A reason why agents forget about investors
Ashley and I saw something last month and again this month that we haven’t seen in a long time. While out door knocking on the pre-foreclosures, we saw realtor signs in front of some of the houses being foreclosed on.
This happened a lot after the crash. Sellers would try to list their properties to get out from under a mortgage they couldn’t afford. Many of them found that no one could buy because property values had dropped, and their houses wouldn’t appraise. From that phenomenon, short sales became popular as agents began to help their clients via that route.
The houses we saw that were in pre-foreclosure back then that had realtor signs would often be pulled from auction due to their short sale status.
As home prices began to increase again, however, short sales dropped because sellers could actually sell their houses for more than what they had purchased them.
Now that I’m think about this, since 2016, we haven’t really seen any realtor signs in pre-foreclosures yards that didn’t have significant property distress.
So why are seeing them now?
Truthfully, I don’t know. Maybe, it’s because foreclosure instances have been so low for the past few years that the way an agent used to work them has become a little unfamiliar. You know — the “out of sight and out of mind” type situation.
Either way, it’s happening. And the foreclosure process is something agents should brush up on. Case in point: one of the owners we spoke with this month had a realtor sign out front and didn’t even know the property was being advertised in the paper for pre-foreclosure. To make matters worse, some of the houses with signs are making it all the way to auction.
To combat this situation, I talked to a few of those agents and reminded them that if they have a deal that’s in foreclosure, they should call us because we can help.
We want to make sure we aren’t out of sight and out of mind.
But I don’t think that’s all that’s going on here. Let me explain something we came across that makes agents reluctant to work with investors.
I was called by one of the top agents in our area who had a listing with some distress on it. I had looked at the listing before, but the margins were very slim, especially for an all-cash deal.
When I talked to the agent, she was upfront about the issues, and she let me know that the owners needed help. She also informed me that an investor from out of town had made the sellers an offer directly. She didn’t have a problem with that per say, but what she did have a problem with was the fact that the investor made it very clear he wanted to cut the agent out of the deal.
For multiple reasons, this is not a good business practice. The main one being the agent had an active exclusive listing agreement with the sellers. She had worked hard, had been diligent about showing the property, and was even working to overcome the sellers’ issues.
She had done exactly what she was supposed to do, done it well and deserved to be paid.
When we work with agents, we always make sure they get their commission. It’s not right to not pay them, especially when they’re doing their jobs. I believe we are about to enter a market cycle where it will be imperative for agents and investors to work well together. And if you try to make deals by cutting commissions, that will be a reason why agents forget about investors.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.