Let Me Whisper An Insider Secret To Buying In A Seller's Market
Written by David Lowrey, Owner of Stress Free Property Management
Over the last year, the Florida real estate market has gone red hot. Deals are flying off the Multiple Listing Service in a day or two. As a Wesley Chapel Property Management company, it can be frustrating because you submit a full price offer, and the deal gets sold to someone else.
After a while, as a Wesley Chapel Property Manager, I started to get discourage about finding a good investment property. The competition is so fierce. Eventually, I figured out what was going on, and I’d like to let you in on an insider’s secret.
When a market becomes a strong seller’s market, the listing agent realizes she is in the catbird seat. There are literally a dozen people the listing agent could sell the property to at full price or near full price. Suddenly the listing agent is the prettiest girl in school and everyone is vying for her attention.
The listing agent starts thinking, “Why should I sell this property to someone represented by another real estate agent? I would have to split the commission.” So
, the listing agent starts trying to sell her best listings to her own Buyers and gets paid the entire commission.
There is nothing wrong with this, at first glance. This is the essence of capitalism, and she isn’t doing a disservice to her Seller, because she shops the best offers she gets from other agents to her own Buyer’s list. In other words, she sells the property for the highest price, but tells her Buyer what the highest price is so he can bid just above it. The Seller is happy. The Listing agent is thrilled, but the people represented by other agents are frustrated.
This kind of behavior does violate the ethics standards of being a Realtor and perhaps some federal or state laws, but it is impossible to prove. Not every Realtor does this, but the temptation is so great I would guess well over half do. Some sort of variation of this goes on in every industry in the world from the beginning of time. One day I clued into this fact and stopped getting upset about it.
Now if I see a good deal, I call the listing agent and ask her to represent me. This way she gets both sides of the commission. This is not a full proof technique because the listing agent might already have several buyers, and I’m going to miss out anyway, but it is worth a shot.
Unequivocally, I pick up deals that I wouldn’t normally have gotten in a seller’s market, using this technique. The downside is the listing agent is not representing your interests to the degree of a Buyer’s agent representing just you. Therefore, you better know what your doing, inspect the property, and be sure you aren’t buying a “Money Pit”.
If you’ve got the experience, this technique will allow you to purchase deals you would have normally lost. If a Buyer’s market, I represent myself and I would recommend you get a Buyer’s Agent, but right now you might consider this technique. Happy hunting!