I have always wholesaled, and I guess I just gravitated toward FSBO, because, there isn’t an agent trying to up their commission, but since I am going into rehabbing, lately I have noticed that the better homes (those that are in great neighborhoods, and are just cosmetics), are listed with agents, and of course they are not priced wholesale, but they are priced a little more realistically, that most FSBO, I see. I said that to say negotiating may be a little easier, since the seller has an RE pro telling them that my offer is good for their property. The only issue that I think I will have are my requirements. I have three contingencies that are non negotiable:
1- Seller must pay for an appraisal to determine as is value, and after repair value, at the time of the appraisal to be delivered to the buyer.
2- Seller must finance part of the deal, with no payments for one year. The note would become due, at the selling or refinancing of the property.
3- Seller must give buyer a Home Depot or Lowes gift card at closing, the amount of which is negotiable depending on the property, but is always between, $2000-$4000.
I just don’t know if I can get a seller with a listed property to adhere to these requirements.
In general, you’re going to have a tougher time getting deals closed that are MLS listed because you will not be discussing terms directly with the seller. Dealing through an agent, or any third party for that matter, always makes it tougher to get things done. Besides the possible problem of miscommunication (ever play the gossip game?), you also have to deal with the agent’s own issues and bias; they may not like investors, you, or your terms and thus won’t present it in a good fashion even if it’s presented correctly. Add your own agent in the mix and the problem(s) are compounded.
Now, you could add a fourth requirement to your list, which is: you must be allowed to present the offer directly to the seller. Again, this is not always possible. Sometimes the agent simply won’t allow it (a violation of ethics, btw) and sometimes the seller won’t allow it (that’s why they hired an agent afterall).
Also, you have to determine if the listed properties are indeed properties that you wish to pursue. As a wholesaler, you know that you need a minimum markup to make a profit. It’s a lot easier to deal with sellers that are already in line with that offer than to try to get them to discount a bunch. An agent’s primary duty to a seller is to get them the best price for their home. It’s likely that yours won’t be it.
Of course, this is assuming that you are dealing with properties that are for sale by homeowners. If you are looking at bank owned, then it’s highly unlikely that ANY of your requirements will even be considered, much less done.
All said, it can still be a profitable venture as many investors don’t mess with it for the amount of work that it takes. If you can work with the numbers, you may do well indeed.
Raj
Hi all,
I’m new here. And new to investing. But I am seasoned in real estate. I have been helping people buy and sell homes for 2+ years as a Realtor.
My thoughts on this come from personal experince in the industry. Working with a Realtor to buy a home can be a good thing. my experince tell me that homeowners, espeically those in money problems are way over emotional and often irrational when it comes to negotiations with their homes.
Try a Realtor it may be the best deal you’ve ever worked, and the easiest. Making a contact with a solid Realtor will take you far. We often have knowledge about good deals before the word is out. After all the MLS is the main source of current homes for sale and even websites that filter out from the MLS will take days for new info to surfice. A Realtor gets this info as soon as its listed, live time. Not days.
FYI I recently saw a home in my area list for tens of thousands of dollars under market value (with proper repairs). It sold to an invester. He spent about 30 days in repairs, now its up for rent. New owner made a smart buy. All was handled through Realtors.
Here is the scoop. When you contact a Realtor about a listed home:
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The commision has already been worked out with the seller. It rarely changes. And when it does its usually down, not up.
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They represent a motvated seller (after all they listed and agreed to pay a portion of the sale to the pro) and the Realtor is also motivated to sell the listing (to do their job and get paid).
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Realtors KNOW how to put deals together. Negotiation, terms, price and conditions are all part of daily work.
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Realtors (usually) know how to help their clients understand the terms and how it will affect them. Is this bad for the invester? Who knows. Depends on the deal. One this for sure, you wont know unless you try!
As a realtor, I always like to say everything is negotiable. Your requirements are a little bit unrealistic and might tend to kill the deal. Of course if you’re also working with a realtor, he/she will probably do their job and say that your demands are a little unrealistic, but can be done. I would probably agree to all your requirements, however I would have your appraisal paid at settlement, if you don’t go through with the deal, you’re out the money. The other item regarding financing part of the deal is just tied into the selling price. You’re more likely to get the property at the lowest price without any of those requirements. Having the seller give back 2-4k is easy to do once they realize it doesn’t really cost them anything if it’s on the settlement papers. The drawback is that if the property is borderline with the appraisal, pumping up the selling price by 4k might cause the deal the fall apart, but as you’re looking for good values, this isn’t as likely to happen.
Also as a Realtor, I think there’s actually more interest in getting a good deal done than trying to pump up the selling price. In this area, prices are soft so there’s not a lot of worry about overpriced properties, more like how much lower are they willing to go.