|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 investors 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 Agents Greed Factor. Lets 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 didnt he buy it? Dont 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. Dont 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, dont 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
Copyright 1998 All Rights Reserved. No part of this publication may be copied
or reprinted without the express written permission of the Author.
William Bronchick, Esq.
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