The mythical super-deal. Don’t be fooled!

The mythical super-deal. Don’t be fooled!

multi-family houseWhen I wrote for Boston.com, I got this from a reader who wanted me to help him and his wife buy a 2-family house. They started to be a bad prospect when I read this:

We’re happy to wait until the right property comes on the market at the right price…but in this market, we’re pretty sure we’ll never get a shot at such a property unless we’ve got someone (maybe you) who often knows what’s going to come on the market before it has a “for sale” sign on it, and before it shows up in the MLS.

I like working with small investors. As they probably know from reading me, I am a huge fan of 2- and 3-family housing. My reservation about working with them is this: I cannot promise them that I can identify properties before they come on the market. I generally have bad luck with buyers who expect that service. It locks me into things I can’t reliably do.

Most pre-listed or pre-FSBO marketed property passes between people who know one another. If I know the owner in a real way, then I can’t be a buyer’s agent without a conflict of interest arising. FSBO hunting on the internet is not easier for me than for anyone else.

The last time that I had someone say how important it was to find a place before it was listed, I told her that I didn’t want to work with her. Period. She was quite put out. We had been getting along fine before that…Wouldn’t you know it, the same day (I can’t make stuff like this up!) I got a call from the brother of a recently deceased friend who needed a listing agent to sell my friend’s condo. The condo was uniquely good for the buyer I just turned down. In this case, I couldn’t be the buyer’s agent for this unlisted property because I had a personal relationship with the seller. I had an attachment to the property through my friend, and I knew her family. Although I had no legal conflict of interest, I had a moral one.

I ended up referring the sellers to some seller’s agents that are good. I referred the buyer to a buyer’s agent. Everyone was happy except the listing agents who did not get to list the place. The buyer bought the property directly from my friend’s estate. It was a great place for her and her husband. (I still love that condo and the memories I have of Edie there. May she rest in peace.)

unicornThe reason I tell this story is two-fold.

One, the finding of a property before it goes on the market is serendipitous. Either you know the seller or you are privy to broker gossip. I can’t promise to be on every grape vine.

Second, the finding of some mythical pre-listed property is a just that. A myth. If the property is valuable, the seller will not give it away without trying to get close to what he/she thinks it is worth. Unless you know or are related to the seller, you are unlikely to get a break on the price; or the break will be nominal. If you are in too low, it will get opened up to the rest of the market. Where we can negotiate for our buyers in these situations is with the commissions. If a seller hires a listing agent, there is roughly twice the commission compared to our buyers offer (and our commission.) We work to be valuable as a facilitator to the seller, so that we can earn some of that discount for our clients.

 

By | 2016-12-28T14:01:07+00:00 April 1st, 2015|Categories: House Hunting, Negotiating|Tags: , , , , |

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