Beating An Agent

[monnchew]

Hello All,

I have been flipping for the last several years, and within the last 12 months ran into a problem with a realtor/investor.  It seems every time I go up against him, he wins.  Sometimes the listing is in his office with another agent and other times it is with another company  It seems odd to me because after I submit an offer the next thing I hear is that I did not get the house.  There is no counter offer, no highest and best, nothing except for denial.  All other times, I would get something that says, "Multiple Offers, Highest and Best."

Is there a way to counter this?  Has anybody else experienced this?  Should I look into other means of finding properties?

[javipa]

Been there.  Done that.

This would make me suspicious that the agent has already signed to buy the property, or brought in a buyer, before listing the property.  This happens all the time where I'm at.

As a result, you're making offers on sold properties.

You could do some homework, and find out who the sellers were on these phantom listings.  If it's the same seller, and he's got more to sell, I would warm up to him, and get the inside track.

Otherwise, find out who the listing agent is (if not the agent you're fighting over deals with).  Make friends with 'that' agent, and let him know you're a buyer.  Also, if you're flipping property it would be real smart to figure out who the buyers were, and get them on your list of buyers...

You should be doing this with all the agents that are in control of these steal deals.  Your name should be on 'their' buyer's list.

Otherwise, you want to be prospecting for your own deals, and not depending solely on the MLS.   

I was taught to make friends with the 'gatekeeper' agents if I wanted to get first crack at the investment quality deals.  One way I've found is to scour Craigslist.  Many agents will advertise pre-listed properties there, hoping to find buyers before they're forced to list them, and potentially split their commissions. 

The steal deals ALWAYS either get pre-listing marketing, and/or presented to the agent's buyer pool, before the property ever reaches the MLS ...for obvious reasons.

BTW, looking into their means of finding properties is not going to be some secret, ninja tactic.  It's called networking, advertising for deals, talking to seller's who seem always to have friends who are selling; it's sending out direct mail to likely prospects; it's 'getting rid of' business cards like they were radioactive, etc. 

Hope that helps a little bit.

[justin0419]

I've done the same with pursuing new listings only to find out they're already under contract when they hit the MLS. I believe my Realtor told me they have 48 hours to get the listing posted after they get it. That gives them time to contact some buyers before it hits the MLS.  That happens more than people think.

[monnchew]

Thank you guys.  You are confirming my thoughts.  It has happened numerous times.  I will see that a property has just been listed on the MLS for an hour (I admit I have OCD and check it often) and when I call my Realtor to set up an appointment...it has already been sold. 

With the opening situation, the purchasing Realtor is in with the same office as the listing Realtor.  This office handles most of the REOs in my community.  Then purchasing Realtor buys the property for himself to flip or rent before it even hits the MLS.  It seems like they feed each other these deals all the time.  They undervalue the homes by at least $30,000.  What a great way to control the market.

Javipa - Thank you for your great insight.  I am going to take my flipping hobby to the next level and try to make it full time.  But now where do I start.  Any thoughts on how to reduce my liability exposure (LLC, insurance, S Corp, etc.)?  I read many of your posts and value your opinion.

Justin - Have you found a way to combat this problem?  If I remember correctly, a few years ago, you were finding many deals on the MLS.  Is this still the case?  I am only able to find one or two a year...a far cry from where I would like to be.  However, I do live in a small rural community.

[$Cash$]

monnchew,

Well, I ran into the Realtor problem and here is how I handled it.

www.publicizeyourproblem.com

John $Cash$ Locke

[justin0419]

You could do what Jay said and make sure that office knows you're a buyer. 

For REO's, they should get a few BPOs (broker price opinion) on the houses.  Everyone wants the most they can get out of a house for sale (most of the time) so if that particular office is low-balling the numbers, I would think they wouldn't get as many listings.   

You are correct about the MLS and our business.  We have found most of our properties right off the MLS.  We bought some last year from a guy I found selling property on Craigslist.  We also got a letter from one of our bankers a few months ago.  His bank was taking over six 2/1's in foreclosure.  We got first shot at them and bought them for <50% of appraised value.  That's what relationships can do.

Prices are starting to rise here...especially asking prices for the lower end houses.  We bought like crazy in the downturn for the last several years so I'm ok if we don't buy much more for now.  We may move into new construction instead anyway. 

[javipa]

Javipa - Thank you for your great insight.  I am going to take my flipping hobby to the next level and try to make it full time.  But now where do I start.  Any thoughts on how to reduce my liability exposure (LLC, insurance, S Corp, etc.)?  I read many of your posts and value your opinion.

Until you've got $200,000 in the bank, what do you have to protect?

Forget all the attempts to reduce your liability.  Honestly, that's operating from such a mentality of 'not losing' that you're likely never to get anywhere.  Be honest.  Be clear.  Be firm.  Be consistent.  Be a jerk when necessary, and maintain good records, and you'll be fine. 

After you've got nearly a quarter million in the bank, then you can begin obsessing on liability limitations.  Until then, learn how to make money, and stick with 'that'.  By the time you've got $200k in the bank, you'll know exactly how to protect yourself ...and realize that's not your biggest problem.   Your biggest problem is keeping the government out of your hair and pocket.  They hate entrepreneurs and small business people.

Your first priority might be contracting with a first rate CPA, bookkeeper, and tax attorney.  That's stuff you'll never want to waste time being an expert at handling.

Meantime, until you're gonna hold on to stuff, worry about liability later, and worry about tax consequences now.

At the same time, I would focus entirely on my prospecting machine.  That includes creating and maintaining a stable of 'ready' buyers.

Hope that helps.

If you get sued for all you're worth, I take it all back.  j/k

[mariahoustone]

This would make me suspicious that the agent has already signed to buy the property, or brought in a buyer, before listing the property.  This happens all the time where I'm at.

As a result, you're making offers on sold properties.

You could do some homework, and find out who the sellers were on these phantom listings.  If it's the same seller, and he's got more to sell, I would warm up to him, and get the inside track.

Otherwise, find out who the listing agent is (if not the agent you're fighting over deals with).  Make friends with 'that' agent, and let him know you're a buyer.  Also, if you're flipping property it would be real smart to figure out who the buyers were, and get them on your list of buyers...

You should be doing this with all the agents that are in control of these steal deals.  Your name should be on 'their' buyer's list.

Otherwise, you want to be prospecting for your own deals, and not depending solely on the MLS.   

[monnchew]

FOLLOW UP -

It is now confirmed that they selling Realtor is working with his associate realtor buddy (in the same office).  He actually bought the property for less than my submitted offer.  We had the same terms other than my higher price.  What should my next steps be?  Or should I let my Realtor talk to his broker and see if things get cleared up?

By the way, I live in a small town (less than 10,000 people) and everyone knows everyone.

[javipa]

Monnchew,

What exactly are you going to clear up?

You've got two agents working inside deals, and listing them just to formalize the deals, if not check off the 'listing box.'

The fact is these two are going to continue with this racket, and you're gonna continue to see these 'fabulous' 'already sold' phantom offerings, and you're gonna pull your hair out chasing them down rabbit holes.

Just move on. 

Find your own deals.  Or you could pre-qualify any deals from either of these agents, by asking them if these are "pre-sold pocket listings."

You could mess with their business relationship by offering absolutely full-on retail offers, of course, with no intention of closing.  But if the original seller ever found out what kinds of offers were being rejected, it could be hilarious. 

Or if one of the agents started thinking he was getting gypped on his commissions by passing these steal deals through the pipeline... Well?

Anyway... my actual advice is to forget these clowns, and find real deals elsewhere.

[monnchew]

Thanks guys.  I really do appreciate your help.  For my own satisfaction, I called the financial intuition's mitigation department and asked if they ever received my offer.  I haven't heard from them, but it was submitted.  They can do what they want with it and I'm off to find properties with what I've learned here.

Actually, I am visiting two properties tomorrow morning to see what comes.  I'm a little nervous to offend the sellers with a low offer, but they are realistic.  What all do you guys bring to the first meeting? 

[DelliaAmor]

Before we get into it, it’s important to know however that you still need to use the local public real estate market to your advantage. Be sure to remain up to date with what’s occurring in the market around you, in terms of comparable sales prices, stock that’s available on the market including quality, size, supply etc... Interesting thread here !