So, I get the call on Thursday...an excited investor that found me (of all places) on ActiveRain. The investor is pre-approved, and unlike many calls I've been receiving from graduates of some awful "investor class" they are actually looking to take title to properties rather than wholesale, and start a portfolio of rental properties. We discuss some strategies, and decide to meet on Sunday.
I set up eight showings on some rather distressed properties requiring total rehab. The investors gladly watched as I unboarded home after home with my screw-gun so that they could take a look. The second to last one of the day was a winner, they asked me how we would go about writing an offer. I explained the process, and notified them that there were special bank addendums that would be required, and that I would obtain them from the listing agent.
Of course, that morning when we met, I provided the buyers with "Understanding whom Agents Represent" and with a copy of my buyer broker agreement.
So, after 45 minutes or so on the initial phone call, 30 min setting up appointments, and five hours away from my beautiful wife and child on a Sunday morning...you all know what's coming.
The investor is not comfortable signing a buyer broker agreement. They have located an agent who will work without one. They wrote an offer on the property with that agent.
Now, really, this was a very small sale, and a very small commission, but we have worked long term with some investors in Baltimore City who have bought multiple properties through us, and I am all about building the long-term relationships. I realize that we all "waste" a few hours here and there with buyers that end up going elsewhere, and that my tiny payday on this sale is hardly worth crying over, but I realized something this time around. The general public has a really poor understanding of how our industry works. Occasionally, someone will get enough information to be dangerous, and really miss the forest for the trees.
I explained to these folks that my exclusive agency agreement is pretty buyer friendly. They can cancel the agreement at any time if they are not happy with my work, and 14days later, they are free to work with whomever they wish. Of course, I am entitled to comission, should they purchase anything that I had showed to them (for a period of three months after the agreement is ended). Yet, they don't really listen to that...all they hear is "I am commited to working with this person only..."
We generally try to have a "sit down" meeting with anyone before we will take them out to view properties but occasionally people will balk at that idea, and I realize that it's a gamble if we decide to meet with them anyway, but I have a few questions for the group:
1) what is it about our industry that gives the public the perception that they can abuse our time and take advantage of us?
2) what are some ways that we can further limit our risk?
In the end, when I look at the big picture, this is all for the best...I don't really believe that these particular investors are experienced, motivated, intelligent or realistic enough to really build a portfolio that would be an important part of our business. They were seemingly incredibly naive about costs of renovation and what kind of work it would entail to manage a portfolio of rental properties in Baltimore City. I did my best to share my knowledge with them (free of charge) whilst risking life and limb to show them $20k shells...but again, they obviously had their own information and ideas from another source.
