Today, Jim Huntzicker goes over the important points to mention with interacting with agents.
As Jim explains, having proper communication can help you build a relationship with agents and in turn, provide you with more opportunities for deals.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Jim: Hey, everybody. It’s Jim Huntzicker. I am the host of the REI Classroom. Today we are going to cover proper communication and proper communication specifically in the MLS.
Mike: This REI Classroom and real estate lesson is sponsored by UglyOpportunities.com.
Jim: You know, most people, when they use the MLS or they tell me that they can’t use the MLS because it’s either, you know, two things. Either too competitive or there’s no good deals, but it can’t be both, right? If it’s too competitive, is that through for the non-deals? So anyway, of course there’s deals in the MLS. People pull out all the time, but the reason so many people struggle with it is they don’t know what to say or how to say it. So, I’m going to teach you a couple scenarios today that will show you how I get estate sales, which is my favorite sale on the MLS.
If I could only do one sale for the rest of my life in the MLS, it would be estate sales and the reason is they’re houses that are in great shape, they’re usually just cosmetically dated and that’s my favorite house to flip. So they’re a great opportunity there, but usually when they come on, there’s multiple offers, but 50% of the time, I am not the highest cash offer and they accept my offer. Let me repeat that. I am not the highest cash offer and they get my . . . meaning they have other cash offers just like mine that will close quickly, but they take mine.
Why do you think that is? It’s because of what I say to them and how I say it to them. And the entire time I’m talking to the agent before I go to the house, when I schedule a showing, after I go to the showing, I’m calling that agent to feel them out, build rapport with them and it’s not even about the deal yet. I’m just like, we’re calling them to say, “Hey, how you doing?” I’m just, like, introducing myself, letting him know that I’m a real estate investor, that personally, I’m a licensed agent so that I’m a licensed agent, I’m the buyer of the property and I’m just building rapport I am doing nothing else but trying to make him laugh, you know, and trying to get him to like me and that’s all I’m doing.
Of course, we’re talking about the house in the process, but what am I doing? I am feeling them out for deals. Do they have offers? Like, are they solid offers? But I don’t ask that at all. I just talk to them. I just talk and I say, “Hey, how you doing? You guys have a lot of activity?” Like, “Oh, any of those crazy offers from investors that are really low or really too high?” You know, because they can get high offers too and those aren’t good and that’s how I get the offer for less because they’ll have other cash offers.
So, let me explain the situation. Property gets listed at $169,000 and the most I could pay was $160,000. So, what I did was I went to the agent and said, I said, “Hey I’m going to come in with my best shot. I want this house. I can waive the inspection,” very important. I can waive the inspection because I’ve already been to the property. I know there’s nothing structural, there’s no mold, it’s just cosmetic. So, it’s easy. “So, I waive the inspection already, but I’m going to give you my highest and best offer and I can’t pay a penny more. So here’s my offer, $160,000.”
So, what happens is also, so I submit the offer with a cover letter because there’s more communication for the seller, right? The seller reads the cover letter. It says, “I’m a full-time real estate investor. I’ve been doing this for eight years. I sell all of my houses to young couples and young families.” That is a huge piece of communication to get to the seller because a lot of times, it’s the family of the people who have lived there for a long time. The parents lived there for 40 years, the kids grew up there and so, when you tell them you’re going to, they, like, don’t like that you’re going to rip their whole house apart.
But then when they hear that you’re going to sell it to a young family or a young couple, they’re like, “Oh, all right. Well, actually, this is okay now.” All the investors that are buying this house are going to sell it to whoever will pay the most money. That happens to be young families and young couples in my market. So, I’m not lying. I’m just telling them what’s going to happen. Every of those, every one of those investors is going to sell it to the same people, whoever has the highest price, right? But see, I tell them that up front. So they, they’re like, “Oh, they want my offer.”
So here’s what happen. They said, “Okay. You’re offer is at $160,000. We have an offer at $170,000 and $175,000, but we want you. We want you to buy it because we want you to sell it to those young couples and young families.” I say, “Look, I get my work done as cheap as anybody, but let’s just say that me and the other two at $170,000 and $175,000, they can both get the work done just as cheap. Well, I know I can’t pay over $160,000 and make this property work. I know that I can’t pay $170,000 or $175,000 because it’s overpaying for the property. There’s not enough margin there for what has to be done to the house.
“So if those guys can pay $170,000 or they’re telling you they can, I bet you they haven’t waived the inspection because they never do and what are the odds that they’re going to ask you for some ridiculous inspection credit after the inspection?” and then that is going to obviously . . . let’s, okay, let’s say you take the $175,000.” I know, they asked me to go to $170,000 in this deal. I said, “If you go to $170,000, we’ll give it to you. You don’t even need to go to $175,000.” I’m like, “I can’t. All I can pay is $160,000 and here is why.”
So when I explain that to them and tell them that this might be a strategy that the other investors are using that they just put a high offer out there over list price they know that if they have you under contract, they can beat you up in the inspection or you know, it dies later and they get their earnest money back and they don’t really care. You know? I mean, they really want the house, but if you don’t come down because of the inspection request, well, then they just back out with their earnest money back and they move on.
You’re, two weeks later you might call me and say, “Hey, Jim. I’m sorry. Is your $160,000 offer still good? They asked me for this $20,000 inspection credit,” and I’m going to say, “No. I bought another house. I told you I can’t buy every house out there. I have a limited number of inventory I can buy.” I have money right now, but if you say no to my offer, I’m going to put it on something else and I’m going to go away as a buyer. I’m not threatening you, that’s just the truth.
So, if you call me back in two weeks, that might happen or I also might say, “Hey, you know what? I’ve thought about it for two weeks and I can’t pay $160,000 anymore either. I’m closer to $150,000 or $145,000.” I said, “but today, I can pay $160,000 and I can close in two weeks. No trouble. Let’s just schedule the closing, no inspection, we’re done.”
So that line of communication and that line, that is exactly how you get them to accept offers that are when you’re not the highest cash offer. Because they don’t know that. The agent doesn’t know it either. You’re like, don’t assume the other agents don’t know.
I’m an agent, so I can say this. Most agents suck. They do. It’s just the truth. The average agent in the National Association of Realtors does three deals a year. So how good can they be at what they do when they’re only doing it three times a year? I mean, really, it’s like a joke. Most are part time and so, I’m not knocking them. It is what it is, but the point is you have to know that.
So, knowing that, all those seeds that I’m planting with the agent, all those pieces of communication that I’m saying, those are plants. I’m planting seeds because what do they do with it? They don’t know what to say to the seller. They take all of my dialogues and they go back to the seller and they look like a genius because they’re saying all these things.
They’re like, “Hey, we need to be aware of this,” and they’re not saying that I said it. They’re saying that they know about it, but I don’t care. I want the house. That’s all I care about, so I’m giving that seller’s agent all those dialogues to bring back to the seller because the name of the game here is getting the seller to like you. How do you get somebody to like you, that you don’t get to talk to, right? Well, through their agent and so, that, you know, and so how, that’s how they accept my offers.
I could teach all day about proper communication and actually, I do, but we’re going to go ahead and wrap this one up as far as using proper communication. I just wanted to show you what is possible and how my offers get accepted when I’m not the highest cash offer and that’s just the beginning of it. But just know that proper communication, like, I don’t know why so many people have trouble with proper communication.
I’ll leave you with one last thing. Everybody always asks me how I get these low-ball offers accepted in the MLS and I say it’s a mindset. I’ve never submitted a low-ball offer in my life and everybody’s like, “Oh, what do you mean?” You know, my record is 32% off. It was listed for $400,000 and I bought it for $273,000 and there’s a dance that goes into that and but, the dance, I’ll tell you about another time.
However, what I will tell you is that the . . . I’m submitting offers that are right in line with the current market condition. So, I’m not, just because they have it listed way high, that’s not my fault that they have it listed high. I mean, I have to deal with it because I want to buy the house for a lot less, but I’m not submitting a low-ball offer. I’m submitting an offer that’s congruent with the current market condition.
So, when you have that mindset going into the conversation, it’s a lot easier to call the agent up front and be like, “Hey, you guys are priced a little bit high. I love this house, but you know, like . . .” and you start feeling them out that way because you know, it’s not easy to get a house listed for $400,000 for $273,000, but if you communicate properly, you can get that done.
So, you really never now what’s possible. It’s just that mindset of knowing that’s not a low-ball offer at all. In fact, it’s just an offer that’s consistent with the . . . because no investor can pay more than you can pay, right? I mean, maybe they can pay a little bit more or whatever, but in the big scope of things, nobody can pay for this house because it needs a total gut rehab more than I can pay.
So just because they’re listed way high because the agent didn’t know what they’re doing, I mean, it’s just the truth, that’s not my fault, right? So, I shouldn’t be embarrassed to call them and say, “Hey, you guys are priced really high for this condition,” and then start feeling them out that way. So, as long as you have the mindset that you’re not submitting a low-ball offer.
Now, I’ve submitted thousands of offers in this point in my career. Thousands. I have never submitted a low-ball offer in my life. And also, I have never, this is very key, I’ll leave you with this, I have once submitted an offer, not once, thousands and thousands of offers and I only get about 8-10% by the way, so thousands of offers knowing that I’m only going to get 8-10% without calling the agent first to talk to him about it.
Why is that? Because whenever you get an offer, like, as an agent, if I get an offer, even in my rehabs that are new, if I get an offer that the agent didn’t call me, I know it’s a crappy offer because they were embarrassed to call me because they didn’t know how to communicate properly when they made that call. So, what did they do? They just hide behind the e-mail or fax machine. I have never ever done that and that’s probably why I’ve had so much success in the MLS. It’s just proper communication. So, I’ll leave it at that. We’ll see you in the next one. Bye for now.
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