Using Buying Real Estate Agents for buying R.E.O’s in Michigan
If you are new to Michigan real estate investing and planning on buying your first couple of deals in 2007 then using a real estate agent to represent you especially when you are buying bank owned foreclosures is a pretty nifty idea.
Consider the good things about the idea:
1. Buying Agents have access to MLS meaning they can pull out comparable sales for you on the fly. If you don’t have access to MLS personally then you are left with making wild guesses or relying to on crazy prices on for sale by owner’s websites.
2. Buying Agents will negotiate the deal on your behalf – if asking for discounts especially big discounts makes a you little nervous then may be it is a good idea to use them for your first deal.
3. Buying Agents will make sure that all the paperwork is done correctly.
4. A small niche of real estate agent’s work as buyer agents exclusively with real estate investors in Michigan. I know couple of them who are my Inner Circle members. They are investors themselves; so they really get it. If you are using somebody like them then they will also find foreclosures for you.
Consider also the flip side of the equation:
Some REO Realtors are not excited about splitting their commissions with a buyer agent ESPECIALLY if you are looking to buy a low end Junker – something like for $30,000. Believe me they don’t get paid that much. I know the insider workings of Asset Management firms and REO realtors and on these low-end houses they are lucky to make couple of hundred dollars. So they are not happy to see that you have a buyer agent in your corner who would like to get half of their already small check. But please make note that only applies to low end foreclosures - up to $50,00 or so and not to all of them but only few.
But overall it is still a good idea for new investors in Michigan – BUT the most important thing you have to understand that you have to find the right Buyer Agent to represent you. There are over 50,000 licensed real estate agents in Michigan. They are not created equal. A very small number; a very very small number is foreclosure savvy. You have to know how to find them. Otherwise you are just wasting your time if you decide to go that route.
Now for the fun stuff of Open Houses Version 2.0 I have done couple of open houses in my lifetime as for sale by owner flips. It was the most boring time of my life. I mean I cannot imagine how most real estate agents do them, week after week, sitting in empty houses, having no idea if anybody is going to show up or not. After doing couple of disastrous open houses I decided that 6% commission that gets paid to real estate agents is actually a pretty good deal. :- ) I would not do them for all the tea in China.
But darn it – people do want to see the inside of the house – and YES you can do all kind of simple but really effective things to screen out the non-serious buyers so if you do end up showing the house to couple of Michigan buyers they already jumped through hoops.
You can use “robots” to sift and sort and find the best applicants who might buy your foreclosure flip. But still they are a giant pain in the rear end to do.
That is why when I see websites like TurnHere and InmanStories, I am not happy but ecstatic. Because this is the shape of things to come. Two more years and more and more home buyers will want to watch a video – not a ugly grainy virtual tour that actually makes your beautiful hard wood floor look like it has sand all over it but real cool looking video.
You can buy an $89 video camera at your local Costco – the price already went down from $130 when I last wrote about them – this camera requires no tape and holds 30 minutes of pretty decent quality video. You hook it up to your computer; literally does nothing except upload your video file to either Google Video or YouTube – both of them are free and in less than 20 minutes the video of your beautiful flip is Live in glorious video. Now if this sounds complicated to you – turn to anybody in your life who is under 20 and they will do this in less than 20 minutes. Just because you don’t like messing with computers does not means that you cannot use Google Video do a virtual open house. Believe me once you have sat for hours in an empty house, bored out of your mind, you will run not walk to your computer and figure a way out on how to do this.
It is coming. It is inevitable. But I think that using video to save time and showcase your renovated foreclosure would become very mainstream very soon and I can see savvy investors using this technique not only to save time not talking to non serious buyers but also using this to gain upper hand on other Michigan real investors operating in their city plus for sale by owner homeowners in that particular block.