I’m thinking I should be seeking the listing agent for such cheap properties under the assumption deals this small would only be of interest to the listing agent because they wouldn’t have to split the earnings with a buyers agent. Is this the correct line of thinking here? It’s what I’ve gathered so far in my first home search but no one is telling me, i’m just getting ignored by agents who at first like to tell me how “up front” they’ll be with me. Uugh. It’s getting kinda annoying it I understand their position, but if I were in their position, whether a “green” agent, who often seem to get sent my way or a more seasoned one, I’d just tell people “up front” what is worth my time. Anyway, before I go on a rant, if this isn’t one already, so yeah, is that what I do, locate/contact the listing agent? Thanks
new "investor" here with little $. interested in less than 25k properties
My wife and I deal exclusively in the price range you’ve listed. We use a father & son team of Realtors. They don’t care if the house costs 25k or 10k. They’re happy to help us and get a sale. What you’ll find on some of the cheaper foreclosures is that the commission is a set amount and not the standard 6% we always hear about. We’ve bought several houses in the 10-18k range where the commission was around $2,500.
Some people don’t want to fool with cheaper properties. Other ones will work with you on anything and just want to keep closing deals. Look for someone who advertises that they work with investors or see who lists cheaper properties in your area. A lot of Realtors end up working a certain price point in the market.
If I were you, I’d locate the listing agent. If you’ve located a great deal, you’re most likely going to have multiple offers. If a realtor has one offer directly from you and one from another agent, take a guess which offer he is going to go out of his way to sell to the vendor?
Officially under the board rules, they are not supposed to do that and could be fined, but I’ve got a strong “hunch” you’ll get a better deal and terms dealing through the listing agent so he doesn’t have to split his commission.
Remember, the listing agent is the gatekeeper of information.
Hypothetical listing agent scenario: “Hey vendor, I have two offers. One is offering $5,000 more from another agent, but looking over his conditions and what I know about him, he doesn’t sound serious and I don’t think he’ll close and it’ll end up staying the market. But, I got another buyer that really wants it and from what he’s told me he would definitely close this deal quickly. But, if we take the first offer, we might loose the second serious buyer to another property.”
I’m not going to say that I’ve closed deals dealing directly with the listing broker and had that broker tell me he had three other offers through other agents because officially that would be against board rules and I wouldn’t want to get anyone in trouble. I also wouldn’t want to say that other agents later told me years later that they had clients with better offers that were turned down on a property I bought. I’m just suggesting that real estate agents may be motivated by self-interest just like you.
Thank you very much!
Trying marketing to movitaed sellers that are easier to deal with. Also remeber agents may not understand your objective becuase they are only worried about their commission so find investor friendly agents that will be of better assstance.
You are right about agents, but only the poor agents that do not see the big picture. An agent should not be thinking about the sales but the long term relationship with his or her clients. If this is the case, a good agent works well with investors.
I have to stereotype all agents. There are great ones, too.
When you say they work well with investors, you mean regardless of how big a purchase they’re making? yeah, this one guy was cool, but after our first run which didn’t go through, he ignored my last two attempts to communicate with him. I must not be worth it and some day in the future if I’m still buying real estate in this area as he’s still an active rea he will have lost out my good business, God willing I should be in such a prosperous position to make big deals…
Yes. I’m talking about Realtors who will work with you even on the smaller deals. Sure it would be great as a Realtor to have several closings per week on $500,000 homes, but that’s just not reality for most of them. Our Realtors know there’s a very high chance of us buying a home when we go out with them to look. We’re already approved for the money and we’ve already screened the properties to make sure they match our criteria.
Yes, there are realtors who work well with smaller commissions. Some people like big commissions and they can wait awhile to get each one. Those realtors are easy to find because they seem to not have to do as much work as the ones who sell lots of smaller homes. Those close more and work their butts off but when you find a good one, keep him or her because a good agent is priceless.
I am a licensed REALTOR in Virginia and welcome investors of all sizes. It doesn’t matter if it’s 25K or 25M. Honestly, the relationships with smaller investors are more important to me than the actual deal sizes. Many realtors will avoid deals in the 25K range because it may not be worth it to them. If you have a 6% commission then that’s $1,500. That is split between listing and selling brokers with each taking half (3%). So each broker gets $750 and then splits their share with the agent after broker’s fees. Let’s say the broker fee is $350, which comes off the top. What’s left? That’s $400 to be split between broker and agent. So the agent may get $200 on a $25K deal and that’s if no other fees are encountered during the transaction. With all this it is understandable why many agents won’t touch deals of this size. It’s really a lot of work for maybe $200.
On the other hand, I look at it as getting $200 for establishing a relationship. It’s not bad. It won’t pay my mortgage but it may be worth it for establishing a relationship, which can grow. Maybe the next deal can be $250K. Then things start to look more interesting.
If the property is already listed with an agent, then they already have a listing agreement with the seller which spells out the fee split. If you put your offer through that listing agent and the deal closes, then the agent will keep 100% of the fee rather than splitting it with your agent. This will help the listing agent be more motivated to consider your offer. Of course, you have to recognize the fact that their first priority is to represent the interests of the Seller - but if they accept your offer - then the Buyer and the Seller are on the same page and it is all supported by a motivated listing agent.