I received a call from a local commercial real estate agent interested in a duplex I had listed. He explained that he does not have Supra key access and would be representing himself on the purchase. We agreed to meet at the property, and I would provide access.
We spent 2 hours at the property. I answered all of his questions. He was drooling. He wanted the property. He lives less than 2 miles away.
He had preapproval yet it was not nearly enough to make the purchase. He asked if I had other lenders I could recommend. Why yes, I do. He actually worked with two lenders I recommended.
No matter how he tried to slice and dice it, he just could not understand the commission he had not yet earned on his commercial real estate business and the commission from the purchase of the duplex, could not be used to qualify for a higher loan amount.
As he memorialized all the work that needed to be done to the property, this commercial real estate agent carefully explained to me that the seller would not get what we are asking.
This agent has completed one residential real estate purchase 2 years prior on his personal residence. Therefore he knows!
We reviewed the comparable sales which proved, based on current market conditions, the property was priced right. I also detailed the work that contractors had done prior to listing the property. It was substantial.
Not only was his offer low, $300,000 below list/market, but the lender conditions were also that he needed to get lease agreements, with deposits in place prior to closing. How on earth are you going to do that?
Not a problem, he said. Once the seller accepts the offer, I will hold open houses to find tenants. You can put a combo lockbox on so I can access it to show the property to prospective tenants. And I will need to be able to access to get estimates to complete some work in the back unit before I rent it.
Oh wait, what do you think I can get for rent?
Also, what do you think it will cost to get new windows and remodel the kitchen in the back unit?
What?
I presented the offer to the seller who rejected it given that the commercial agent/buyer already exhausted his options with additional lenders. The seller said ... if I were going to do that I would just do it myself.
The agent continued to call and email me.
I explained that even if he did have the funds, the seller does not agree to the terms. And if the seller did agree to the terms, I would have to be there every time the property was shown to prospective tenants. No way, no how, would I provide access via a combo lock box! I reminded him that he was self-represented and IF I were to do all of that, I would be representing him, which by the way, I would not do.
There were at least three agents “watching” the property. I received emails from agents asking me to talk with my seller and let him know he will never get the price he is asking and to consider their lowball offer. “Low-Ball” in this case was $300,000 below list/market price.
Patience, Perseverance & Market Knowledge
Granted, the property had been listed at a time when the hot-hot-hot seller market started to shift. It was at a time when the stock market took its first big hit in late 2022 followed by a second big hit. Investors were sitting on the sidelines waiting for OPPORTUNITY! Some wanted to get in front of the opportunities.
The seller resided out of state. As other competing properties sold, we did take a few price reductions to stay competitive. After we took the last price reduction, it was a feeding frenzy.
The showings were non-stop. An offer deadline was set. Let's GO!
Multiple offers were received.
The seller accepted an offer slightly over the asking price, all cash, non-contingent, 10-day escrow.
Bottom line, the offer the seller accepted was $300,000+ more than what others were offering.
On the same day that the seller accepted an offer in December 2022, I received an email from one of the agents who had been asking me to talk with the seller to accept a lower offer. She and her client had been to the property four times.
In part, the email read: “Just letting you know that my client is still interested in your listing on [street omitted] should the seller decide to accept a lower offer. It is clearly not going to sell for the asking price and prices are continuing to trend downward. Let me know if he has a change of heart.” [emphasis added]
Patience is a Solution. Could I have convinced the seller to accept a lower price?
It never crossed my mind. The market was telling me what the right buyer would pay for the property. It just took a little more time.
This is my third entry in the March to a Solution Challenge.
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