All Forum Posts by: Mark Updegraff

Quote from @Russell Brazil:

Buyers better get ready for the fact that they're all going to need to sign buyer agency agreements in the near future if they want to work with an agent because of the DOJ. 

It's interesting that the DOJ says they want to protect the consumer, but the action they are taking will lead to mandatory buyer agency agreements and will likely lead to a rise in cost to the consumer.

 Well said @Russell Brazil - Our preferred attorney will be meeting with my agents here in Upstate NY to review new protocol in light of the recent lawsuits.  I've never required someone to sign an agency agreement in over a decade of doing this.  I've been burned a couple times early on, but the type of personality that operates with no consideration of anyone else but themselves is easy to spot with a little experience.  Now they're the ones I politely decline to work with.  If you're someone that brings value to to the table, it should be a no brainer for loyalty given you're working with a decent human.  It will be interesting to see how the consumer reacts when these documents start getting shoved down their throats.  Indeed it will be bad news for the consumer as a lot will get locked in with inexperienced / part time agents who never make the cut.  In my market, this can easily lead to increased home prices, closed transactions that had no inspection where there are a lot of issues that could have been identified by an experienced agent, and a bad taste in the consumer's mouth.  Co-op broker fees have been diminishing over the last few years, and I think it will accelerate.  Discount brokers a keeping the meat on the listing side and shorting the selling side.  Most buyer's can't afford to pay the differnce and selling agents desperate for a deal don't seem to mind.  We're going to see a huge shake out of agents over the next few years IMO.   

I’m out of town this week but happy to give you my insight when I return.  I’ll send you a pm w my cell - text me and we can schedule a time to discuss.

Sincerely, Mark Updegraff 

@Andrew Wilson & @Teresa Johnson

You've both come to the right place to get started!  I just met with @Ryan Shaffer who is also a young new investor that is starting his journey. 

I think you guys should start an accountability group!  I've found it very helpful in building my businesses to have people that you meet with regularly to help keep you accountable for your goals.  

This network here will be more than happy to answer any questions that arise along the way, which is great.  But you really need to stay focused on your goals and move toward them regularly.  There is no better way than linking up with people that are in the same stage as you, so you can brainstorm, talk strategy, encourage each other, and KEEP EACH OTHER ACCOUNTABLE!  

Let's GOOOOOO 😉 

I love it as an aid for content creation.  I also really like feeding it long things that I have written with direction on what to do with it.  

Randomly, I fed it the opening post from a BP forum post that I had been commenting on, along with all my comments and got a really nice succinct way to sum it up for the initial question.  

Initial Question:

I'm currently in the process of buying my second property. I am using a VA loan and I am currently located in Virginia beach with the following search criteria: SFR 4/2 with a backyard ( garage is a bonus) , 1600+ sqft with a market time of 40+ days, minor repairs or modifications needed are welcome.

The modification and market time is , you guessed it, to be able to negotiate a discount from the original listing price.

The agent that I work with is the same one I used to purchase my first property. I really like him, but he doesnt feel comfortable writing offers that are discounted from the listing price. He Always finds a way to talk me out of it.

Have you experienced this before ? What are your thoughts ?

The ChatGPT response based on a back and forth discussion I had with the author:

It sounds like you have a specific idea of what you are looking for in a property and are hoping to negotiate a discount from the listing price based on the market time and potential repairs or modifications needed. However, it seems that your agent is not comfortable writing offers that are significantly lower than the listing price and is trying to guide you towards a more realistic approach. In a strong buyer's market like the one you are in, it is likely that there will be a high number of offers on any decent property, making it difficult to secure a significant discount. It is important to remember that as a buyer, you are subject to the forces of the market and cannot expect to "fight" it and get a deal that is not in line with market value. It may be more realistic to expand your search criteria and focus on finding opportunities rather than trying to get a specific property at a discount. It may be helpful to ask your agent to provide a spreadsheet of all homes sold in the last 90 days and 365 days that fit your criteria, so you can analyze the data and see where the market is trending. Ultimately, it is important to be honest with yourself about whether you are truly looking for an investment or just looking for a deal on something specific.

Original Thread here:

https://www.biggerpockets.com/...

Quote from @Jeff Costa:

The real question is: can Chat GPT write listing descriptions in ALL CAPS?!?

You've got me dying over here ROTFL 😂 🤣 😝 

I have to admit, it wrote me a KILLER description whit just a few prompt inputs.  Like, where have you been all my life GOOD.  It did forget the caps though 😉

@Frank A Castro 

I've been obsessed with ChatGPT for the last week.  For fun, I pulled out my dialogue with you, but not even in a really sophisticated way.  I gave it your input of your first question followed by all my responses (with none of your content in-between).  and asked it to write a short article.  Here is what it came up with:

It sounds like you have a specific idea of what you are looking for in a property and are hoping to negotiate a discount from the listing price based on the market time and potential repairs or modifications needed. However, it seems that your agent is not comfortable writing offers that are significantly lower than the listing price and is trying to guide you towards a more realistic approach. In a strong buyer's market like the one you are in, it is likely that there will be a high number of offers on any decent property, making it difficult to secure a significant discount. It is important to remember that as a buyer, you are subject to the forces of the market and cannot expect to "fight" it and get a deal that is not in line with market value. It may be more realistic to expand your search criteria and focus on finding opportunities rather than trying to get a specific property at a discount. It may be helpful to ask your agent to provide a spreadsheet of all homes sold in the last 90 days and 365 days that fit your criteria, so you can analyze the data and see where the market is trending. Ultimately, it is important to be honest with yourself about whether you are truly looking for an investment or just looking for a deal on something specific.

Pretty cool!!  😎 

Appreciate your elaborated response, truly. While I agree with all the info and facts ypu have provided, i must say, and thats on me for not putting it out correctly: On my $340k I am the one paying for the $10k of closings, not the seller. 

 OK, so you're 30K under the 370k list or 8%, that's getting pretty close to making a deal.  

Is this your "Best and Final" offer?  If it was, you've got to wait for a price reduction before you'll be able to make a deal.  That 5% I talked about is pretty tried and true.  If you want a response from the seller, you'll need to be at least at that price point.  If I was your agent and you told me you needed to be at 340k and you wouldn't pay a penny more, I would do a verbal with the listing agent.  They would likely run it by the seller and he would say no, maybe you get some insight into what he would take wiht a verbal counteroffer.  I would then tell you we've gotta wait until the next price reduction when we're within that 5% of list price.  Hopefully the cut didn't spark offers and then we could negotiate you down to where you want to be.  

If you want the house and you don't want to loose it, you could try to do a best and final now.  IMO 8% under won't get it done.  If you were willing to come to 350 it would increase your odds but they would be slim still.  Realistically if you want the deal now, you probably need to be at least at 355k and that isn't a given.  if the seller didn't take 360 given a lot of days on market he is a fool.  If that was the case just wait it out for the next reduction.  

You want to be conscious on how you're structuring your offers.  The listing agent will read through the lines and make a lot of assumptions.  If you can keep the concessions off until after you have a number it is going to help you.  When you come in asking for concessions the seller thinks, man this guy NEEDS my help to buy a house, he can pay me MY price for MY help.  Take it off, it isn't helping you.  Once you get the deal, have you agent add it back in so long as you agree to take it off if the appraisal becomes an issue.  

Increase your deposit AS MUCH AS YOU CAN.  This will show you're a serious buyer.  Even if you end up getting a credit back at close.  You're in a low % down product, make yourself look like a well qualified buyer in other regards to counteract that.  

Waive your inspection.  Sellers that entertain low ballers know that it isn't the end of the negotiation.  As soon as you get them to capitulate you have an inspection and then ask for another 20k or more off.  Don't be that guy.  Get your discount upfront by letting the seller know you're a professional taking it as is, with a quick close.  This will give them peace of mind that the CAN work with you at a discount.  If that is past your comfort zone, have the inspection performed before you write the offer.  Most seller's will be OK with that if they know that you'll be writing an inspection free offer.

In concluding, if you're w/in 8% of the list price the agent should be willing to help you make a deal unless they know something you don't.  

Hope all that helps!

Sincerely, Mark Updegraff 

 Hi @Mark Updegraff,

I really appreciate your input, however I will say that yes, I am trying to get something at a discount, hence why I have in my search Criteria houses that need light repairs and have been listed for a longer period of time, why ? Because in my market supply hasn't kept up with demand and everyone that's selling their properties know that. 

You stated on your answer that you think  the reason the house is on the market for so long is because is overpriced or  has issues, but then you said that I am trying to get lucky because I am trying to get it at a discount. You also said that I am not trying to buy an investment property, but get lucky, like if paying for an overpriced item was going to do me any good. 

The reason I came here was to seek advice from people that have been on the game longer than me, have most likely experienced this in some sort of way in the past, and how they have dealt with it.   

I will leave below my analysis for this particular property, maybe someone that knows my market (VA Beach ) can see something that I don't.

Asking Price: $370k

My Offer: $340k plus closings ( about $10k)

0% down, and buying my rate down to about 5.5% fixed at 30 yrs ( around an extra $2000 )-> PITI $2275 , plus 388 ( CapEx, Vacancy and Repairs) = 2663

Income: $2600 

Then you see that even offering $340k and self managing I'd be -$63. However, I'd be living in this house for at least two years( VA loan 1 year required) while I am renting my other cash flowing property ( I am also in the process of pulling a HELOC to help funding my next deal). While living in the house I will be forcing appreciation by improving comps and give time to the rental market to catch up.

I spend my free time analyzing properties and 85% of them I don't even show it to my agent because of the unrealistic offers I would have to send for it to make sense. Also, I show the listings I want to put an offer on to my agent, he doesn't bring them to me, which I don't have a problem with. 

I do agree he is a hard worker and a great person, I just don't think we have the same strategy approaches. 

Respectfully.

The main point I'm trying to make is this, and I don't know the answer it would take a little due diligence which you could request from your agent.  Which, if he is unwilling to do then I will agree with the sentiment in this forum and that is to find another agent.

What is the market value of that home?  You see, you're subject to the forces of that market, unless you "get lucky" as I like to say.  You can't fight the market, you can participate in it knowing full well what you're getting yourself into.  Or you can choose to wait for a more favorable time.  OR you can choose to find a more favorable location.  The problem with your approach is that you want something SPECIFIC.  The more specified you "investment" is the less likely it is you'll "get a deal" 

True investors scour the entire market, in fact the may watch multiple markets in multiple locations!  They're focused on opportunities.  To the true investor it is about the numbers first and everything else second.  By restricting your search you're restricting your ability to be a good investor. Ask yourself, is this really an investment or am I looking for a deal on something particular.  Be honest with yourself too.
There are markets that a pro forma will NEVER work.  Sitting around waiting for one in such a market is a waste of everyone's time.
Ask your agent to do this.  Tell him: "Sir, I really want my next "investment" to be a 4 bed 2 bath 1600 sq ft colonial style with garage within the zip code of 12345 and within 1 mile of sunnyville elementary (or whatever your MUST HAVES are, he'll need them all).  Can you please make a spreadsheet of all the homes sold in the last 90 days, and 365 day that fit this criteria within 100 + or - the square footage and they can have 4+ beds and 2+ beds."  Once you have this data, you (or he) can do a quick analysis. What I do is add a column to calculate the price / ft of each sale and then reorder the data to go from lowest price / ft to highest.  You'll need a least a dozen entries to get some accuracy to this.  If you don't have it you'll need to open up your criteria a bit.  Don't restrict by a criteria that is not common among houses, like lot size. If you want 4 acres but the average property in that area is 1/2 acre don't put that restriction on.  This would be another parameter that tells me you're bargin hunting and not "investing". Once you have your list rank ordered take the subject property and multiply its square footage by the average of the middle 80% of the price / ft entries.  This will give you an approximate value if the subject property's condition is similar to that 80% average.  Ask him to also email you those comps so you can drill in and look at them and see if one or two stick out as "most similar"  You can multiply that out by the subject sq ft and that should give you a really clear view on what MIGHT be attainable IF the market fundamentals are still the same.  In my market, the "chasing" approach is a good place to start however sales are going way above asking so this metric isn't and end all be all for a good agent.  A good agent will know the market and help you attain your goal.  Remember in a market with rapidly rising prices delay may end up costing you more.  I know everyone in this forum will shout things like "used car sales man" etc.  Trust me, I've done this for 12 years.  The people that listened to me, even in a rising market HAVE MADE OUT THE BEST.  People with your approach have not.  
As a disclaimer, I don't know this agent or if he's worth a ****.  However, these stats are true:  20% of agents sell 80% of the real estate.  Chances are, if you have one of these 20% you've got someone that knows the market VERY WELL and can help you attain your goal.  What he or she CANT do is force the market to be something it is not.
All that said:
Asking price 370k, your net to seller offer 330.  (Please, never add your concessions as "your offer", we're talking about net to seller.  Like I said previously that 10k extra makes you look like a weak buyer).
SO your 40k Under his ask. This is 10.8% under list price.  Let me be real with you, and maybe you ARE right about valuation.  When you're on a market and you get an offer that is 10.8% less than asking, you're going to do a price reduction FIRST before you entertain the offer to see if there are other buyers that don't want to kick tires.  Sorry, thems just the facts man.  If you're not within ~5% of a list price, you're probably not going to do well.  Be honest with yourself though, you want a house, and you want a deal.  You're not an "investor" in this situation.  You're a buyer that simply wants a discount.  

QUICK TIP:  If you can do the deal without the concessions have your agent construct the deals without the concessions and then after you've come to terms with a seller ask them to add the concessions back on top the offer.  In this scenario you came to terms at 330k and then your agent would write an agreement that the seller agrees to add the 10k sellers to the top of the offer making it 340k and if the property does not appraise the buyer agrees to take them back off.  What you're doing with the concessions as part of the offer is not smart.  If the property doesn't appraise and I'm the seller now I just went down this road with your (at a discount to my list price none the less) and now I've got to discount it more if I want to do the deal, PLUS I've been off market for 2 months for possible other buyers).

Let me say this as well:  The market is VERY sensitive when listings are even just a small amount over the true market value.  He could be off by as little as 5k and it is hurting the seller to get it sold.  If what you told me is true and it was severely overpriced to begin with then that would make complete sense.  He could be one 5k price cut away from the landing the appropriate buyer.  Hell, he could be one 5k cut away from multiple offers pushing it past 370!! I'm not kidding, I've see it.

Final disclaimer.  You could be right, or I could be right.  Do that exercise and find out.  If I was a gambler, I would put money on me 😜

Quote from @Drew Sygit:

@Frank A Castro At least 95% of agents are useless to investors - the one you are working with obviously included.

You need to find an agent that:

1) Is an investor

2) Works with investors

3) Can prove they work with investors!

 Realtors that are investors have less tolerance for idiot "investors"  Realtors that are investors only work with other investors that are serious buyers.  Not all "investors" are buyers.  We also call them tire kickers.

Quote from @Frank A Castro:

Good evening fellows, 

I'm currently in the process of buying my second property. I am using a VA loan and I am currently located in Virginia beach with the following search criteria: SFR 4/2 with a backyard ( garage is a bonus) , 1600+ sqft with a market time of 40+ days, minor repairs or modifications needed are welcome.

The modification and market time is , you guessed it, to be able to negotiate a discount from the original listing price. 

The agent that I work with is the same one I used to purchase my first property. I really like him, but he doesnt feel comfortable writing offers that are discounted from the listing price.  He Always finds a way to talk me out of it. 

Have you experienced this before ? What are your thoughts ?

 I'm going to go ahead and disagree with the majority of the people in here.  

It sounds to me that your agent could be spot on and is trying to save everyone some time.  Look, if you were my client I would get you into the best possible outcome possible, but I'm not going to pretend that writing significantly under asking offers for difficult sellers that probably overpriced their homes to begin while using a loan product that may make you look less qualified is going to get you anywhere.  When people ask for concessions and closing assistance, even if they don't need it, it makes it seem like they do... which makes their deal more risky for a seller.  In my market we've been in a strong buyer's market for several years.  Even in todays environment we'll see north of 20 offers on any decent property.  The fact that it is sitting on the market does tell me that it is either overpriced, or has issues.  You say you're looking "for an investment" but you're not.  You're shopping for something that you want, but you want it at a discount.  There is a market for real estate, if you're not operating within that market you won't be successful.  Professional realtors know the difference between sheer luck and what is attainable.  It sounds like you're looking to get lucky.  If that's what you're doing; consider telling you agent to make verbal offers. This will allow you to make quick offers on a majority of properties and if there is any way it could come together your agent will surely write it.  I'm guessing there are not many of these properties, your agent is being a realist, and you would rather come on here and listen to these people that have no idea what the fundamentals are in your market place and then fire your hard working agent that needs to put food on his table for no good reason.  If you have a good agent, and you are truly a buyer.  Let him do his job and get you into what you're looking for.  IMO you'll waste so much time in the pursuit of saving money that it will cost you more as prices swell around you.  I've seen it time and time again.  Just my 2 cents, please don't shoot the messenger!

Happy Hunting!

Sincerely, Mark Updegraff