Quick Cash and Short Sales

Quoting Sidney Jimenez, CDPE:

An investor that wants to engage in a purchase with a contract that lets them cancel at any time is not doing the best for that homeowner. They can leave the homeowner if they do not get all the ducks in row to make a profit.

Realtors don't have skin in the game so why would you want an investor to lose their shirt on a deal that won't work for them? Plus if the investor doesn't get their price on the contract the deal is cancelled anyway. Do you expect someone in the business for profit to lose going in? Just because a real estate agent makes a commission, that is still a profit, the agent isn't offering to make any payments or purchase the house if they can't sell it before the foreclosure.

DONTE,

No one wants to begrudge an investor the opportunity to make a profit. The problem lies when that investor puts the homeowner in a position where their future is put in peril. The homeowner in a position where they have to sell and cannot afford to sit by and hope for the investor to make a profit.

This is about the idea of someone causing harm to a homeowner because they were not able to make a profit. That is not helping someone that is exploiting a situation where the homeowner is desperate and feels the investor is their savior.

You're right an agent will make a commission on the sale but they are not going to leave the homeowner's side because they are not going to make a certain amount of money. An investor still has an obligation to not harm the homeowner in their own pursuit of a buck. That is the point here. At some point, a profit is second to the well being of that homeowner.

Case in point...there are investors in certain parts of the country that are purchasing condemned homes, from the city, and will them sell those homes to others without disclosing the properties being condemned. Those new owners are now responsible to pay for the demolition of those properties. That is not right.

This country is in the mess and it's in because of the blind pursuit of the mighty buck...even know with all the devastation reaped on these homeowners there are others that want to keep taking.

That, Donte, is not right!

Sydney,

I agree, I agree, I agree! Thank you for standing up for what IS right vs. just what FEELS right. The world has lost touch with what we do to each other as people anymore, and it's great to see someone have the guts to stand up and voice this. Nice to see these words coming out of Florida too, way to go Sydney!

MaryJo

Being a RE Investor Trainer since 1986, I find these last 12 months a real dilemma.

Agents work for the Seller. Period. (unless a Buyer's Agent)
Get the listing, any way you can.
Listings mean money.

An Agent has a fidiciary duty to the seller like an attorney or a CPA.
They want top price and earn a 6% comission.
They have "no skin in the game" and "are not at risk in the transaction."
They generally do not own rental property investments.
Of the 2 mill agents, the average agent does not make much money (last heard, if you average all agents that have a current licence, the average income is $6,000.00 YEARLY.
NAR's job is to be a spin doctor and meaning that to be "home ownership is a right for all." and "it's always a good time to sell and to buy"

Well, an REI has a special agenda and rules of the game.
REIs:
* have Private lenders to fund deals
* will buy creatively (subject to existing financing (sub2), land contracts - installment sales, seller carry backs, etc. )
* the way we buy is OPPOSED to Realtors - 6% commission model
* if we as REIs gave assurances that the the Seller would have his PITI payment paid, and did that through an agreement negotiated and agreed upon in good faith, is that a better solution that a property vacant for 6 - 12 months?
* an REI does not hurt the seller if the seller's needs are met at the time
* an REI has a fidiciary duty his business, his private lenders and partners, and his employees.
* and if the REI is ethical, he is clear in his intentions toward the seller
* with all the "foreclosure rescue" and "equity skimming" legislation from the local Attorney General's Office and
the the FBI, REIs are cautious to get involved to assist all sellers. The potential profit has to out weigh the risk.

I particually offer terms (lease options, land contracts, wraps AITSs) for sellers I meet, and then, as a principal, I will hold that contract out as a principal and rent the property out OR sell my interests in the contract.

Sellers are having their so called "equity" evaporate with all of the short sales and foreclosures. There goes their retirement savings!

In summary, until the major banks REALLY open up home loan credit, no mortgage broker or agent will be able to close most deals. Sellers need to know that the bottom has NOT been reached, and investors that are privately funded will be the ones to be closing transactions.

Or people like me, that offer good sales prices with REI terms.

Best wishes,

Brian Gibbons, http://REISkills.com

The only problem with this tactic is that when your seller accepts the investor's offer, the property is off the market, preventing a better offer from coming in.

Here in MA, we do have a status of "Active with a note" which allows the property to marketed with an accepted offer. But VERY few agents will show this property.

Also, low-ball offers take forever at lenders. They go in the "tall stack" of packages that no loss mitigator at the lender wants to take... why bother.

Ray Paulk

RaytheRealtor

As a Realtor and an investor myself, I know that nothing is as simple as it sounds. We talk about fiduciary duties, but I can not do the things that a fiduciary actually does, eg: trustee, executor, attorney. We just advise and counsel as our experience and abilities allow. When we discuss investor activities that impact sellers we have to look at what the sellers' options are. What happens to a seller if an investor does not get involved? Sometimes an investor is the only one to step up with a solution, so it is not helpful to criticize the investor on a blanket basis.

THOMAS,

I'm not sure there is a blanket assassination of investors, as least not by me. The problem is not the investor, but the tactics and final disposition of the homeowner. If and investor can make a profit and help the homeowner..more power to them.

The problem, to me, lies when the investor will leave the homeowner without a transaction just because they cannot make a profit. That is doing harm to another and I don't think there is any way to justify that.

We are not talking about a transaction with someone that has other options. Many times, if that investor cannot profit and decides to walk the homeowner is irreparably harmed and may have no other viable solution to fix their situation. The home is foreclosed and there could have been someone that would have bought that property to make it a win/win for the buyer and the seller.

As you see investors defend their turf here, they do so by talking about money..who makes it, who has it. Let's talk about the homeowner and doing what is in their best interest. Can we put them at the front of the line in these transactions?

Thanks Mary Jo....it's just how I feel.

Here is a link to a very interesting article in the NY Times...be forwarned, it will make you angry: Cleveland Foreclosures

Quoting Mary Lou Wall:

Hi Jim,

This is a friendly comment/question. By telling a seller not to sign a promisory note - could that not expose you for giving legal advice - there are a lot of variables in making that decision; I personally would not make that statement - I would give it to an expert on his finances - attorney, accountant. What do you think Jim.

MaryLouWall813@sbcglobal.net

Mary, you are abso.

Sidney: I think a lot of the critisizm of the various investor programs would be reduced if any Realtor or seller would insist that the investor spell out his program in writing (no "mushroom deals") so that the lender would know what the game plan is, and so that sellers would fully understand what the risks are. If the seller and the lender both agree, I can not see where the damage could be. Remember that sellers in this kind of situation may have come to the conclusion that they do not have any other options except allowing a forclosure. If the foreclosure happens anyway as a result of a failed investor program (eg: could not make money) who has been damaged? The seller may just have gained some time to live in the house free.

We all make decisions every day based on what we believe is in our own best interest at the time. Sometimes it turns out that the decision was wrong but does that mean that we should not make decisions?