Buying Cheap Real Estate In Today's Market. Reality Check.

Aloha, Bryant... I'm considering asking for a retainer fee up front from buyers like these...in the time honored tradition of the legal profession. So many "prospects" come to Hawaii on vacation and then decide they suddenly want to look at property, then they never buy anything... that's when we become "Real-Tours" instead of Realtors. It's a challenge, but I never ever put a prospect into my car without getting them to sign a rep agreement - otherwise, they're just wasting my time and adding to my (already very large) carbon footprint (the Big Island is VERY big!). Warm aloha, Katie Minkus, R(B).

Is there a house back behind that grass?  Seriously though, having a buyer's broker agreement is the only way to go.  It is just too much work to end up getting paid little to nothing on a deal.

Hi BB

I love your posts.  They are always so great!   Even if I didn't agree with you (which I do), your posts always have a way of making people really think!  They are so entertaining!  Nothing Boring here!!  LOL (especially the videos).

How is TLW?  

Sorry I have been out of the Rain these days, had LOTS going on and trying to keep up.

Your friend in Tampa

Katrina Madewell

BB, I like the idea of getting the buyer to chip in on the commission.  A serious investor will realize the importance of having a great buyers agent, that could save him much more than the small investment it would cost him.  GREAT idea:)  Hope TLW is doing well.  We are all thinking of you both and praying for her!

Some great points.  We get some of those calls in our area as well, sometimes someone looking for a rural piece of land for $50,000.  With all the driving and time involved in a transaction like this, it might not be worth $1500.  The problem is you never know when these are going to turn into larger transactions or good referrals.  The key to me is qualifying effectively in the beginning and not spending alot of time until you do have some form of commitment.

I haven't been able to get a commitment to guarantee a commission over what the seller would pay.  But if you are able to do this in today's market, more power to you.

Wow, this post has really taken off.

I think buyers have a different outlook on the agent relationship in general than sellers.  Sellers are schooled in thinking that they need to pit agents against each other and ask for the moon, so the contractual deal becomes the only sane way to secure compensation, among other things.  Buyers, though, typically fall into a realtor's lap as a function of their search, usually online.  They don't know to pit agents against each other - in fact, they are often quite naive on the competitive nature of the biz.  That's primarily why we can get away without a BA and not lose as many as we should...but when the buyers DO have an ounce of schooling they can become petulant, "sneaky", demanding - in short, like sellers.

I agree with your premise - If you believe enough in yourself & realize your time is worth something you'll enact something like this & not worry that you won't have any buyers.

BB - BBA is the only way to go with this type of buyer. Why don't the other agents in your market get it? Good for you!

Hey Bryant, great post...I've been waiting to "find some extra time", you gotta let me know where to look...is there a link to that sort of thing or what?? :)

BB, I definitely like your idea of a minimum fee when you are dealing with low priced properties.  A loyal and motivated buyer shouldn't have a praoblem with that.

Just read today's post (1/16/09) and had to read this one.  I think it's a great idea to get a retainer from your clients.

Bryant....great post and some great comments as well.

First, I WISH our Brokerage Agreement was so simple. Ours is 4 pages and the print is 1/2 the size of yours! Goes into ALOT  more detail....maybe that's a good thing.

I don't have the $50k people. I do work with Buyers' in the low $100's. Yes, it's more work. But I will never forget the statement a neighbor-friend of mine who was in real estate told me..."Don't ever forget your bread and butter. When the expensive real estate is sitting on the shelf, the lesser priced homes will be selling. You might have to sell 2 or 3 to make the same amount, but at least you will be selling." Words to live by, for sure.

It's an ROI thing also. Like some of the comments have said, this sale could lead to more sales and referrals and making it well worth the while. But, if if means hours and hours when there are other clients, that may be the time to refer it to another agent who does not have so much business.

I have a similar problem in my market place with condo rentals. You think $1500 is bad, try $60-100 for finding someone a rental!!!! I've had agents with listings at 10% co-op of the monthly rental tell me, "company policy, can't offer more." Bull....you just want to KEEP more for yourself. And when you try the retainer line, they look at you like you've just spun your head in a 360 degree circle and your eyes have popped out.....and I know an agent at the next office down the street WILL take them out for $60. But, there is that ROI again. What if they lease now, and are ready to buy in a year?

Such is the decisions we make in our businesses!

I would have to agree with Julie's point about things coming back around. Just because a prospect is looking at one $50,000 house for an investment now doesn't mean that they won't be buying another in the future, contacting you to rent out said investment or referring you to other prospects because of a job well done. Although I do agree that screening is necessary when working with potential buyers, I would offer caution when making decisions.

A valid point and an explanation that shows the buyer why the broker buyer agreeement is an advanatge to him.

Fortunately or unfortunately, the area I'm in does not have any or shall I say many homes in that 50k price range...perhaps I should come to you and buy an investment property!

Great point, especially with the lower priced condos here in FL. Spoke the other day with another Realtor who ended up $300 as her final commission I think it was a bank owned condo for an investor, this was her 1st sale.

I hope your wife is doing better and a speedy recovery.

Really good point.  We forget we can write in a commission.  Thanks