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Dealing
with Real Estate Agents
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.
TAppeal 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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