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Dealing with Real Estate Agents
by William Bronchick, Esq. |
The
real estate agents have a valuable source of potential deals for
the real estate investor - the Multiple Listing Service.
Unfortunately, real estate agents have a monopoly on this
information, so they may be a necessary part of an investor’s
game plan.
Dealing with real estate agents can be difficult as an
investor. Agents prefer home buyers with cash to put down, good
credit and conventional buying power. Their interest is getting
a commission with as little hassle as possible. Most agents
have never done a creative real estate transaction with an
investor, so they are not often receptive to unusual offers.
Most agents equate a “nothing down” offer with a buyer who is
not serious.
Offer a Reasonable Earnest Money.
You cannot present an offer with a $50 earnest money and expect
an agent to take you seriously. You can expect to pay at least
$500 as earnest money to get their attention. If you are
presenting a solid cash offer, you should put up more money. If
you are concerned with losing your earnest money, consider using
a promissory note.
Offer
a Short Closing Date.
Another way to get an agent to take you seriously is to offer a
fast closing. Nothing makes an agent salivate more than the
thought of a commission check in ten days. If the agent has
another offer presented to him, he will usually advise his
client to take the offer with a larger earnest money and faster
close than an offer which is higher in price.
Insist on Presenting Creative Offers in Person.
If you present a creative offer to an agent, it will not be
represented to the owner in the same enthusiastic fashion. As
stated above, agents do not like creative offers - they like
conventional offers from solid buyers. If you want the owner
to hear all of the great benefits of your offer, insist on
presenting the offer in person.
Appeal to the Agent’s Greed Factor.
Let’s face it . . . real estate agents are in the game to make
money, just like anyone else in any other business. If you can
offer the agent an incentive to make money out of the
transaction, you will get his cooperation. If you present an
offer which does not permit enough cash to come out of the deal
to pay the agent, why would he cooperate with you? If you
present a lease/option offer on a listed property, how will the
agent receive a commission? You need to find a way for the
agent to get paid, even if you pay him out of your own pocket.
Do
Your Own Comps. Sometimes
you will get the opposite of an uncooperative agent - an
overzealous agent. Be suspicious of an agent who tells you what
a deal you are getting on a property. If it is such a good
deal, why didn’t he buy it? Don’t take his word as to the
value. Ask for a printout of comparable sales (not listed
properties). Be aware that information contained in the MLS
computer was entered by the listing broker and may be
exaggerated. If a comparable sale shows the same square footage
as the house you are looking at, take a drive by and see if it
is accurate. Do your own assessment of value.
Fax
Preliminary Offers First.
Don’t waste your time filling out a contract offer until you
have preliminary approval. Most agents are not this formal and
will take any offer in writing to the seller. Simply summarize
your offer in writing and fax it to the listing agent. Once you
have an oral approval, then take the time to fill out a contract
and an earnest money check. NEVER put up earnest money until
the offer is accepted!
Don't
be Bullied by Uncooperative Agents.
If you cannot finesse an agent, don’t be afraid to stand up to
him. Some agents are unethical and will refuse to present your
offer. Many times the agent will lie and tell you that your
offer was rejected when, in fact, it was never presented. If
this is the case, do not be afraid to go over his head to the
listing broker. If the listing broker is uncooperative, deal
directly with the seller (unless, of course, you are also an
agent).
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