Why Motivated Sellers Don't Use Realtors

The seller is actually the one that pays the Realtors' commission. That is usually 6% of the sale price. They figure it's money they can keep in their own pocket. So on your example of getting them their 65k they are only going to really get 61,100.00 paying $3900.00 to list it with the Realtor.

What makes you think motivated sellers don't use realtors???

I'm still looking for my first deal, and didnt realize motivated sellers would use a realtor as well, well no b/c as an invester u might be motivated to unload a property quick or @ a steal, and if you have your team in place it only makes sense to use a realtor. depending on the type of stratagy you're trying to use.

them try to sell on their own after listing with a realtor and not getting a sale. Some sellers think that they can sell it easier on their own. Some sellers like to deal directly with who is going to buy their house. Some sellers don't trust realtors. It doesn't necessarily mean they're motivated, but for whatever reason, they don't want to use a realtor.

Also, investors sell houses FSBO. I know I sold the home I lived in on my own because I had realtors come in and tell me they could only get me 540K for my house. I had run comps and knew that wasn't true, and sold my home for 580K, without commission fees. I was able to not only get 40K more, but I saved 32k in realtor fees.

Motivated sellers don't use realtors? I would think that some do... but maybe they can't move the property fast enough with the realtor. Sometimes a seller may need to get out of a property but not know what to do. Someone happens to come along and offers them a way out.

I could see the commission side, but if a person is about to lose their house or needs money fast the cost in the sale won't be a factor.

Ty

bmchpherson, I understand but if the fair market value for my house is 100K, why would I accept 65K from an investor if I can just have a realtor list the house for 70-80K. My house should still sell quickly. I guess my question is why would someone accept a low offer from us when they can get more selling it through a realtor if they just drop their price.

I know that their house may not be selling on the mls, but if its not selling because the price is too high, why don't they just drop the price? Or is it that these are not the people that we're looking to work with. I'm just a little confused.

So, it sounds like the people that we want to work with should be extremely desperate to get out of the property to be willing to accept a low offer from us. I get that. It sounds like its a matter of marketing to these people and being the first one there with the solution to their problem. True?

Deshone,

What you're implying whether you see it or not is that if an 'investor' comes along and offers to buy or wants to assign a contract on someones house they are more guaranteed than an agent or broker to sell that house faster.

That cannot be the farthest from the truth. Now, if what you are saying is from personal experience, then I can see your point and can't argue with facts. But if what you are saying is an assumption, then you are way off. Way way off.

I'm more than willing to bet the average or relatively inexperienced wholesaler's success rate is low in finding a property and buyer in the allotted time. If it were that easy, you'd have more people talking about how they did it with facts, and less from people contemplating not doing this anymore.

I work both sides of the fence and the truth is it is in the best interest of the buyer to deal more with a relator simply because we have a better chance of filtering out the phonies and scammers and normally wholesalers get their deals cut right from under them lots of times. it happens. Believe it.

I understand and agree with your point. I guess my question is a little vague. Since you are on both sides, hopefully I can clarify it like this: From an investor's standpoint, what makes it more beneficial for the seller to work with us rather than with a realtor?

That's what I've been trying to figure out. What advantage to we offer that a realtor does/can not?

If you are a firsttime homebuyer, it is normally in your best interests to work with an agent as it is us who will be better to cooridnate schedules and appointments when the property needs to be inspected, appraised, repairs done before closing, etc.

Both parties fulfill a function. its on the buyer which benefits them the most.

HOWEVER!!!!,.....an agent is generally better in weeding out phony investors who really don't have the funds or frauds and generally don't have to worry about a deal being taken from under them by a client as a wholesaler would

Great info elixbrown, that makes sense from the buyers standpoint, but I would like to know from the seller's standpoint. I'm more concerned about that because I have reached the point where I have my investors(buyers) lined up and its time to go get a deal for them. So I would like to know from the person who is selling the house point of view, why would they want to work with us(wholesalers) over realtors.
Thanks for your wisdom.

also have bad experiences with realtors. That's how I got my first deal; the agent didn't do her job with marketing, or even telling the owner (out of state) that the whole yard was a shambles (she had the listing an entire year!), which of course is a negative first impression. She didn't put any interior pictures or have any kind of description on the property other than 2 short sentences. There are some good realtors out there, but then there are some that are nightmares that leave a bad impression of realtors. NOT saying all realtors are that way at ALL!

Love it Tammy, didn't think about that. Thanks.

that one reason might be speed? They may have been listed, it didn't sell, then and investor comes along waving cash and closing in 7-30 days.
No more showings, no more hassles.
Just a thought.
Lauri

Such as, maybe the seller has a mortgage and they can't accept a lower price without having to come up with the difference or involving a short sale. Maybe they would rather have a quick 65k 10 - 30 days instead of waiting 90 days for conventional finance...It really doesn't matter, it's whatever their circumstance is and you won't really know unless you put the offer in.

The idea that they can get rid of the hassles and get cash now does make sense as to why they would accept a lower offer. Thanks Laurie and bmcpherson as well as everyone that helped me to get a better understanding on this whole thing. Now its time to find some FSBOs.

1. Is the only difference when assigning a short sale or REO is that I have to do a double close?

2. As a first deal should I stay away from these when starting out. I need to work with whichever will be the quickest to roll out. I have to do this first deal within 60 days. Thanks

One thing alot of investors waste their time on is making offers to non motivated sellers, that will always list with a realtor and sell to the owner/occupant. We can not compete with the owner/occupant!! Don't waste your or your realtors time making offers on the wrong type of properties!
When dealing with homeowners, they must be distressed in some way to accept a 65% of ARV offer. Their houses will most often need work. If its beautiful it ain't for us (usually)
We all know what a distressed home owner is, right? They are facing foreclosure, death in family, illness, divorce, loss of job, must move,
tired landlord ETC ETC.
Here are the main reasons a distressed seller will sell to an investor:
1.No auction risk if in foreclosure
2.As is offer, no repairs needed
3.Quick sale. No financing/inspection contingencies. Can close in as little as five business days
4.Fresh start, loans, leans brought current
5. No commissions to pay
6.Improved credit, no foreclosure, improved fico
7. No more land lording, quick and easy selling process
8. No more double payments or can now get new home when moving.

Then there is buying and flipping REOs and Short sales, but that is a different story! Got an accepted offer I must go sign on this afternoon!
REO, Accepted offer $87,000
Rehab $20,000
ARV $160,000

Will try and wholesale this one at $99,500 and do a double close using transactional funds. Net profit $6200
If I can't wholesale it, will do a hard money loan. 70% of ARV which is $112,000, Do the rehab and bring it to retail. MY rehab, money costs and commissions/closing costs will be close to $42,800 with a net profit of $30,200 with a six month time frame to sell. It's in one of the hottest areas in Denver! None of my money used!!

Right now and this can change as we all know, I'm having alot more luck with REOs that homeowners with equity.

Wholesale flip, double close REOs with transactional funds!

Michael Mangham
MD Home Acquisitions LLC

http://www.mdtfcam.com TRANSACTIONAL FUND site
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomea.com Seller site
http://www.mdhacq.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird dog, Door knocker site

One reason is lack of equity. If there is not enough equity for the realtor to get paid their commission, they won't take the listing, the seller has no choice but to try to sell it on their own. This is good for an iunvestor because the property is a good candidate for a lease option or a "subject to" purchase

I love the way you laid that out with all those benefits we offer. And thanks for answering my question on the REO's and short sales. When looking for property, what do you think brings you most of your best deals, bandit sign, realtors, etc.? I'm looking for a very low cost way to get started. Thanks once again to everyone who is sharing info

There are several strategies I use to find REOs and I am sure there are more!

1. I find vacant properties and research them. Find the lender and ask for their listing agent on that property. Ask is they have any problem or distressed REOs they need to get rid of also.

2. We have agents set up searches for us that match our REO buying criteria. We also ask them if they know of any old problem or distressed REOs.

3. We contact the asset managers at small (no more than 3 branches)banks and credit unions and ask if they have any problem or distressed REOs we can offer on.

4. We network with other investors.

As far as Home owners we get most of our deals by researching people in pre foreclosure and calling when we have a phone number and door knocking their house if we can't find a phone number. We call FSBOs and for rent signs. These deals are very easy to assign, We don't use a realtor on these and we use our own assignable contract.

We use realtors of course. Mostly for REO and short sale offers.
This is what I do and I know there are alot of other ways.

Also as you know, you can not assign REOs or Short sales and must double close to accomplish the same thing. No money out of pocket!! Your REO and short sale offers MUST include proof of funds and earnest money. Then you must have a transactional funder lined up for the double close.

Go to my website to gain access to this and MORE
http://www.mdtfcam.com

Michael Mangham
MD Home Acquisitions LLC

Michael that's great information, when you say that you work with the smaller banks, how do you find out about them and if they handle mortgages?

Also, if you were in my position, buyers list, but no money at all and needed to find a property quickly as possible to assign, what route would you take?

who cares why a motivated seller won't list with a realtor? There are a few reasons; they don't feel like they can afford to sell through an agent, they don't have enough equity, they don't have time to sell through an agent, or they might not trust agents.

As long as you continue to focus on the reasons why, you will never concentrate on how to find the motivated sellers to make offers.

most sellers probably do at one point consider using a real estate agent. i notice that most sellers in-tune to their market or have some knowledge of real estate probably don't use them because of the realtor fees. if savy sellers aren't able to sell in a short time they usually just give up and list w/a realtor.

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www.gmventureproperties.com