\n<\/p>\n
First-time home buyer<\/strong><\/a>?<\/strong>\u00a0If so, you probably don\u2019t know what to look for when shopping for a primary residence. So many questions rush through your mind.\u00a0How much do you need for a\u00a0<\/strong>down payment<\/strong><\/a>? Where do you find the right real estate agent? Is it better to just stay renting?\u00a0<\/strong>Navigating the world of real estate can be tricky, but we\u2019re here to help. On this home buying hacks episode, we\u2019ve got\u00a0Chris Hutchins<\/strong>\u00a0from the\u00a0All the Hacks<\/em>\u00a0podcast to help dispel home buying myths and open up new ways to\u00a0make money with real estate<\/strong>.<\/p>\n Use this episode as your guide on that path to property number one. David, Rob, and Chris will touch on\u00a0why you should buy\u00a0<\/strong>in the first place,\u00a0how to find the right\u00a0<\/strong>real estate agent<\/strong><\/a>,\u00a0negotiation tactics to score a better price<\/strong>, making an offer,\u00a0financing<\/strong>, down payments, and what type of\u00a0home insurance<\/strong><\/a>\u00a0<\/strong>you\u2019ll need. Plus, we\u2019ll go deep into\u00a0getting out of a bad deal<\/strong>\u00a0and using inspections to save you from purchasing a problem property.<\/p>\n Don\u2019t wait on the sidelines to\u00a0<\/strong>buy your first property<\/strong><\/a>! This episode will give you EVERYTHING you need to know!\u00a0<\/strong><\/p>\n David: Chris: David: Rob: David: Rob: Chris: David: Chris: Rob: David: Chris: David: Chris: David: Chris: Rob: Chris: David: Chris: David: Chris: David: Chris: Rob: David: Rob: David: Chris: David: Chris: David: Rob: Chris: David: Chris: David: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is the BiggerPockets Podcast show, 783.<\/p>\n
I will say the purpose or maybe the goal of this conversation is to kind of walk through the home buying process, whether you\u2019re trying to invest, whether you\u2019re just trying to buy your primary residence, whether you\u2019re buying even a vacation home or something. If you\u2019re listening and you\u2019re thinking, \u201cI don\u2019t know if I\u2019m ready for real estate investing,\u201d one, maybe you should be, and two, this is going to be applicable to anyone, no matter what type of home you\u2019re buying.<\/p>\n
What\u2019s going on, everyone? It\u2019s David Greene, your host of the BiggerPockets Podcast, here today with my co-host, Rob Abasolo, with a bit of a different episode. Today, Rob and I are sharing the mic with Chris Hutchins, podcast host of All The Hacks, a very cool podcast that teaches people how to hack their way through life, specifically with personal finance. In today\u2019s show, Chris interviews Rob and I getting information that many of you probably never heard about how to save money in real estate through using agents, looking for deals, home inspections, really everything we could possibly think of for those that don\u2019t own a lot of real estate. Rob, how you feeling?<\/p>\n
Good, good. Yeah, we broke it down really from start to finish. We talk about agents, listings, due diligence, the financing, getting insurance for the properties that you\u2019re buying. This is going to pertain to everyone that\u2019s looking to buy a primary residence, this is going to pertain to everyone looking to buy investment properties. We really do cover everything, and honestly, for how much I\u2019ve heard you speak on the podcast, David, you still amaze me, my friend. You gave one of the coolest tips about disclosures, and that\u2019s all I\u2019m going to say. That is today\u2019s quick tip is just to listen to the entire episode because the entire episode is quick tips, but once you get to that tip about the disclosures, I was like, \u201cWow, this man is\u2026 He\u2019s done it. He has done it. He has figured it out.\u201d Congratulations and kudos, my friend.<\/p>\n
Thank you. This episode\u2019s going to be aired on our podcast and Chris\u2019s podcast, All The Hacks, but it was cool that we were interviewed because we got a chance to share some of the knowledge that we have when normally we\u2019re the person interviewing the guests to get to what they know. I kind of liked the change of pace, and I think you will too. Today\u2019s episode is full of actual advice. It\u2019s probably one you\u2019re going to want to listen to two or maybe three times. Make sure that you are using the note app in your phone, or if you still use a pen and ink and paper, taking some notes because there is stuff that is guaranteed to save you money.
Today\u2019s quick tip is listen to all three parts of this episode. There was so much good info in our conversation with Chris that we broke it into three easy 30-minute segments so you can actually absorb all the good intel instead of just being overwhelmed with one long show. If you\u2019re listening to this on the day it airs, then we will see you back here tomorrow and the next day for parts two and three. All right, let\u2019s bring in Chris.
How the turntables have turned. Chris, welcome to our show, and I\u2019ll just go ahead and welcome myself to your show to save you the time there. We\u2019ve got a cool little crossover event going on here today. For those who are unfamiliar, my name\u2019s David Greene. I\u2019m a former police officer who became a real estate investor and is now a real estate broker. I have a mortgage company called The One Brokerage. I run a real estate team, I buy rentals, I write books, and I host the BiggerPockets Podcast.<\/p>\n
Yeah, and I\u2019m Rob Abasolo. I am the co-host of the BiggerPockets Podcast. I have a goofy YouTube channel called Robuilt where I teach people how to invest in real estate, short-term rentals, tiny homes. I\u2019m a former ad man, if you will, just like Mad Men, the TV show is basically me. I was a copywriter and I quit all that, quit all the corporate dreams about two years ago to focus full-time on real estate and documenting the journey.<\/p>\n
I\u2019m Chris Hutchins. Thanks for having me and thanks for joining me. I host All The Hacks podcast. As people listening from that side know, I\u2019m all about trying to optimize and upgrade every aspect of your life. I want to do it while spending less and saving more, and I want to really dial things in, and so I\u2019m glad we\u2019re here because I\u2019ve gotten lots of questions about just the whole home buying process and I was like, \u201cWho could I find that knows more about this than I do?\u201d And so I thought, \u201cLet\u2019s do this conversation.\u201d You guys are the pros. I\u2019ve listened to your show, I don\u2019t know, countless times, and I thought this could be really fun for everyone on both sides to go through front to back how do you buy a home and optimize every step of the way.<\/p>\n
And for all those listening on BiggerPockets but who haven\u2019t heard about Chris, his podcast, All The Hacks is an award-winning podcast that will teach you to upgrade your life, money, and travel, all while spending less and saving more, which we love because the more money that we save, the more real estate we could buy, which is what most of us are addicted to.<\/p>\n
So let\u2019s jump in. Someone wants to buy a house. I always tend to ask people before you\u2019re even thinking about this, why are you doing this. I\u2019m curious if you guys have any frameworks you use for thinking about why you would buy a house, what\u2019s important to you. It doesn\u2019t even make sense before we jump into optimizing the entire process.<\/p>\n
Well, I mean, there\u2019s a lot of reasons to get into real estate. I don\u2019t think that there\u2019s any one particular reason. Some people get into real estate accidentally where they buy a house and they live in that house, and then one day they decide to buy another house and move into that house, and then they have to decide should they sell or should they buy or should they sell or keep the home, and then they become a landlord and then decide, \u201cOh hey, the flow from this is great,\u201d and then they buy more houses. Some people buy a house and then house hack and rent out rooms in their home to subsidize their mortgage. And then there are also the other side of it where people work nine to five jobs and maybe they\u2019re not making enough money at that nine to five job and they want to create supplemental income, so they get into real estate to help create monthly cashflow. Or, maybe they just want to eventually replace their nine to five income with real estate.
For me, that was really why I got into it. I had a pretty stable career in advertising, never really felt like I was making enough money, and so my side hustle became real estate, and I just started buying more properties as a way to make more money to supplement what I didn\u2019t feel like I was making at my career. What about you, David? What do you think?<\/p>\n
There\u2019s a lot of practical reasons why you want to invest in real estate. Even the casual observer sees home prices getting higher and higher and higher. You watch the HGTV shows that show how people can make money in real estate. It\u2019s kind of understood that it works, but not everyone knows the brass tacks of why you can make money with real estate. A lot of it are tax advantages. The tax code, it\u2019s very forgiving for real estate investors, and the money that you make from real estate, you usually pay much less taxes on than if you made that same money at a job because there\u2019s a little bit of risk that\u2019s going to be involved in it. It\u2019s easy to leverage, meaning I can buy a $500,000 house and put maybe 5% down on the loan, so I\u2019ve only put $25,000 of my money, but when that $500,000 house appreciates by 10%, goes up to 550, my $25,000 just made me $50,000 of equity. It\u2019s like I\u2019ve doubled my money relatively quickly where it\u2019s harder to invest in other assets where you could borrow money quite as easily.
And then there\u2019s lots of ways that real estate makes you money. You could buy it for less than market value. You can\u2019t really do that with a stock. You can\u2019t go get a deal on Tesla stock or Apple stock and find some way to get it cheaper. You can add value to the property, you can make it bigger, you can make it nicer, you can fix it out, you can change its use so that it can be rented to people. It creates actual equity which you can\u2019t do with a stock. There\u2019s nothing I can do if I buy Tesla stock to make that company worth more. And then, like Rob mentioned, it actually generates revenue. You can rent out spaces in that home, and when you do that correctly, you earn more money every month than what it cost to own the real estate, and that differences of what we refer to as cashflow and that can replace active income.<\/p>\n
Yeah, for anyone listening from All The Hacks that hasn\u2019t really got into real estate investing, you guys have done a great job. I\u2019m going to throw out an episode that is about getting started with just $10,000, I think it was episode 730 because I tried to take some notes ahead of time, but that was excellent. I will say the purpose or maybe the goal of this conversation is to kind of walk through the home buying process, whether you\u2019re trying to invest, whether you\u2019re just trying to buy your primary residence, whether you\u2019re buying even a vacation home or something. If you\u2019re listening and you\u2019re thinking, \u201cI don\u2019t know if I\u2019m ready for real estate investing,\u201d one, maybe you should be, and two, this is going to be applicable to anyone no matter what type of home you\u2019re buying, hopefully is what we can get to. I don\u2019t know, that\u2019s a little bit of the why.
For me, I\u2019ve never actually dabbled too hard in real estate investing, outside of like index fund REITs, but I\u2019ve gone through the home buying process as a primary residence and I actually own a fractional vacation home. I owned one-eighth of a home through a program called Pacaso where we bought one-eighth of a home up in Napa. It\u2019s kind of interesting because you can kind of invest, it\u2019s kind of a lot better in my opinion than a timeshare or anything like that so that\u2019s been great. So that\u2019s my experience, and I\u2019ve kind of optimized little pieces of it along the way but nothing like what you guys have. So I\u2019m excited.<\/p>\n
Curious, Chris, how well have you done? I think you said you bought a primary residence that you live in, right?<\/p>\n
Yep. I\u2019ve done that twice now.<\/p>\n
And how has that investment, if you just looked at it from a pure investment perspective, outperform some of the other things you\u2019ve invested in?<\/p>\n
Yeah, I mean, I would say the first time around, yes, but I had the fortunate luck of buying in the Bay Area at the worst possible, bottom-of-the-worst real estate crap. I got quite lucky by timing, didn\u2019t know it was going to do as well as it did. The most recent one, I don\u2019t think it\u2019s been long enough to see anything major differences yet. But the first one, if you layer in taxes and leverage, yeah, it was a great investment, but it\u2019s hard, it\u2019s hard with an N of one in a market that blew up crazy to feel like I know too much based on one success story.<\/p>\n
That\u2019s how it works though, honestly. It really does work like that sometimes for people where, for me, I think every real estate or every real estate, I was going to say real estator, every real estate investor, they all have this big lofty dream of becoming a millionaire, and it\u2019s super achievable because you can buy five properties that appreciate over the course of five, 10 years and you could just have a million dollars in equity. It wasn\u2019t necessarily because you were a genius or because you were the most, kind of had the most, I don\u2019t know, I already said it, genius strategy, but it happens because you just did it and you kept doing it and you keep doing it consistently, and that\u2019s really the secret sauce.
So yeah, maybe it was by luck that you bought that house in the property or in that market, but what a lot of people end up doing is when that happens, they get a taste for it and then they keep just buying and buying and buying and buying. I think if you do that consistently, no matter what, you\u2019ll always look like a genius 30 years from now.<\/p>\n
Yeah, but we could have a much longer debate maybe in a future date about debating that strategy, putting it in stock, all these other investments. But I think whether you want to build a portfolio of 20 homes, whether you want to buy multifamily homes, commercial properties, or you just want to buy a primary residence, at the end of the day, you got to find the home, you got to buy the home, you got to decide if it\u2019s a good deal, you got to close on it, you got to fund the purchase, unless you want to buy it with cash which I\u2019m guessing most people don\u2019t. So maybe let\u2019s jump into that process and kick off with just someone who\u2019s like, \u201cI\u2019m not really sure what I\u2019m doing.\u201d You\u2019ve been an agent. Let\u2019s talk a little bit about that process of partnering with someone to help you go through this process instead of just trying to wing it on your own, and when that makes sense or maybe when it doesn\u2019t.<\/p>\n
Yeah, and if you\u2019re going to buy a property, you don\u2019t know much about it, you definitely want to use a real estate agent in the beginning. When you\u2019re buying, here\u2019s something people don\u2019t realize, you don\u2019t have to pay your agent. If you\u2019re buying a house off of the MLS, this would be any property you see off Zillow or Redfin, something like that, the seller has already predetermined a certain amount of money they are going to pay the buyer\u2019s agent for bringing you to the property. You have a lot of questions, there\u2019s paperwork you\u2019re not going to understand, you don\u2019t know what the process is, it\u2019s intimidating. You find a real estate agent, and I\u2019ll add they\u2019re not all the same. There\u2019s good agents and bad agents, there\u2019s good lawyers and bad lawyers, good doctors and bad ones. You really want to find somebody who\u2019s good at what they do. They can take a lot of the fear that you have right out of it.
I mean, it\u2019s amazing when you take this scary process and there\u2019s a person like me that does this so often it\u2019s boring to me, like, \u201cOh, another one of these. I\u2019ve walked this path so many times.\u201d It\u2019s definitely not scary. That\u2019s something that every person who wants to buy a home should know right off the bat. Find a buyer\u2019s agent, they\u2019re going to answer a lot of the questions that you\u2019re going to have and they\u2019re going to protect you in ways you didn\u2019t even know that you needed to be protected. Maybe we can go through what the actual escrow process looks like or the process from start to finish of what to expect would buy in a home if you\u2019d like.
If you\u2019re a little bit more experienced, you bought homes before, one thing that people will look at, especially in a competitive market like ours, Chris, we just realized that we\u2019re neighbors, we live pretty close to each other, probably like an hour and some change away, is you can go directly to the listing agent and you can say, \u201cHey, I will let you represent me on this deal, but I\u2019m going to need some kind of an advantage. I need you to get my offer accepted over the other people, or I\u2019d like a little bit of a discount on the price if you\u2019re getting to represent me here.\u201d So there are people who buy a lot of real estate that has said, \u201cHey, I don\u2019t think I need my own buyer\u2019s agent necessarily. I still need someone to handle the paperwork,\u201d but they go right to the listing agent and they look for an advantage, and that is pretty popular in the Bay Area where most listings are getting several offers on all of them.<\/p>\n
Yeah. Actually, I have bought two homes in the Bay Area and both times I\u2019ve used the seller\u2019s agent. We could talk about that a little bit more because I have some thoughts about it, but maybe rewind a little. You said it\u2019s important, not all agents are the same, you got to pick the right one. Obviously, not everyone lives in the Bay Area, so you\u2019re not going to be the perfect agent for everyone. How does someone find that perfect agent?<\/p>\n
First thing to look for, find a person that sells a lot of houses. A lot of agents don\u2019t. In fact, most agents don\u2019t. I\u2019d say 90% of agents sell a couple houses a year or less, and it\u2019s unpopular to say this, the agents get angry because they\u2019re offended right now, like, \u201cJust because I only sell two houses a year doesn\u2019t mean I\u2019m not good.\u201d Okay, I know. However, tell me anything that you do twice a year that you get really, really good at. In general, that\u2019s how life works. If you snowboard twice a year for your whole life, you never really get that good at snowboarding, or it takes you 20 years before you\u2019re as good as somebody that just snowboarded every weekend for the whole first year that they got into it. Repetition really does develop mastery. I talk about that in the BRRRR book that I wrote. So the first thing I look for is an agent that sells a lot of homes, period.
The next thing I want is an agent that owns real estate themselves. At minimum, they got to own their own house, but ideally I want them to own investment property. It gives a completely different perspective when you\u2019ve bought a home and you believe in it and you just get a different set of goggles to look at real estate through. I don\u2019t have any kids. I love kids, we were talking about that before the show, but each of you as a dad, I am sure, sees something different when you look at a kid than I do, right? I don\u2019t immediately freak out when they start putting something in their nose. I haven\u2019t had enough experience of seeing how that could go wrong, right? Rob has seen some of that, so he\u2019s going to have a much different emotional response to that marble or that Play-Doh getting a little bit close to the nostrils.
Real estate agents that own real estate have that sixth sense. They can recognize that\u2019s a bad neighborhood, that\u2019s not the right tenant, that\u2019s not the right floor plan, that\u2019s not the right structure, you really want to go to this house that may not look as pretty in the pictures, but will be a better deal.
The third thing that you want to look for is an agent that understands the financial component of real estate. Many real estate agents are geared to cater to their client\u2019s emotions. They want to be liked. They\u2019re very high on as an eye on the DiSC profile. This is how they make their money by being likable. Most people reach out to the agent who\u2019s the nicest, the friendliest, the warmest. That doesn\u2019t mean they\u2019re the smartest.
So when you\u2019re having conversations, I always want to hear agents that are approaching real estate from a financial perspective. I want to hear them telling me, \u201cThis is the part of town that\u2019s being redeveloped. This is the next up and coming area. This is where all the money is going into. This is a property that would function as a rental if you moved out.\u201d Even if that\u2019s not necessarily what you\u2019re looking for, you just want to buy a home. If your agent sees things that way, it is very good to hedge your bets in the future because you never know when you have more kids, need more bedrooms, get a new job, want to move for some reason. You don\u2019t want to be locked into a situation where it\u2019s hard to sell that home or it can\u2019t be used as a rental property if you want to leave it.<\/p>\n
David, let me ask you something. Does the requirement of having an agent that owns real estate, is that as important if you\u2019re just buying a primary residence? Do you weight that a lot heavier for people that are looking to buy investment properties?<\/p>\n
No, it\u2019s the same for a primary residence. Let me tell you why. The first house I ever bought, my agent did not own any real estate, and I bought this house in the very end of 2009, great time to buy real estate, like you were saying, Chris. My agent did not tell me that the property taxes in that area had special assessments assigned to them and were much higher than the normal property taxes. In fact, they ended up being about $250 a month higher. I was expecting 300, they were 550. Now, I was buying this as a rental property, but even if I had buying it to live in, and you got to remember at the time, the total mortgage was like $1,300 so bumping it from 1,300 to 1,550 was a pretty significant chunk. It\u2019s like a 20% increase almost in my overall payment because they overlooked that property taxes were higher.
Now, agents who own real estate themselves would be familiar with the fact that property tax bills come, there\u2019s more expenses than just your principal and interest on your mortgage. They would see angles like insurance can increase in this area because it\u2019s in a flood zone. I really think she missed it because she had never paid a mortgage on her own. She never had her taxes and her insurance escrowed into her mortgage payment.
The next time I bought a house, it was with an agent that had been selling houses for a very long time and sold a lot and owned a lot of real estate herself, and as we went through the process, she educated me. \u201cYou don\u2019t want to buy on that part of town because you\u2019re going to pay extra money to get the better school districts. You don\u2019t want to buy over there because the taxes are higher. You don\u2019t want to buy a house like that because with that kind of a roof, your insurance is going to be a lot higher.\u201d I learned so much about investing in real estate just from the person that was getting paid to help me. It was free advice and free knowledge, and it really gave me a different perspective of what to look for and what to avoid.<\/p>\n
I love it. Okay, so I just sent a link to you and I\u2019m\u2026 There\u2019s this guy in Northern California, maybe you know him, Stanley Lo, number one agent in Northern California for 10 years. Looks like and is commonly described in San Mateo County as the Asian Elvis of real estate agents. And so when you first said look for someone who sells a lot of houses, I was looking at, I know this guy. I get the flyers in the mail. He sells all the houses, high volume, high throughput, not just low-income property, all kinds of price ranges. Does that mean that if I were looking for a real estate agent, would he be the right guy? Should I consider him even though it might not feel like someone\u2026 Someone\u2019s personality, maybe that\u2019s not the personality I would want as my real estate agent, but do the numbers speak more than a personality? How do you think about that? And if anyone\u2019s curious, greenbanker.com is this real estate agent\u2019s website.<\/p>\n
I mean, he\u2019s got it down, I will say that. I mean, the marketing, the cowhide blazer and the big circular glasses. I mean, I\u2019m in, personally.<\/p>\n
That\u2019s funny because I\u2019d be running the other way the minute I saw this.<\/p>\n
I\u2019m in.<\/p>\n
He does sell a lot of homes, I\u2019m sure, and so he probably does have some experience. My gut would tell me, as someone who has worked with a lot of clients and knows a lot of realtors, this is probably not someone who\u2019s actually going to be representing you. He\u2019s going to have staff that are going to be handling a lot of it. You\u2019re not going to be talking to Stanley, and he\u2019s going to likely make up for a lack of negotiation ability and focus on saving you money or making you money if it\u2019s a listing with his personality. So he\u2019s a great marketer, and the top producing agents are always the best marketers. This is a problem in our industry. The best agents don\u2019t make the most money. The ones that are best at getting the phone to ring make the most money, but that doesn\u2019t mean that they\u2019re the best when it comes to representing you.<\/p>\n
You want someone that sold a lot of houses, but maybe you don\u2019t necessarily want the person who markets themself as the person who sold the most houses.<\/p>\n
Yes.<\/p>\n
And so it\u2019s that kind of that sweet spot of maybe like the 60th to 90th percentile, but not the very top.<\/p>\n
There\u2019s a lot of things people fall for. I sell the most houses in this neighborhood, realtors will use that as a way of saying I\u2019m the best. Don\u2019t fall for that. It makes sense to our perspective when we\u2019re listing to the home. Oh, you sell all the houses in the neighborhood, you know how to get me top dollar. You just don\u2019t realize until you think about it, the buyers don\u2019t care. The buyers don\u2019t care who\u2019s selling that house. They are never going to look at who the listing agent is when they\u2019re writing their offer. They just care about the house.
The buyer\u2019s agent needs to know the neighborhood. The buyer\u2019s agent needs to know the amenities. When you\u2019re looking to buy somewhere, you want an agent that knows the area very well. When you\u2019re looking to sell, it will never matter how many homes in the area that agent\u2019s sold. In fact, the only reason they sell a lot of homes in the same area is they put their sign in all their yards and then they go, we call it farming, knocking on all the doors and meeting all the people, getting their name out there. They\u2019re just able to utilize a listing to build leverage to get more, but there\u2019s no competitive advantage when it comes to representing a seller if you\u2019ve sold other homes in the area.<\/p>\n
I wanted to add one thing to that, well, A, it sounds like if they\u2019re putting signs in everyone\u2019s yards, it sounds like they\u2019re good marketers, which goes back to what you were saying, but I did want to say that one really important piece to agents just from a consumer side and as someone that relies on agents pretty heavily is them having a really thorough Rolodex of vendors that I can use to help me run my properties, whether I\u2019m living in it or not.
If I\u2019m buying a short-term rental, for example, I know I need a contractor, cleaner, landscaper, pool maintenance person, pest control, and probably a plumber, electrician, and all that type of stuff. So when I\u2019m calling a realtor, and this goes into how many houses have they sold, if they\u2019ve sold a lot of houses over the last five, 10 years, they probably have a pretty thorough Rolodex. I mean, outdated term. If they use the term Rolodex, maybe they\u2019re not with it. But if they have a very big contact list of all these different vendors, that\u2019s what I\u2019m personally looking for in a realtor because a lot of the times I really need a firsthand referral to know that I can successfully either live in a property or execute a rental.<\/p>\n
Yeah, that Rolodex is interesting. It\u2019s something I never saw in the contract, but once you close, I was surprised that even though it\u2019s not necessarily required, a good agent will spend so much time helping make sure the process from I closed to I moved in, I got the yard done, I even renovated something, they\u2019ve been super helpful there.
We have a lot to go here, but I do want to touch quickly on that negotiating piece that you mentioned earlier, David. When someone\u2019s trying to get into this, what leverage or room is there for negotiating? I did what you suggested. I went to the seller\u2019s agent and said, \u201cHey, I don\u2019t want to mess around. I know I want this house. I don\u2019t need to go find another agent. I feel good in negotiating. Will you work with me?\u201d It ended up being a great situation because that agent got more commission and was a little bit more biased towards trying to get my purchase over the finish line, and in one case, rebated 1% of their fee back to me. Are there other rooms for negotiation? Are there other tactics someone can use to get a better price or likelihood of getting accepted?<\/p>\n
Well, the first thing you have to do is define a win. In a situation where the house is getting 10 offers, a win is just getting it at all. There are times in the Bay Area or other hot markets with restricted supply and lack of inventory that you\u2019re just not going to get a home, period. It\u2019s incredibly hard to get in contract, you\u2019re competing with so many people. In those situations, you\u2019re not going to get a discount from your listing agent, you\u2019re not going to get a better price on the home. You just have to get it.
Now, in other situations, which is what I try to target my clients into, I show them properties that less people are competing with. The listing photos are ugly. It\u2019s been in contract, it fell out of contract. Now the days on market have ticked up and people aren\u2019t looking at it anymore. I look for opportunities to help them get into a property with much less interest, and then we can get them a discount on the price, we can save them some money there. A mistake a lot of people make is they go to the listing agent of an incredibly hot property, they ask for a discount from the listing agent and they go, \u201cNo, there\u2019s like 12 other people that want to buy this house. I can get my client a hundred grand more going with a different offer. I\u2019m not going to discount commission just to help you get it.\u201d That\u2019s a big piece is knowing when you have leverage and when you don\u2019t.<\/p>\n
I want to talk about making that offer now, right? Let\u2019s say someone\u2019s gone through this process, they picked their agent, they\u2019ve figured out what they\u2019re doing, and they find a house and they\u2019re trying to decide, is this a good house. Let\u2019s start with that before we get to the offer. It\u2019s like you have a place in mind. You\u2019re looking at this listing. Maybe you do, maybe you don\u2019t have an agent yet, but what are the things that are really important for someone to be paying attention to when they\u2019re looking at a listing, either online or in person?<\/p>\n
If you\u2019re also curious about the things smart buyers look for in a listing, keep listening. The next part of this conversation will drop tomorrow. So make sure you\u2019re subscribed into the BiggerPockets Real Estate Podcast and go check out All The Hacks wherever you get your podcast.<\/p>\n