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Old 11-25-2011, 11:21 PM   #1
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Default Would you tell your realtor your top bid?

I'm not a stranger to buying and selling property. In the past I've either bought or sold completely on my own or I've worked with a specific realtor I like and trust.

We are looking to put an offer on a rental next week. (offers presented Tuesday night) We are working with a new realtor because he knows commercial properties.

This realtor is also representing the other 'known' interested person. (there might be more??)

It hard to guess, but we are speculating multiple bids as the property is in a desirable location.

I'm prepared to pay up to $25K over list....

I tend to keep my cards close, but a friend tonight second guessed my 'game' saying that if I'm playing the realtor I'm shooting myself in the foot.

Opinions....would you tell your realtor your top dollar on a property?
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Old 11-25-2011, 11:29 PM   #2
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Funny my first thought was the realtor might be playing you by expressing he is representing other offers.

Just tell your realtor what your budget is and if it is realistic he should be working to save you some money.
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Old 11-25-2011, 11:46 PM   #3
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Funny my first thought was the realtor might be playing you by expressing he is representing other offers.

Just tell your realtor what your budget is and if it is realistic he should be working to save you some money.
Ya, I don't know. Say he knows that two people are willing to spend more than list....he could play us against each other squeezing more money out of the deal.

It drives me nuts not being in the drivers seats.


ummm, did you note the offers are presented on Tuesday....I'm kinda busy Tuesday...should be interesting.
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Old 11-25-2011, 11:51 PM   #4
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No way. Have a number in your head that you are comfortable with and stick to it. I notoriously bid low on any place that I look at buying regardless of how much I want the property. You will either be flat out rejected or countered. Bought a place 2yrs ago that they wanted 47,500, I offered 30,000, we settled at 35,000. Current appraisal is 78,000.00 after 10,000.00 in renovations.
To many properties in to many good locations to pay over asking price. My advice, if your looking to buy a place for a rental then know exactly what your numbers are and how long it will take to get ROI. Best case is to immediately get ROI on investment.
Bank repo's can be great investments. Our current home was a bank repo and is currently appraised at 2 1/ 2 times what we paid for it 6 yrs ago and really haven't made any improvements other than paint and flooring.
I have " lost" lots of offers that I have made but have not ever got upset from any of them. Make an offer, counter if they come back, and move on if it doesn't work to the benifit of your numbers. Buying property is purely business and there is no room or reason for emotions to get involved. As a rule of thumb I generally place my first offer at 15-20% less than the asking. Low but not usually so low that you won't get a counter.
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Old 11-26-2011, 12:02 AM   #5
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Cool, good to hear someone else interested in real-estate.

Like I say I'm not a stranger to buying and selling, but this is a bit different.

Our market is still red hot...one of the strongest in Canada. Bidding under list is a waste of time.

The cap rate and ROI are solid. The numbers are very good on this property.

Hear you on being emotional. It being a rental its all about the numbers and location.
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Old 11-26-2011, 12:10 AM   #6
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I have a friend who has bought 22 properties this year at city auctions and has yet to pay over 2000.00 for any of them. Most of them had/have paying tenets in them, some of them he hasn't even been inside of but is getting monthly income from them. His ROI generally comes back in a few months. These are not the nicest homes in the best part of town nor are they the worst homes in the worst part. But they are bringing him a nice amount of money being deposited into his account each month. I guess it comes down to what type of rentals you want.
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Old 11-26-2011, 12:17 AM   #7
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I have a friend who has bought 22 properties this year at city auctions and has yet to pay over 2000.00 for any of them. Most of them had/have paying tenets in them, some of them he hasn't even been inside of but is getting monthly income from them. His ROI generally comes back in a few months. These are not the nicest homes in the best part of town nor are they the worst homes in the worst part. But they are bringing him a nice amount of money being deposited into his account each month. I guess it comes down to what type of rentals you want.

That's crazy.

I should get my initial investment back in 5 years.
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Old 11-26-2011, 12:38 AM   #8
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I get the feeling that you are looking at a nicer property in good area. 5 years is good. Have you evaluated the property close enough to ascertain the possibility of making some changes that could shorten you ROI time. Such as splitting the property into 2 apartment for 2 incomes, addind a bedroom, adding curb appeal, installing higher end appliances to focus on the more discriminate tenet. Sometimes just making the place more eye appealing can get you another couple hundred bucks a month.
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Old 11-26-2011, 08:52 AM   #9
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I get the feeling that you are looking at a nicer property in good area. 5 years is good. Have you evaluated the property close enough to ascertain the possibility of making some changes that could shorten you ROI time. Such as splitting the property into 2 apartment for 2 incomes, addind a bedroom, adding curb appeal, installing higher end appliances to focus on the more discriminate tenet. Sometimes just making the place more eye appealing can get you another couple hundred bucks a month.

Yup....thanks. Right...its not a $2000 dollar home. I'm not into fighting in the trenches, looking for cut and dry ROI.

This one in particular is a duplex, which is 1 block from a hospital and college in the heart of a very good area. 900 sqft upper suite and 1700 sqft lower suite (basement is fully finished), rents are: $1100, and $1500 respectively. 1.5 car garage and car port and room for 2 more parking spots that can be rented.

As in...all the guts are there. (the suggestions your make)....mostly what is needed is cosmetic and some appliance upgrades. Nothing big ticket. I might be able to squeeze a few hundred with cosmetic upgrades.

Anyway, I think I'll stick with my gut and keep my cards close. Real estate agents have way too much power of information in these situations.
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Old 11-26-2011, 09:10 AM   #10
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I agree with not laying out your cards. I have been getting into rental properties the last few years and have two duplexes. My friend is a realtor and on the last one, we had five counter offers. I know he was irritated and he asked me why I didn't trust him enough to just give him the real price I was willing to pay. I told him on the next one if he accepts just a flat fee versus a commission I would do that. That subject changed quickly. Realtors are in business to do the same thing we are.. make the most money with the minimal amount of time invested. Its in their interest to cut to the chase and go in as high as the client is willing to pay. That is NOT in my best interest though.
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Old 11-26-2011, 09:24 AM   #11
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I agree with not laying out your cards. I have been getting into rental properties the last few years and have two duplexes. My friend is a realtor and on the last one, we had five counter offers. I know he was irritated and he asked me why I didn't trust him enough to just give him the real price I was willing to pay. I told him on the next one if he accepts just a flat fee versus a commission I would do that. That subject changed quickly. Realtors are in business to do the same thing we are.. make the most money with the minimal amount of time invested. Its in their interest to cut to the chase and go in as high as the client is willing to pay. That is NOT in my best interest though.

Agreed, thanks.

The market here has changed quite a bit since my last purchase. (2 years ago)

The realtor encouraged that I should be looking at making a 'clean' offer. (no inspection, no "pending financing" or "pending layer approval") those sort of 'outs'. Also, that $5000 is the minimum deposit, but $15 000 or $20 000 would be better.

It used to be $500 and if you gave a $5000 you were really serious about it.

Called my bank whom I have a great relationship with and she confirmed that this is the 'new' way things are being done. I asked if people have lost their deposits and she said two people have lost $15K deposits. That seems ridiculous.

What typical for you?
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Old 11-26-2011, 09:49 AM   #12
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$1,000 with bid agreement and a letter of approved financing from my lender. Money in escrow with contractual agreement of 100% return if inspection (mandatory) exposes or exceeds repairs in excess of $2,500 and we cannot come to terms.

I want the buyer to understand that I will not nickel and dime them and that I am serious. But, I will also not buy a house that needs a roof, mold remediation or a heating system. I have not heard of the high deposits needed nor would I entertain them with even a speck of risk. Its a buyer's market. I'm not committing to a headache you may be trying to unload without looking under the hood first.
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Old 11-26-2011, 10:14 AM   #13
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$1,000 with bid agreement and a letter of approved financing from my lender. Money in escrow with contractual agreement of 100% return if inspection (mandatory) exposes or exceeds repairs in excess of $2,500 and we cannot come to terms.

I want the buyer to understand that I will not nickel and dime them and that I am serious. But, I will also not buy a house that needs a roof, mold remediation or a heating system. I have not heard of the high deposits needed nor would I entertain them with even a speck of risk. Its a buyer's market. I'm not committing to a headache you may be trying to unload without looking under the hood first.

That's very typical here also. (in the past)

Will decide what I'll do by tomorrow.
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Old 11-26-2011, 10:59 AM   #14
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It is common in my area to do trade tranactions. People will trade cars, tractors, computer equipment, other properties, etc. to negotiate a deal. Sounds crazy but is very common here.
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