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All right... what is your position as a real estate agent regarding real estate investors? Are they an opportunity or are they a nightmare?
That was the discussion in a post I made in mid-July.
In a more recent post, I discussed some of the actions real estate agents could take to create a solid and profitable working relationship with real estate investors.
I want to thank Eilean Foster in the Egg Harbor City NJ area for providing the following comments...
Peter, I understand the investor's need to buy low to make the numbers work; but the investors I have want to "buy" AND make a profit in one fell swoop!
When a property is offered at $225,000 but the investor offers $145,000, or offered at $269,000 and offers $150,000 what am I to do but break out in laughter!? The first being a private owner, the second bank-owned and both "offers" where (surprisingly enough?) rejected!
Investors want/need to make a profit, but so do the sellers, or at least break even! Investors have to be AS realistic as any other property buyer is expected to be!
And so I am sure that there are times when Eilean views the real estate investors she is working with as potential nightmares... not opportunities.
I think that perhaps this could be a matter of perception. for example... it really is a pain in the butt for an agent to make offers that seem so low that there is no way the seller will accept. And when you multiply that by many offers a great deal of time can be expended by the agent.
So... what is an agent to do in this situation? At what point does it seem like you are banging your head against the wall and it is time to stop? I am not sure... but read on.
I am going to go out on a limb here and take the side of a typical real estate investor.
First... the following statement is a mantra amongst real estate investors... "You Profit When You Buy"
What this means in reality is that every real estate investor must lock in their profits on the day they make their offer, because they know they better not count on the market or any outside force to deliver their profits. If you are working with a real estate investor that has survived the downturn, you are working with an investor who understands the meaning of this statement.
This is the primary reason offers made by real estate investors seem so low. Not only are they taking a risk regarding the future value of the property, but they must also guarantee the financing, deal with contractors, tenants and/or buyers, appraisers, inspectors... well you get the picture. A deal that would normally yield a 20% return on investment or a $25,000.00 profit could very quickly deteriorate into a deal whose ROI goes to zero or whose profits become a loss.
And that is why real estate investors follow the mantra... "You Profit When You Buy".
As an agent if you are able to understand the real estate investors thought process in this regard then their endless number of low ball offers does not seem like sheer lunacy. Instead, it looks more and more like a well thought risk reductiion plan.
And since we still live in a capitalistic marketplace, those willing to take the risks should also be rewarded. This goes for both real estate investors and their real estate agent team.
I of course welcome your feedback on this topic.
To Your Success...
Peter R. Giardini
P.S. Listen in and participate in my nationally broadcast Real Estate Investors Mastermind Radio Show. Broadcast live every Thursday night at 11PM EST. For show details you can go to www.blogtalkradio.com/peter-giardini