Estate agents are a different breed… I know, I used to be one.
(I've still got my licence – but I don't use it.)
This is especially true of commercial agents.
You'd think that if you were selling a property for someone… and of course trying to sell it TO someone, you'd make every effort to service enquiries that come in about properties you have in your books.
After all when you sell a property as an agent – you make money. That's how it works.
So, personally I'd expect that if you get an enquiry from someone about a property you've listed, you'd jump on getting back to them and giving them what they need to make a decision and buy the thing…
But, apparently that's not the case.
I reckon many commercial agents come from the “treat 'em mean, keep 'em keen ” school of business.
“If you ignore a potential buyer – they'll only want it more.”
In fact I see this all the time. I make an enquiry about a property and the agent never gets back to me.
I hear it from my commercial investing students all the time as well.
But here's what I tell them:
That's the point where most people give up… They'll call a couple of times, get nothing back and move on.
That to me, is an opportunity.
That's the point you've got to push through. Hound the agent until he has no choice but to give you the answers you need.
There's more than one deal I've done which turned out to be a complete winner, that I only got across the line because of a tenacious resolve to chase the agent down until I get the information I needed about the property.
I'm literally helping the agent make money in spite of himself.
And do I get thanks? Nope – not generally.
Not even a card.
But what I did get is a great deal and years of awesome cash flow… so I guess it all works out in the end.
The other side of the coin is the kind of agent who defends the vendor's irrational wishes like a dog-with-a-bone.
I had one student do a deal a couple of years ago with a property in Tassie. The property was listed at $750,000.
It wasn't worth that and the vendors were ‘dreaming'.
When we looked at the cap rate of the area it looked like it was worth closer to $620,000 than $750,000 that's a big difference!
I don't know where the vendor got that number, but the agent was adamant that the vendor wouldn't accept a cent below the asking price…. Not a single cent!
Obviously, there's a vested interest from the agent to consider, but the reality was that it just wasn't worth that.
If you are inexperienced in commercial, you'd either have to be willing to take the deal at a much lower return, or let it go and move on.
As an experienced commercial investor I got a meeting with the vendor and explained to them why they were ‘Dreaming', and exactly how far they had overshot the true value of the property.
I showed them my numbers and research.
They really had no choice but to relinquish… and at the end of the day they were happy about it…
The student ended up getting the deal for around 90k cheaper than the list price…
And the agent had to suck it up and take a slightly smaller commission.
The reality was that at the list price they were not getting any takers, so from my point of view “a bird in the hand is worth two in the bush”.
I definitely should have got a thank you card for that one from the agent.
In the end we got the deal across the line and at the end of the day that's what really matters.
The point is that in both these cases we see agents with deals that were probably not going to happen. The agents cause more people to walk away than to follow through…
Most would drop the deal in the “too-hard basket” and move on, yet with some persistence, you can see that it's possible to get awesome deals like this across the line… if you can push past the point where you feel like you're stalking them.
Keep that in mind next time you find a hard one – it could be an opportunity in disguise.