Posted by IB (NJ) on June 19, 2007 at 06:18:47:
I almost lost my shirt dealing with listing agents of REO’s when I started out 7 years ago. The MLS prices were just too darn high and the listing agents too inflexible.
I soon realized that the big money in REI is dealing directly with sellers and no middle man involved. I would leave the MLS alone if I were you. Use them for comps and that’s probably about it.
Ib
I am a newbie, and already devastated… - Posted by Frank, FL
Posted by Frank, FL on June 15, 2007 at 07:57:39:
I am losing hope and sleep over a house I haven’t been able to wholesale.
I have already wholesaled 3 properties, in the 2 months I have been working at it, but this deal is the first time I can make some really good money off of a single deal.
I came accross a brand new listing in the MLS of a property that needed work, and wasn’t too far off from a price I would pay for it. The comps (really good comps) came at $400k, and they were asking $275k. Repairs needed are $40k. My first offer was $230k, and they countered at $272k.
At this point, the agent also tells me that they have a lot of activity in the house, and that they already had an offer for $240k. Despite my BS meter going off, I know I can go up to $245k, so I arrange a meeting with the listing agents and the seller to present my offer. I go with a cash offer for $235k in my hand.
We all sat down, and once I started talking, I noticed the seller is not as hostile as I thought he would be. As I explained the details of the contract, he was nodding and smiling to everything I was saying. Then, here come these two spawns from the devil: the listing agents. For my contracts, I give $1,000 in escrow, and a 15 calendar day inspection period for my proptection. Even though the seller AGREED to all of this, the listing agents refused these terms. They wanted a $20,000 deposit, and a 2-3 day inspection period. After arguing back and forward, I said my farewells, and the listing agents asked the seller to stay for a few more minutes.
To no surprise, the seller countered the next day with $243,500, 3 day inspection period, and a $20,000 deposit. I would try to get a contract signed for 12 days inspection, then 7 days, and the AGENT refused. They did not want to “tie up the property”. It was a Friday. At this point, I decide to show the place to a few of my investors over the weekend, and BAM!! I have a buyer ready to take the property.
Long story short, next Monday I manage to secure a contract with $5,000 down, and a 4 day inspection period that gave me until Friday to assign the property to my buyer. I let all my other investors know about the place, and there is a lot of interest.
The days pass, and my buyer is trying to get rid of his partner, so he is having issues getting the hard money loan to cover the purchase and some of the repairs. Another 2 buyers are having issues securing the financing in such a short time span. It is now Friday, and I am sitting here with the potential profit in my hands, close to being lost.
I have lost sleep, efficiency at work, I am stressed, and I am losing confidence in my abilities. I tried to go back to the listing agent to get at least this weekend, and she flat out refused, saying she would not even notify the seller.
This post is not so much for advise, but because I simply need to vent my frustration.
What would you do, what would you have done, and what should I do in the future to avoid what was a week in hell for me?
UPDATE - I have to move on - Posted by Frank, FL
Posted by Frank, FL on June 18, 2007 at 13:10:22:
Just wanted to give you guys an update.
Thanks for the encouraging comments and advice, but I had to let the property go.
I thought long and hard about risking my $5,000, and I thought of doing the project myself. In the end, I opted not to because I am in no monetary position to go through a $40k rehab job. I guess I lacked both the money, and or partners that would sign up with me.
I am learning that this business is a rollercoaster ride, and after a day of feeling down, I simply had to get up and continue working.
So far, the MLS has been a big part of my strategy for finding deals. This experience with a listing agent is convincing me more and more that I have to find better things to put my effort towards.
Re: I am a newbie, and already devastated… - Posted by Tim
Posted by Tim on June 18, 2007 at 08:22:56:
In the future, put in a clause that gets you out of it if you can’t flip it in a certain period of time. Word it however you want and for whatever reason but have it in there.
Tim - VA
Re: I am a newbie, and already devastated… - Posted by Natalie-VA
Posted by Natalie-VA on June 18, 2007 at 05:51:29:
Frank,
I hope this deal turns out okay for you in the end. In the future, just don’t sign up deals that you can’t or won’t close on yourself. It’s just not right to tie someone’s property up if you can’t or won’t perform in the end. Let us know how it goes.
–Natalie
Re: I am a newbie, and already devastated… - Posted by Brian_wa
Posted by Brian_wa on June 16, 2007 at 14:33:12:
If your numbers and estimations are correct, why don’t you just keep on trying to flip it if you can. If you can’t, simply buy the thing, clean it up (don’t fix it) to make it nice and presentable, then sell it and make a lot more. Don’t lose sleeps over a house with this much equity man. Have confidence and conviction in what you say or do.
Brian
Re: I am a newbie, and already devastated… - Posted by Sedlik
Posted by Sedlik on June 16, 2007 at 08:20:34:
Why don’t you buy it? get the money and close, then flip it.this should have been plan 2.at lease you’ll have more time.
Re: I am a newbie, and already devastated… - Posted by Doug Pretorius
Posted by Doug Pretorius on June 15, 2007 at 21:33:05:
Your experience with the seller vs. listing agent is totally normal. It’s VERY common for the seller to agree but their agent to refuse. So you better get used to it!
The simplest solution is to ONLY work with sellers. If you see a house on the MLS that you’re interested in, contact the seller directly. There’s no law anywhere they says you have to deal with the listing agent. The seller will of course still owe the commission, but they were going to pay that anyway, so that’s no problem.
Re: I am a newbie, and already devastated… - Posted by David C. Cooper
Posted by David C. Cooper on June 15, 2007 at 10:28:45:
I admire your persistence. I think I would’ve walked away from the negotiations and went looking for another deal.
I really hope you get it flipped, let us know what happens.
Good luck!
Don’t worry… - Posted by tsiegal
Posted by tsiegal on June 15, 2007 at 09:00:31:
How much did you flip the property for?
What area of florida are you in? Maybe i can help you out.
Re: UPDATE - I have to move on - Posted by Natalie-VA
Posted by Natalie-VA on June 18, 2007 at 13:31:17:
Frank,
I’m glad you’re learning, but I’m discouraged that you seem to think the listing agent was a problem here. It seems to me that she was just trying to protect her client. She sensed that you couldn’t perform and she was right. I’m not one to defend RE agents, but I think this one did her job.
–Natalie
Re: I am a newbie, and already devastated… - Posted by Doug Pretorius
Posted by Doug Pretorius on June 16, 2007 at 13:44:51:
Who needs all that risk?
Re: Don’t worry… - Posted by Frank, FL
Posted by Frank, FL on June 15, 2007 at 10:05:27:
The property is in Miami. I had a few buyers interested at $265k, but at this point I am more than flexible.
Re: UPDATE - I have to move on - Posted by Frank, FL
Posted by Frank, FL on June 18, 2007 at 14:12:23:
I know the agent was doing her job, but my gripe was that if she had not been involved, the seller and I would have come to an agreement where my investors get enought time to get their hard money lenders out to the property, I get my assigment, and the seller gets rid of his house.
In doing her job, she got in the way of this. I can’t be mad at her for doing her job, but she was certainly a very unpleasant person to deal with.