We finished renovating/remodeling a property and put it on the market! Within 2 weeks, thanks to our very able Realtor, we had a reasonable offer (amidst the very cold days of winter).
Flipping is a big number crunching game. The lower your cost, higher the profit. Simple, in’it? We decided to experiment with another ‘lower’ cost attorney- just as a back-up. Sometimes, it’s better to get 2 legal advises over 1 in complex real-estate transactions. And anyways, what could go wrong with any Seller attorney?
We found a ‘real-estate only’ loooooow cost attorney who also owns a title company. Seemed like a great future partnership. Again, what could go wrong? As Sellers, We didn’t have to worry about title, environmental or anything as such!
Now the horrors began.
We got an offer on January 19th, 2015. Under a fairy-tale sale, we should have been out of attorney review within 3 days. Then the 10 days of inspection would kick in. Then the 3 days to ask for repairs/credit and another 3 days for Seller to reply. Please note that I have taken the full lengths of time in my calculations. People generally do not wait up until the 10th day to inspect property and so on… Buyers were already pre-qualified and could close within 30-35 days! We would have hoped to easily close before February 27, 2015!
Today is March 9th, 2015! We are nowhere close to closing. It is yet ‘anticipated’ to close by March 16th! Why? Attorney correspondence nightmares. Every stage hit a road-block and was delayed by 5-7 days! Attorney would only reply after 3-4 emails! He reminded me of the frustration talking to Bank executives for short-sales! All the attorney did was be an intermediary- forward emails between Buyers attorney and us, the Sellers! That too, with delays!
Did we lose anything? Of course!
We are still paying the maintenance and taxes on the vacant property! PSEG bills and water bills are still in our name. That is eroding our profit margin. And, in terms of lost opportunities, We lost greatly. We had to let go off 4 properties because we yet, did not have money to buy them!
I AM a real-estate investor/professional myself! And yet, the cheap Attorney decision was so wrong. Lessons learnt! YOU GET WHAT YOU PAY FOR! Being in the real-estate field for a while, we are able to negate some effects of such unprofessional professionals. Of course, the story may not sound as horrendous. But for an investor, a lost opportunity can mean losing $ 10k+.
Whether it is a real-estate agent, attorney, contractors or any other professional in any walk of life, please do not be fooled by lowest prices! They are so low for a reason! Another investor friend found a relatively cheap plumber (relative because plumbers are never cheap :-))! He charged a low amount for diagnosing an issue and fixing it. 2 days later, tenants complained left right and center for very high heat in the house. Our dear friend had to pay another plumber for the right diagnosis and fix the problem. Ended up shelling out for 2 plumbers. Horror stories are endless.
We work 24/7 with real-estate agents. Some only list on MLS, others add value by giving inputs of getting better sales price, marketing via different channels, promptly responding to Buyers/Sellers, arranging maintenance and snow removal, suggesting right listing price (not too high and not even too low). Obviously, a very low priced property will have lots of takers. But that doesn’t do the Seller much good and gives Agent boasting rights of selling property within 2 days!! Expect services in conjunction of your agreed commission.
Of course, under no circumstance, do I opine high-priced professionals only. Pick any. Just do your due diligence about the professional. Ask around for referrals. See if they warranty/guarantee their work. See IF you stand to lose and how much if they do not perform. Call a few and see how they diagnose an issue. Lastly, if you REALLY stand to lose, be bold and register a complaint.
I conclude and summarize with a John Ruskin quote:
“It’s unwise to pay too much, but it’s worse to pay too little. When
you pay too much, you lose a little money – that’s all. When you pay
too little, you sometimes lose everything, because the thing you
bought was incapable of doing the thing it was bought to do. The
common law of business balance prohibits paying a little and getting a
lot – it can’t be done. If you deal with the lowest bidder, it is well
to add something for the risk you run, and if you do that you will
have enough to pay for something better.”