Selling Poinciana One Property at a Time.: How to Find A REALTOR(R) Willing To Work Cheap.......Or Not!

How to Find A REALTOR(R) Willing To Work Cheap.......Or Not!

florida foreclosure

Hi folks. I received the following email earlier today. I'm sure with prices so low and agents being so busy that this is a very common occurrence. I was getting ready to write him a long winded email and then remembered....I have a blog article that will help him!!!

This is one of the advantages of having a blog full of helpful info. Instead of writing long emails we can just link folks to our articles. So here goes

  • I have had the hardest time getting a reply from a Realtor about what I m interested in buying. I saw a mobile home between $10,000 and $20,000. in Winter Haven. I'm very interested but don't get replies. Have had numerous houses in the past and believe most realtors wont bother with low commission houses. Would appreciate an honest, enthusiastic Realtor that doesn't have a $ sign as their first criteria. Thanks, Bernard

BUYING CHEAP REAL ESTATE IN TODAY'S MARKET. A REALITY CHECK

Here's one reason why a BBA (Buyer Broker Agreement) should be important to the Buyer. In fact, it's my opinion, that a BBA is MORE important to the Buyer than it is to the REALTOR® and here‘s why. 

  • (I expect I'll get all the usual responses about "My clients would NEVER buy a house behind my back" and "The commission doesn't matter to me". If you believe these things to be true this post may not be for you OR maybe it's EXACTLY for you!)

I spoke with a Buyer, earlier this week, who has cash and is ready to buy. It seems he has been trying to find an agent to assist him but everyone is too busy. Of course, after reading how slow the market is, he finds this hard to believe. So being the good little Broker that I am I explained it to him. 

His problem is....he is looking to purchase a deal, a foreclosure, a cheap rental property. And he should. There are some good properties that he can purchase for less than $50,000. As an Investor, these properties are the ones he SHOULD be buying. The only issue is the prices are so low, that the co-brokes (commissions being offered to sell the property) aren't worth the time involved in helping him find the right property. So he gets placed on the back burner. We may help him.....but only when we get some extra time. 

In fact, I have the same problem. He wanted me to go look at a property before he made an offer and I said I would......tomorrow. Today I was busy doing other things......that have a higher return. 

The reality is I can't afford to spend hours previewing cheap foreclosures that he may or may not be able to, or want to, purchase. 

This is where the BBA comes in. If a Buyer is truly wanting to get a deal, in the very low price ranges, then it is to his advantage to give his Broker/agent an incentive to put in the time. Maybe he'll have to chip in $1,000 or so to meet the minimum compensation outlined in the agreement but surely, by agreeing to this, he'll get better service and therefore a better deal on a property. 

I have always been a firm believer in getting the commission out of the equation right up front. The best way to do this is to get a BBA signed. Unless of course you like working for peanuts. I don't. And won't. My Buyers deserve better than that. Do yours? 

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Comment balloon 42 commentsBryant Tutas • November 08 2010 11:40AM

Comments

So is he going to sign?  I had so many of these last year and I offered my services for an up front flat fee of $100/hr 30 hour minimum.  No takers :)

Posted by Renée Donohue, Las Vegas Real Estate Broker - www.urLVhome.com (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

Some people will put enough peanuts together to make a bag.

Peanuts, get your peanuts here.

Enjoy the day

Posted by Don MacLean, Realtor - Homes For Sale - Franklin MA (Simolari & MacLean REMAX EXECUTIVE REALTY) over 7 years ago

Just had one of these the other day and finally had to let him go.  He was calling me incessantly an expected me to pick up the phone each and every time he called.  VA buyer and had no money for closing costs.  I'm going to write a similar post now, thanks for the idea.

Posted by Justin Dibbs, REALTOR® - Ashburn Virginia Homes for Sale (Pearson Smith Realty) over 7 years ago

BB,

It's a great idea.  Set the expecation from the very begining.

Try to seek those out who put a high value on their time and yours.

We have a minimum of $2,000 at our office.

Posted by Coldwell Banker Camelot Realty, Homes for Sale Mount Dora Realtor (Coldwell Banker Camelot Realty) over 7 years ago

Even better are the newbies that just bought their 1st "investing course" or stayed up late to watch the nothing down infomercials and don't really have a clue what they are doing, but want your full attention.

Posted by David Karp, Woodstock, Marietta GA Real Estate (Peachtree Realty Group, LLC) over 7 years ago

Similar scenario to low budget renters.   They often are the most demanding and time consuming and don't understand why you can't make them #1.  Perhaps we should ask tenants to throw in cash up front in a Tenant Broker Agreement.   

Posted by Coral Gundlach, Real Lives. Not Just Real Estate. (Compass) over 7 years ago

BB...These type of buyers can breed bigger deals down the road, but if it's not worth your while now...it's hard to cultivate the crops later. You have the right idea - agree on minimum compensation, then earn it.

Posted by Steve Loynd, 800-926-5653, White Mountains NH ( Alpine Lakes Real Estate Inc., ) over 7 years ago

BB - exceptional post. This kind of honesty and explanation helps buyers understand why it really is to their advantage to hire a realtor.

Cal

Posted by Cal Yoder, Homes For Sale in Lancaster PA - 717.413.0744 (Keller Williams Elite) over 7 years ago

Bryant, glad to see you are back....my subscription log has been missing you!  Great blog!

Posted by Damon Gettier, Broker/Owner ABRM, GRI, CDPE (Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert) over 7 years ago

Hi BB!  I totally agree with your idea and will definitely propose that my buyers agents use this.  I think it will be a win-win for everyone--those low-end home sellers just sitting there waiting to be picked and the buyers agents who would like a little more work as well as the buyers looking in this market who need assistance.  GREAT idea!

Hugs to you and TLW!

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) over 7 years ago

Our minimum is $1500. Anything under that unfortanately isnt worth the time!

Posted by Ryan Case, 877-828-0710 (SCA Real Estate) over 7 years ago

Hi Bryant. Once in awhile I receive an inquiry about lower priced homes. It is not unusual in my parts at least in Port Richey. By the way thank you for responding to my email and answering my question. I really appreciate it.

Posted by Lana Robbins Realtor ® Licensed Real Estate Broker, Licensed in Florida and Washington (Aloha Kai Real Estate) over 7 years ago

BB,

It can be as simple as if you have the time.  But many times, you just don't.  I understand the minimum's and I think they are a great idea.  A buyer/broker agreement is a must in this type of situation as well.

 

Wendy

Posted by Wendy Rich-Soto Realtor,Real Estate Coach & Consultant, "Bridging Your Way Home" (Keller Williams Realty, LA Harbor) over 7 years ago

I don't work with foreclosures and I won't buy or sell a property under $200K unless it's a favor for a past client.  Why?  The commissions aren't worth the risk related to my E&O insurance.  I used to do rentals but stopped doing those as well for the same reason.  In either case, the commissions are very low and not a reasonable risk/reward balance.

However, if I get a call from someone looking for a deal I will help them get exactly what they want without having to use up a lot of my time.  I'll walk them through how to approach the listing agent, give tips on making an offer, I'll even look up comps on the phone just to give them the tools they need to move ahead - just not with me.

 

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) over 7 years ago

Excellent post. Don't give away your services. I don't.

Posted by Jon Quist, Tucson's BUYERS ONLY Realtor since 1996 (REALTY EXECUTIVES TUCSON ELITE) over 7 years ago

BB - While I agree that you should make a minimum commission when working with small buyers like you described for 10k, if you take a client on (with a BBA) then you have a duty to serve them unless, of course, you cut them loose.

Unfortunately, here in CA, many of my buyers who are in the 200k-300k price range get treated like they're some kind of cheap 10k buyer from so many of the Realtors around here.  Once again, I understand that many Realtors have their specific business model to only work with certain price ranges and if that's the case then don't waste peoples time by taking clients you don't want and then treat them like crap when higher priced buyers suddenly come along. 

If you don't want them, refer them out and let them work with Realtors who will treat them they way they deserve to be treated.  I get so sick of seeing my buyers get treated like crap from Realtor who take them on because they (the Realtors) are desperate because they have no other clients they're working with and then as soon as that higher dollar value buyer comes along, my buyer gets treated like a stray dog. 

Ok, mini rant over and I will get down off my soapbox now.  Have a good night BB.

Posted by Donne Knudsen, CalState Realty Services (Los Angeles & Ventura Counties in CA) over 7 years ago

That is a very interesting point. You get what you pay for. It takes a lot of time and many offers to get a winning bid and the returns are low for the time invested on these properties. This provides an incentive for good agents to invest the time. Interesting.

Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) over 7 years ago

Thanks Bryant,  you gave me an idea on how to handle these buyers.  I get so many calls on <$20,000 properties.

The problem is when I realistically look at the work involved in dealing in this market, I'd probably have to charge about what the homes are worth.  There are always multiple offers and the buyers seem to be more difficult to work with.

Posted by Tim Maitski, Truth, Excellence and a Good Deal (Atlanta Communities Real Estate Brokerage) over 7 years ago

BB...

Here, it is unusual to collect from a buyer over and above the commission, but we have done it before in cases where the investor buyer recognized the value!

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 7 years ago

BB...

Here, it is unusual to collect from a buyer over and above the commission, but we have done it before in cases where the investor buyer recognized the value!

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 7 years ago

I think it makes alot of sense to charge a fee for your time - should make them more serious as well. Haven't done before but I will now. Thanks for the idea and post.

Posted by K.C. McLaughlin, Realtor, e-PRO, Homes for Sale - Cary, Raleigh NC (RE/MAX United) over 7 years ago

Many of these self proclaimed investors today are looking for that elusive one in a million deal.  They are never satisfied with the listing price, comps or other facts.  They only want 'the deal' and it's based on asking price.  Very hard to please and work with.  I agree with your binder idea.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 7 years ago

My loan officer got fired this week and doesn't know it yet. . I wanted him to help me help people that are credit challenged and start a campaign with a group of them. . 

He told me its not enough money. . that we shouldn't bother.. 

I said these are seeds for business in the next few years for us. . when no one else is helping them. .we are .

Has anyone experienced the power of gratitude from a client when they couldn't find anyone else out there. . that is a powerful weapon for any business. .

 

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 7 years ago

I am being stalked by people wanting rentals.  They want me to check on every house that has been on the market for a long time to see if they want to rent.  My time is better spent on real ready willing and able buyers wanting to buy. 

If the renter wants a higher priced home and has money to put towards a lease purchase or owner finance, that's a different story.

Posted by Kay Van Kampen, Realtor®, Springfield Mo Real Estate (RE/MAX Broker, RE/MAX Solutions) over 7 years ago

Bryant,

That makes good sense. I'm sure he doesn't have unrealistic expectations of other professionals.

Brian

Posted by Brian Madigan, LL.B., Broker (RE/MAX West Realty Inc., Brokerage (Toronto)) over 7 years ago

 I agree with Fernando.  My best lead ever came from a $750 lease.  Two years after I put my client in the lease property, he moved to Louisiana and was working with a company moving 60 families to Houston.  He called and asked if I wanted the business.  That was 14 years ago.  I'm now selling homes to the children of those clients.  If the buyer is ready, willing, able, reasonable in his search and will sign the buyer rep agreement, we're good to go. 

Posted by Jeanne Gregory, RE/MAX Southwest, Sugar Land, TX over 7 years ago

I had a "wholesale investor" that I worked with for about six weeks.  And the offers that they were submitting was insulting to say the least and therefore, were not accepted by the sellers.

We did this about five times and after that, I made an executive decision to start charging a transaction fee for every contract I wrote up and submitted. 

You're right Bryant when you say that "if there is some sort of incentive," then these buyers would receive better service.  It takes time to write up contracts, fax or email them to the listing agent.  Talk with the agent, the title company.....blah, blah, blah, all for $800.  It's simply not worth it!

Posted by MeLisa Minter, Realtor, Taylor Lake Village Real Estate Broker (RE/MAX Space Center) over 7 years ago

I do think clients sometimes forget that not all the commission is spending money. That we have mortgages, food, car loans like everyone else and so sometimes do have to set personal minimums. A BBA would certainly solve this but I really wonder how many will pony up the cash. I doubt many. But hey, thanks for the idea, I'll be honest and say I had not thought of this and will now be integrating it.

Posted by Corinne Guest, The Choice of Professionals for Luxury Home Buying (Barrington Realty Company) over 7 years ago

With many of my low end buyers, I actually have my assistant do a lot of the upfront work and research on these.  And then I step in just to do the showing and the paperwork.  Just too much effort to earn a $1000 commission after making offers on 8 or 9 houses. 

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) over 7 years ago

Great Post Bryant, I agree with my fellow Atlanta agent Tim Maitski. Unfortunately this type of buyer is probably the most demanding of them all.  And don't bother asking them for a buyer brokerage with a minimum commission.......they will never sign it. 

Posted by Home Design, Home Design and Real Estate over 7 years ago

The Best Ideas are always so simple.  You Rock!!

Posted by Michael J. Gallo, Florida Luxury Realty - Gulf Home Sales Team (Florida Luxury Realty) over 7 years ago

Bryant,

Good post, but whomever stated that these small investor deals can lead to a cash crop is correct. Cultivate them, its time well spent, but if they won't sign and exclusive then pass on them. We have to be very careful with our time and not to waste it.

-Brent

Posted by Brent & Deb Wells, Prosper TX (LivingWell Properties) over 7 years ago

Great idea. We all need to watch our business so we can stay in it. Prices have not come down to that level where I would need to have a buyer kick in to pay me....yet. We will see where this market takes us.

Posted by Michael Simcock, Elk Grove, CA Realtor 916 425-1084 (Coldwell Banker (Elk Grove, CA)) over 7 years ago

How often does an agent try to walk and kick themselves at the same time, because they have invested time in a buyer/seller that did not result in compensation, it cost them time, money & impacted there self esteem.

Having a BBA is essential but I have found that agents are either timid or so willing to work for free that the public as a skewed perception of the value of an agents services --- there is an old saying that goes why buy the cow when the milk is free.

Posted by Lorraine or Loretta Kratz, Certified Negotiation Consultants (Crescent Moon Realty, Inc. & Land N Sea Auctions.) over 7 years ago

What ever form you want to use as a buyer's agent you need to set your expectations early in the relationship.  When I have this type of investors I give them 2 weeks to get a property into escrow or I stop working with them.  I let them know upfront what my expectations are and if they are not met then I will not work with them.

Posted by Simon Mills (Mills Realty) over 7 years ago

BB - terrific strategy, but has to be carefully and knowledgeably presented. I like it!

Posted by Mike Saunders (Lanier Partners) over 7 years ago

I have not had to use a minumin compensation with my buyers, yet, but have been tempted when selling rural land.  On the other side of the equation, I have let sellers know that it may be in their best interest to offer a higher co-broker commission to a buyer representative in order to have the buyer broker feel it is worthwhile to show the buyer the property and to even write an offer.

Posted by Mike Weber, 40+ years in Northern Colorado (Keller Williams Realty Northern Colorado) over 7 years ago

I think this way of doing things makes sense to both parties, and where a buyer is getting a great deal but no service, it makes sense to pay for that service.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 7 years ago

Yo Dude...

Why am I not parked? What oh what is your problem? :)

Let's go over it again. Post in draft. Park TLW. Post blog entry. Don't make me explain this again :)

TLW...ROAR!

Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) over 7 years ago

Interesting post!  The first home I ever bought was a condo conversion project.  My agent didn't make me sign a buyer's agreement.  She worked her tail off showing me properties (typical first time buyer, I had to see everything...).  We were finally to the point to write a contract, I had the unit number picked, then I got a call from the company representing the builder.  Buy direct and they've give me $3000.  $3000 is a lot of money to a first time home buyer!  But there was no way I was taking the bait!  However, I shudder to think how many people wouldn't do the same - moral of the story - buyer's agreement!

Posted by Sara Bonert, Real Estate Internet Marketing (Zillow) over 7 years ago

Good point.  I hadn't thought about that perspective but it is true.  There are some inquiries that I can't even respond to because the price point is so low.  They take the same amount of time and without a guarantee of loyalty, you can actually lose money by pursuing them. . .

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

I have many calls/emails from the 'cash deal hunters'. They do know care who would be their realtor, but who will bring a deal 60c/1$ to flip and make fast money. There is no loyalty there and no BBA.

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Los Angeles CA (Barcode Properties) over 4 years ago

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