"You have to make an offer before you can see the property..." Is This Normal??

[Testament]

Hey guys.

My mentor and some of his associates are looking to get into real estate investing. He sent me to zillow.com to check out real estate postings for him in Nevada. We're in Northern California, so one of the associates I mentioned was going to be personally viewing the houses I found for us. I found what looked like some great deals - I ran them through a google spreadsheet file that made a bunch of calculations on how profitable a house would be and made a note of the real estate agents handling the best ones.

As it turns out, one real estate company was in charge of about 90-95% of the houses in the area I was looking at. I made a call to one of them that was listed and she let me know that she could help me out with viewing all the properties I mentioned to her. We set up a viewing appointment for 12 PM the 16th (this was about a week and a half ago) and she said she'd send some more info to my email.

After a few days without receiving an email, I figured I'd best call and make sure everything was still good to go. When I called her back, she informed me that the owner of one of the properties wasn't willing to allow me to come and view them unless I made them an offer first and it was accepted. I cocked my head a bit, and did a double take in my kitchen.

Testament: "Sorry? I have to...make you an offer...for a house that I've never been in, or seen the outside of except in pictures?"

RE Agent: "Yeah, we need an offer first. The house is occupied and they don't want to leave it without an offer first."

Testament: "Uh...I mean, I don't really know what to say. It's like I've told you I'm interested in a used car you're selling, and you're telling me that I have to offer how much I'll pay you for it before I've seen it or gotten to test drive it. Do you understand how silly that sounds?"

RE Agent: "Oh, well, that's the way it's done in Nevada. They might do it differently in California, but owners have more rights here."

Testament: "Uhm...well...alright. I suppose it wouldn't hurt to make an offer of the price it was listed for on Zillow.com. Make them an offer of 50k then."

I was extremely confused by it and red flag senses were tingling like crazy. Obviously there was something wrong with the place if they wanted to do it like that. Or maybe I was just being paranoid and this was actually how it was done...I don't know, I've never done real estate before.

Anyway, I sent the real estate agent's phone number to the associate I mentioned before (the one who was going to be viewing the properties for us) and he gave her a call about an hour ago. She let him know that she now needed an upfront offer on virtually all of the properties I had mentioned being interested in.

She also told him that Zillow.com was "very unreliable," which I'm thinking translates to, "We just use Zillow.com to post bait-and-switch offers."

But, as I said, I don't know...this might be a very common practice for all I know.

Do you guys typically have this come up when you're making deals? Or am I just caught in a scam?

 

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[MoneyDoc]

I have never heard of this in the 20 years I've been alive...

 

[jazb]

Tell them to go F*ck themselves

 

[vinisterz]

move on to the next one, that property probably will not sell anytime soon.

 

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[Deon]

That is insane... no it's not standard practice anywhere

 

[nausbot]

Unreasonable. Don't waste any more time.

 

[lleone]

There are many companies doing turn-key and similar and a lot of them are totally sleazy. They tell you it's worth more than it is, they put renters in at a high rent to make it look like you're cash flowing positive and then they move out and you can't re-rent. Vegas is still in recovery and there were articles about how a lot of vacant homes are being kept by banks rather than foreclosing on them, so I would be really careful what areas you pick. As for this particular case, I would just pass. There's always another deal down the road, so go with your gut.

 

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[Testament]

Thanks for all the responses, guys! Really glad to know that this isn't a standard and I'm not just being paranoid.

@lleone - Thanks SO MUCH for that info! I had no idea that sellers employ those sorts of tricks. It seemed like there were a lot of insanely good deals around where I was looking, and I've very much been getting a "too good to be true" vibe the whole time. How did you find out about these tricks that sellers use? Would you be able to recommend any reading material to become more aware of that kind of stuff?

The only real estate-ish book I've ever read was Winning Through Intimidation by Robert Ringer. Great read, but it mostly dealt with how buyers/sellers will try to screw real estate agents out of commissions.

Looking in at the houses now, most of them have been on the market for over a year. Something's gotta be up... Again though, I have literally no experience with real estate, so I'm not sure how reliable my gut instinct actually is on these matters. I'd just hate to be involved in any way in a deal that would be bad for my mentor.

 

[FastNAwesome]

Again though, I have literally no experience with real estate, so I'm not sure how reliable my gut instinct actually is on these matters.

Yes it is reliable. And yes of course, it can be wrong sometimes. But this sounds totally scammy, and you saw right through it.

Some great answers here, I'd just like to add:

- As long as you hold the money, you are MR.CUSTOMER, and you get to bargain, or propose your own rules, or walk away from the deal.

- Even if this was the "usual practice", you still don't have to accept it if it doesn't make sense to you. You can call it ridiculous. You can ask for a different deal. You can go to another website, another company, or choose another city, or reach property owners directly. Should be pretty cheap to have some flyers printed and spread out in the area you're interested in.

- She promises she'll email you and then she doesn't. Well that's a nice first impression. If they're so unreliable and unreasonable in their demands now, imagine what they will be like when they get a hold of your money. It can only get worse. Even if they had a good deal for you, I wouldn't work with such people.

 

[lleone]

@Testament

There are two great resources I can recommend that are both totally free and you will learn a ton of info. The first one is www.biggerpockets.com. There is a forum topic on almost every part of real estate investing you can think of. If you start asking about Las Vegas, you will get some really experienced people giving you all kinds of insight. You can also search on turn-key and will also get a ton of info. What's great is that they are pretty good at keeping sleazy people off the site. Once you join, there are a couple of free general resources that will give you a good overview on real estate investing. Another resource if you're more interested in rehabbing or flipping is http://therealdealzpodcast.com. It's a podcast, but the guy (Tucker) really shares a lot of insight into this area. Biggerpockets also has some really good podcasts as well.

Start there and see where it goes.

 

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[Ecom man]

@Testament

There are two great resources I can recommend that are both totally free and you will learn a ton of info. The first one is www.biggerpockets.com. There is a forum topic on almost every part of real estate investing you can think of. If you start asking about Las Vegas, you will get some really experienced people giving you all kinds of insight. You can also search on turn-key and will also get a ton of info. What's great is that they are pretty good at keeping sleazy people off the site. Once you join, there are a couple of free general resources that will give you a good overview on real estate investing. Another resource if you're more interested in rehabbing or flipping is http://therealdealzpodcast.com. It's a podcast, but the guy (Tucker) really shares a lot of insight into this area. Biggerpockets also has some really good podcasts as well.

Start there and see where it goes.

I love listening to the bigger pocket's podcast. Lots of good info on the site and the podcasts have a ton of good tidbits on real estate investing! Never heard of the realdealzpodcast so thanks for the heads up. Sounds like another good way to learn.

 

[Testament]

Update: Thought you guys might get a kick out of this...

So I woke up this morning to about 10 texts from mentor's associate. First one I read is, "Worst realtor ever, lol."

I start reading through and can't help but laugh -

"We're outside the properties and she's saying she can't look inside now."
"I'm trying to talk my way through it, but she's a moron."
"She doesn't even know how to get through the security gate."
"Doesn't know ANYTHING about the units...is telling me that the place isn't walking distance to UNLV - I can literally see it across the street from where I'm standing. This is like a bad comedy skit."
"But yeah, this is bad."
"Worst realtor ever, lol."

Eventually they DID manage to conquer the security gate of doom, and here's what he had to say about the place:

"There's plaster on the walls, truly awful looking patch up jobs. Looks very depressing, ugly beige and brown colors...problems with the AC unit."
"I don't think anyone would want to live here."

And to top it off, he actually got to talk to another person who lived in that apartment complex. The typical rent that they listed we could get from the place was 900 a month, BUT, surprise surprise, the person who lived there said that she was only paying 600. So, uh...yeah. I think this bears repeating:

Worst.
Realtor.
EVER.

Thanks so much for all the help everyone! It's good to know that I can trust my gut in the future.

 

[vinisterz]

that place may just be a great opportunity in disguise.

place is horrible: time to negotiate the price down and rehab.
rent is low: study the current lease agreement and possibly bring the rent up to market rent

 

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[Stef]

YES it's very normal in certain cases here in South Florida as well. When there i a tenant that is not cooperating, the only way to get access to the property is to make an offer, that is then presented to the tenant to gain access.

It's a formality and does not bind you to that price at all.

 

[CashFlowDepot]

Another reason NOT to work with real estate agents!