Paid $3,000 for off-market deals and got four MLS listings

Wrote this up because it was avoidable and I didn't avoid it.

We run a small service business on the maintenance side and I've been trying to get onto the ownership side for a while. Met an agent at a local meetup who described himself as investor-friendly and said he had a pocket pipeline. He offered a sourcing arrangement: $500 a month for six months, and if I bought something he'd credit the retainer against his commission. I said yes on the spot because I liked him and because the number felt small.

What I got over six months: four properties. One was on the MLS the day he sent it. Two had been on the MLS and expired. The fourth was a wholesaler's email blast that had gone to about 400 people, and I know that because two guys at the same meetup mentioned the same property that week. Nothing was off-market in any sense I'd use the word.

Cost: $3,000, plus about 20 hours driving properties that were never going to work, plus $450 for an inspection on the expired listing before I found out about the foundation.

What I got wrong at the first step. I never asked what he'd closed. I found out in month five that he'd done nine transactions in two years and eight were owner-occupant buyers. He wasn't lying to me, he genuinely thought investor-friendly meant willing to work with investors. It does not mean that.

What I'd do differently. Ask for the last ten closings before any money changes hands, and ask specifically how many were bought by someone who wasn't going to live there. Ask what he owns himself. Ask what off-market means to him out loud, because it turns out that phrase covers everything from a genuine unlisted seller to an email forward. And I wouldn't pay a retainer at all. An agent who has real deal flow doesn't need $500 a month from me, he needs a buyer who closes.

4 replies

2brandonlee36Passive

Asking what an agent owns is the single best filter I've found. Not because owning makes them good, but the answer tells you whether they've ever sat on the other side of a vacancy. The agent I use now owns three duplexes and she talks about rent in real numbers because she's collecting it.

I'd push back on one thing though. The retainer wasn't really the failure. You'd have wasted six months on him for free. The failure was six months without a checkpoint. If you'd said at week six "show me one property that isn't publicly listed or I'm out," you'd have lost $500 instead of $3,000.

2kevin_lombardPG1BPRO5

I nearly did the same thing at a meetup last month, different arrangement but same feeling of saying yes because I liked the person. What does off-market actually mean when it's real? Is it a seller who hasn't listed yet, or is it something else?

2tylerbrooks9PassivePRO5

@juniper what this looks like in practice is an agent who has a seller not currently on the market, usually because the agent has a relationship with them and knows they want to sell in the spring or want to avoid showings. The agent brings you before it's listed. Everything else, expired listings and wholesaler blasts and pre-foreclosure lists you can buy, is public information with a delay on it.

@cobalt the thing I'd add to your list is asking for the name of one investor client you can call. A real one will give you two without pausing.

Paid $3,000 for off-market deals and got four MLS listings

4 replies