ARV on both properties is easily obtained but the scope of work is completely unknown.

The only somewhat successful person I worked with had deep pockets and bid on multiple properties a month.   She knew some would be losers and some would be winners, but by buying enough she would likely come out ahead.  Trying to find the right one and pinning your hopes on that property is a path to bankruptcy.

Not for the faint of heart.

My advice - simply and strongly - is do not be a part time agent if you want to serve the public.  If you want a license for your personal deals, great, do whatever you want.  But if you are going to represent buyers and sellers whether they are investors or traditional clients, I do not see how any part time agent in today's market can give those those clients the representation they deserve.  Sorry but one old time agents opinion.

I have been around a long time and love training new agents.  I do not have a team but I do have a unique program where I engage new agents on my listings to help them put their classroom training to work in the field.  So I am not against new agents representing buyers and sellers with proper support but in a fast moving market, a part time agent just can't give a client what they deserve -  whether new or old.

I am going to disagree with a comment @Jennifer Petrillo made.  There was a reference made that insinuated the Realtor was telling you to bid high because they will make more commission.  Your numbers reflected the offer should be $61,000.  The list was $62,700.  What does  bidding high mean?  $64,000.  So for $3000 above your bid, the Realtor will make perhaps $90 gross and after splits and taxes be able to take their family out for pizza and beer.  Do you really think they are going to sell you out for a pizza dinner?

Look, I very much respect the numbers an investor suggests.  But as an active  Realtor, I am tuned into the market better than almost any investor out there.  There is much I can learn from active investors and their is much active investors can learn from me. 

So many times, I tell an investor something like, "I respect your numbers and see where you want to be.  However, we are in a multiple offer situation and in order to get this deal you will need to go above asking.  How much?  I don't know because we are playing poker but I think it should be $x.  You will likely only get one chance since if you are not good enough, they will work with the best offer.  If these numbers work, great.  If not, maybe we should move to the next property."

My job is to advise buyers as to what I think it would take for them to get the home at the best possible price.  Sometimes the best price is above market. I will never push somebody to write but I am doing them a disservice if I am not honest with my advice.  Worse, if I just take orders and do what they want without providing guidance and they don't get the property because of my lack of honesty, what good am I?

Bottom line, as a client you know if a Realtor is looking out for you or themselves by the way they conduct themselves.  Advising you to bid over asking is not a sign in and of itself of an unethical Realtor.

@Stephen Fryer When I wrote my response about not using the listing agent, after I hit "post" I thought, "Stephen must be an experienced investor."  And I was right.  You have boots on the gerund and people who can check in on your buys..... people you trust ....and you have done multiple deals in the market.  I think David is new to the business and the market he is looking at so it would not be wise for him to use the listing agent at this time. 

I also agree, as an agent, I would not feel great really working an agent to the bone for a sub 100K deal unless I was in a position to give them many in a short period of time. 

Thanks for the clarification. See, often there is never one right answer.  It depends.  Experience and goals play a big part.

I agree with some of what @Stephen Fryer said but not all.  As previously stated, I think you are wise to sign a buyer agency but one that does not tie your hands.

But where I strongly disagree with his comments is to suggest you call the listing agent.  This the WORST strategy for an out of town buyer.  The listing agent represents the seller.  If the neighborhood is between B or C, I am sure the listing agent will say B.  Condition of the property?  Ease of renting?  You will get an opinion that makes the property more attractive and promotes the seller's interest.  

Of course, on factual matters, the agent can not misrepresent but on subjective matters, they are looking at things through the seller's eye's.  And they will not - can not - negotiate on your behalf.

I agree with @John Warren.  The request for a buyer agency can be way to determine if you are serious or not.

Also, how and when an agent requests a signed buyer agency agreement can be dictated by state law.  In Virginia, for instance, agents are required to have a written agreement when a brokerage relationship is created.  When is that?  the short answer is when the agent starts giving you advice and showing properties.

However, there is no requirement here, and I am guessing in other states, regarding  length and terms.  

For a "normal" retail client, one looking to buy or sell a residence, I often make it exclusive.  But for investors who are getting deals from many sources, I may make it effective for only homes I show them.  (yes conflicts could happen but I work primarily with people of integrity.  They are fair with me and I with them.)  Or I may write it for a specific property somebody has brought to my attention and wants me to assist.

Length of the agreement is the other negotiating point.  NEVER NEVER sign one for longer than you think you need to find a property.  If it takes longer, it can always be extended.  

Okay, the broker may be required to get one signed but what is the benefit to you?  The agent will work harder for those he has signed as clients rather than those he could maybe get as clients.  If he finds a great deal, it would be presented first to someone already signed up with him where he has one less hurdle (getting a signed agreement.)

So in your situation, I would suggest signing the agreement.  You appear to value this broker. However, I would make it very short, like 30 days and then extend it as needed.  I can't speak for the terms of the agreement presented by your agent but the length of the agreement refers to the time it would take to find a home and write a contract.  Of course the time between contract and settlement may exceed the 30 days but that is automatically covered in most agreements.

No, don't tell them to go pound sand - just protect yourself with terms you can live by. 

Hope that helps.