Oh, I thought you were an investor!

By
Real Estate Agent with RE/MAX Suburban

real estate investing

Recently was contacted from a new 'investor' that was so excited to get into real estate rehabbing & wanted to get started right away. We discussed what his goals were & how much money he had to work with & what his time frame was. Let's get going NOW.

I came across a few properties that would work out so I sent him one townhouse that was small but needed major work. The return was there but did he want to do the work & was he really up to this challenge? Many so called 'investors' think that a few HGTV programs and they can do it too. But really, this is not for everyone. He was definately interested in the property, I showed it & he wanted to put in an offer.

That's when the problems began - when you start talking about money when you haven't got much of a relationship with someone. Let's just say that the property was listed at $50,000 and he immediately said with hilarious gusto 'Let's offer them $25,000'. 

Indeed .... let's not bother with that as this is a definite bargain. Possibly I need to go over the comparables again that I told you about of $135,000 & $150,000. Those were also rehabbed & in perfect new condition & they would set a good baseline on what you should anticipate with work & material in this property.
 
So of course there are multiple offers and this is a blind bid on the bank's website. All were told to make their highest & best offers by Monday at noon which we did.

My 'Investor' was a little shaken up over the multiple offers & I assured him that he wasn't the only investor that was looking for the same properties to rehab for a profit. Do you want 'in' on the game? The 'Investor' surprised me with going WAY OVER the list price which I submitted to the bank.

We ended up winning the multiple bid & were sent the contract from the bank to sign. I could tell that again, my 'Investor', was starting to get nervous about this whole scenario & wanted to know if he could now change his bid to $60,000.  Advising him that that wouldn't be a good idea considering we were in a multiple offer situation & you came out on top with your price of $70,000.

So $70,000 is the winning number here, get it?

A phone call comes later in the day and my 'Investor' says that he doesn't want to pay the winning bid amount any longer & that when we have our home inspection he wants to put in notice to the bank that the house needs $10,000 more in repairs. We'll just get a $10,000 credit from the bank.

Really?  Who's going to go along with that little charade? 

I expressed that the outcome of that strategy was less than perfect (less then zero success) but HE would have to submit the home inspection stating those repairs.  I wasn't going to do it.  I would attend the home inspection on his behalf but I wasn't about to write any report or be a party to a falsified inspection.

So, as it ended up my 'Investor' got cold feet and wouldn't sign the paperwork.  It's all for the better for both of us I'm sure.

So I sent a followup email stating that the deal was dead and nothing further was required as no money had exchanged hands and the contract wasn't signed.

My 'Investors' reply:   Call me when it goes down to $40,000.

Think I'm going to call?

Posted by

 

lyn sims remax suburban  Lyn Sims    Schaumburg IL Area    Northwest Chicago Suburbs  ●  (847)230-7324
 
 
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Comments (17)

Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

The re education process is interesting sometimes. Made an investor offer a couple of weeks ago. Turned out there was 25 Offers. Low ball doesn't work.

Jan 23, 2015 07:36 AM
Rob D. Shepherd
Windermere/lane county - Florence, OR
Principal Broker GRI, SRES

Not him, but you might try calling the "Ghost Busters". Just reflecting back for a moment. LOL

Jan 23, 2015 07:37 AM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

Lyn Sims - This made me laugh. Had a buyer who saw a house he was interested in on www.auction.com and actually thought he could get the house he was interested in at the starting bid or close to it. Right! But I've learned that THEY need to go through this once just to see how it really works. After that, my buyer was back on track. Your "investor" might come back and be reasonable.

Jan 23, 2015 08:11 AM
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Lyn - It's amazing to me how people, who have no experience and no idea how real estate and/or investing work, yet they think that they can make all the decisions and get everything they want for the price they want it at.

It just doesn't work that way, and neither does the rest of life for the most part.

Jan 23, 2015 08:58 AM
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Just reading that makes me want to slam my head against the wall.  

Jan 23, 2015 10:50 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I've had these "investor" types too.  They are SO savvy that they paid $50,000 cash for a Cadillac Escalade, but were too cheap to buy a house for $70,000, where the return would double.  They are idiots.  

Jan 23, 2015 11:25 AM
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

See Lyn...See Lyn Run...Run  Lyn...Run fast Lyn!  Don't look back!!!!!

Jan 23, 2015 11:48 AM
Ranee Bray
TCP Real Estate - Cedar Park, TX
North of Austin Homes

Better to cancel now I guess.  Easy come easy go.  We've seen a lot of those types of "investors" here in Austin.  

Jan 23, 2015 12:50 PM
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Television educated wannabe investors are everywhere! I plan to spend a little more time vetting on how their mind is set, some are trainable.

Jan 23, 2015 03:47 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Bill:  lol, you bet.

Pete:  Maybe yes, maybe no.

Ranee:  Better early before much more time is spent.

Carla:  lol, yep let's spend all our money on a depreciating asset like a Caddy.

Chris Ann:  yep, nothing else you can do.

Hella:  You're an optimist, hope that investor makes his way back to you.

Bill:  They didn't tell me the total number but I don't think it was 25.  See, that's another part he didn't think of either. There are other people that might want the house no matter what it's condition.

Rob:  

Jan 24, 2015 02:40 AM
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

Yep. It's amazing. It's almost as if they all attended the same seminar on how to be a pretend investor. 

Feb 03, 2015 09:48 PM
Karen Luke
South Metro Property Management, LLC - McDonough, GA
Henry County Real Estate

A wise old broker once told me years ago not to allow any new "investor" to purchase at an auction. They need to go through the process of buying, rehabbing and selling several times before they look at an auction of any kind.  

Feb 04, 2015 01:07 AM
Kim Gaston
RE/MAX Advantage Realty - Colorado Springs, CO
Colorado Springs REALTOR®, CNE (719)661-6987

Love your style, Lyn.

Schaumburg Real Estate Investors call Lyn Sims (847)230-7324  Schaumburg Homes .

Feb 05, 2015 11:14 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Kim:  Thanks for your compliment.

Karen:  In pre-qual we should also ask how many properties have you already purchased.

Chuck:  Bad seminar they all must attend as you say.  'I wanna' & doing are 2 different things.

Feb 06, 2015 03:45 AM
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Lyn:  We must be sharing the same investor!  Despite losing the last 5 offers and me telling him he needs to get at list and over he did it again.  The only one he was able to buy was the one he followed my advise on.  After this one I think my response time will become longer...  Too many "flip this house" seminars perhaps!

Feb 12, 2015 07:41 AM
Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

Hi Lyn Sims , We have run across a few of those so called investors that spent their money and attended seminars or watched HGTV to become Real Estate Flipper experts. They usually have to  learn the hard way, because they won't listen to us.

Mar 21, 2015 11:36 AM

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