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Andrew Ikeda

Ok, I know, I know...but.....

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Hello Michael and Everyone:

 

After studying l/o's from several perspectives I see that everyone is pointing to the motivated seller and finding the 'ideal' conditions. (The materials dont seem to go into details about dealing with r.e. agents.)

However, where I live, the traditional way of going through a real estate agent still prevails.

So now I'm wondering how can we structure a 'good deal' when r.e. agents are involved? (I'm assuming this can be done) If someone is asking lets say, $100,000 for the house, should we offer $93,000 or less (less 7% r.e. agent commissions - average)? Or in other words, have the seller cover closing costs??

How feasible is this and what do you think the percentage is for this kind of system/method working? How about the agents? Has anyone experienced any hostility from them? Sorry, I know this is kind of a stupid question but I'm lacking information in this area. I'm wondering if there are many (or any?)motivated sellers going through r.e. agents, and if so, how to find them and work with them.

Again, I understand that the main concept of making l/o's work is targeting the motivated seller but I'm just wondering if anyone has anything different to say about this and willing to share some ideas.

As usual, I am always grateful for advice and ideas.

Have a great day!!

 

Sincerely,

 

Andrew

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Andrew, my experience has been that, for the most part, your typical real estate agent gets in the way of doing creative deals. Not all, mind you, but most. I have nothing against Realtors, and I think they provide a necessary service in the community. However, their training is not in touch with ours as creative real estate investors. Talk about lease purchasing, seller carry backs, and flips, and you'll this :D.

Their first concern, understandably, is their commission. Talk about any kind of nothing down deal and their isn't any deal.

I always try to avoid Realtors just for these reasons. I have never found there to be a shortage of FSBO's or FRBO's available to talk with. And as you market yourself, these FSBO's and FRBO's will be calling you.

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Hello Michael:

 

As always, thanks for your answer. There is just one thing nagging a little in my mind.

My question is, just... what if.... I started negotiating with a seller and r.e agent and maybe they change their minds after a few weeks or whatever. The seller is willing to cover the agents commission, etc. Could you tell me how you think agents would react to that? I dont think they would have a problem with that but then....I really dont know.

Also, what happened if the seller gets fed up with the agent and the property doesnt sell? Could an investor or seller or both go around the agent?? Are there any ways around the agent without 'rocking the boat' so to speak.

I remember back in 2001 I went to an open house and a potential buyer was saying how one agent she was working with at the time only took her to a few properties and then told her how busy she (agent) was and after (I think it was 3 months), she cancelled the agreement with the agent. Could you please briefly explain this 'agreement' or deal? I'm not sure how long sellers are obligated to use an agent?

I was observing an open house at the time (training with Coldwell Bankers for my r.e. license), and no, I didnt get the license..thank God!

And for all the other investors who might be reading this, here is something for you to think about: If a real estate broker has say 10 agents working for her and these 10 agents each do a deal drawing $6,000 in commissions per deal and split it 50/50 with the broker, the broker will be making $30,000 for that month. It got me to thinking why the broker I was planning to work with told me that becoming an investor was next to impossible until I had at least 24 months experience as an agent. One of my friends was a r.e agent several years ago and she brought this to my attention. Very lucrative, eh?

The reason I brought this up is because I'd like to encourage everyone to live by the golden rule - treat others as you want to be treated!!

Thanks for your time and consideration.

 

Sincerely,

 

Andrew

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Every situation and Realtor are different, of course. In general with the situation you described I would think that with the seller agreeing to pay the Realtor his/her commission, that would probably make everyone happy.

As for "going around" a Realtor, my advice is don't. It is illegal and unethical. Any short term gains you derive from doing so will surely come back at some point in time and nip you on the heels. You may be sued or, worse still in my opinion, your reputation in the community will be tarnished. Your reputation as an honest businessperson is invaluable to your long term success in this business.

A typical listing agreement between a homeowner and a Realtor allows them the right to cancel. However, if a homeowner decides he wants to save $20K in Realtor fees, and decides to cancel after the Realtor has shown you the property, the homeowner is still responsible for paying that commission should you buy the property. If the Realtor should find out, you can be positive a lawsuit will follow. This is something you want no part of.

If a homeowner wants to do business with you, tell him to contact you when his listing is either cancelled or expired.

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Guest Andrew

Hello Michael:

 

Thanks for your prompt answer. Of course, I dont want to do anything illegal or unethical and dont plan to either.

Sorry, I'm not clear on something you wrote. If I understand this correctly, it would be illegal or bring trouble only after the realtor showed me a property. So if I just did a cold call to seller inquiring about it and without looking at it, it would not be a problem?? You wrote: "If a homeowner wants to do business with you, tell him to contact you when his listing is either cancelled or expired." It would be ok to mention this if I were doing a cold-call without encouraging him to cancel the listing? :D

In summary then, what I'm asking is if I could cold call the sellers legally and ethically to supplement calling FSBO's and if it's ok, how?

Thanks again Michael and have a great weekend!!

 

Sincerely,

 

Andrew

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I guess the first question I would have is how would you have the phone number of the homeowner?

If the property is listed with a Realtor, it would be the Realtor's sign and phone number on the front lawn, and the Realtor's ad in the newspaper would have the Realtor's phone number.

That said, let's just say for argument sake that you did somehow have the homeowner's number and called, knowing that the property was listed with a Realtor. I think you'd be walking a fine line here, Andrew. You are soliciting business from a homeowner while he/she is under a listing agreement. On the other hand, someone else would make the argument that since you had never seen the property, or spoken with any Realtor about it, you have done nothing unethical.

My opinion is this is asking for a problem. You may go many years without a problem with this approach. Then, one day, an angry Realtor discovers what you have done, and presses on with a legal action against the homeowner, and possibly even you. Who needs it?

There are plenty of FSBO's, Andrew. Don't cause yourself any unneeded aggravation.

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Hello Michael:

 

Thanks again for the answers. I have no more questions about this topic...and dont worry, I wont cause myself any aggrevation! :rolleyes:

 

Sincerely,

 

Andrew

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