Are You Actually Providing Consulting Services to Clients?

On another note-

I have been made aware that there were several new threads started that never made it to the message boards. Unfortunately, I was never made aware that they were out there. Must ba a glitch. I will review all tomorrow morning and post those that are still relevant.

Sorry for the delay

JackH

I'll try here.

I have always been a RE Investor and not an agent, due to the creative financing and perceived liability issues. I have been involved with consulting since 1986 with the Seller in the following ways:

a. Joint Venture; say a house needs repairs and I have the cash or contacts, and there is little equity. To get the home sold, I lease with an option with the ability to do the repairs, perform the repairs, and assign the option for a fee. The buyer either gets financing or joins a new Lease Option.

b. Seller needs creative financing marketing, perhaps lease option or land contract or seller carry equity on a note. I will act as principal, then assign the deal for a fee. Sometimes that fee is split between buyer and seller.

To charge fees as an agent, this does not concern my business, as I am not licensed.

Many houses can be moved in 24 hours with creative financing.

All the best,

Brian Gibbons, Trainer, http://REIEntrepreneur.com

Quoting REISkills.com - Brian Gibbons:

I'll try here.

I have always been a RE Investor and not an agent, due to the creative financing and perceived liability issues. I have been involved with consulting since 1986 with the Seller in the following ways:

a. Joint Venture; say a house needs repairs and I have the cash or contacts, and there is little equity. To get the home sold, I lease with an option with the ability to do the repairs, perform the repairs, and assign the option for a fee. The buyer either gets financing or joins a new Lease Option.

b. Seller needs creative financing marketing, perhaps lease option or land contract or seller carry equity on a note. I will act as principal, then assign the deal for a fee. Sometimes that fee is split between buyer and seller.

To charge fees as an agent, this does not concern my business, as I am not licensed.

Many houses can be moved in 24 hours with creative financing.

All the best,

Brian Gibbons, Trainer, http://REIEntrepreneur.com

Jack asks:

So are you a consultant, or a third-party participant acting on behalf of the seller? Since you only "own" an option, can you sell the home without closing and taking it in your name? I wonder if that would be legal in many states, such as CA, where a license is required to sell a home unless you are the owner.

Maybe I don't understand it fully,

JackH

Hi Jack:

You know, the word consultant throws me. I am first and foremost a business owner looking to make a profit AND help people trying to get a solution from selling a residence.

The 6% model does not allow a seller to do anything but accept an AGENT FOR - contract.

When I act as a principal, and propose a lease option with fully assignable rights, (or land contract, or a seller carry back with no payments at a reasonable interest rate, or a joint venture, or a master lease), I do not need a real estate sales or broker license.

I do not necessarily act for anyone except myself, as I do not want the liability to be a "fidiciary".

My goals are:

* to provide the seller debt relief - cash flow relief

* and to feel the property is in play for the seller to move on.

I try to create a "plan" for the property as if I were investing that property to make a profit myself, then assign the deal to a tenant buyer or vendee or optionee.

In this market, finding a cash buyer will get rediculously difficult, even with low interest rates.

Without good income, low unsecured debt, and large downpayments, I feel (IMHO) even FHA will require more "money in the deal" from any owner occupied loan.

I'd appreciate any thoughts from experienced people on "seller financing" and helping sellers creatively.

All the best,

Brian Gibbons, http://REIEntrepreneur.com

Brian states:

When I act as a principal, and propose a lease option with fully assignable rights, (or land contract, or a seller carry back with no payments at a reasonable interest rate, or a joint venture, or a master lease), I do not need a real estate sales or broker license.

I do not necessarily act for anyone except myself, as I do not want the liability to be a "fidiciary".

My goals are:

* to provide the seller debt relief - cash flow relief

* and to feel the property is in play for the seller to move on.

Jack (still confused) asks:

Brian, you state that you are acting as a principal yet you keep referring to the seller. Do you own any of the property at the time you attempt to get it refinanced or sold? Are you operating under the protection of a Corporate lender license for loan securing purposes?

If not and you are either trying to secure a loan for a seller or you are trying to secure a buyer, then you would be in violation of California real estate law if you do not have a license. I can't speak for other states, as I am not familiar with their nuances.

What I am starting to get is that you are providing some form of interim financing and you then act in such a way as to get the property sold. Does this give you ownership at the time? Are you an owner or licensed lender?

Help me out here. I am having a tough time understanding your process as it relates to licensing. It might just be me, so bear with as I try to get a handle on this.

Thanks

JackH

Quoting Jack Harper:

Brian states:

When I act as a principal, and propose a lease option with fully assignable rights, (or land contract, or a seller carry back with no payments at a reasonable interest rate, or a joint venture, or a master lease), I do not need a real estate sales or broker license.

I do not necessarily act for anyone except myself, as I do not want the liability to be a "fidiciary".

My goals are:

* to provide the seller debt relief - cash flow relief

* and to feel the property is in play for the seller to move on.

Jack (still confused) asks:

Brian, you state that you are acting as a principal yet you keep referring to the seller. Do you own any of the property at the time you attempt to get it refinanced or sold? Are you operating under the protection of a Corporate lender license for loan securing purposes?

If not and you are either trying to secure a loan for a seller or you are trying to secure a buyer, then you would be in violation of California real estate law if you do not have a license. I can't speak for other states, as I am not familiar with their nuances.

What I am starting to get is that you are providing some form of interim financing and you then act in such a way as to get the property sold. Does this give you ownership at the time? Are you an owner or licensed lender?

Help me out here. I am having a tough time understanding your process as it relates to licensing. It might just be me, so bear with as I try to get a handle on this.

Thanks

JackH

It is important to examine state licensing law to determine what actions fit within the definition of a real estate broker and thus require licensure. In some states, a pattern of lease options without their exercise could trigger the licensing requirement if shown to be done to evade the licensing requirement (not clear how you prove or disprove that intent). This is definitely the time for legal advice from a competent real estate attorney in your state. For example, here is the relevant section from Hawaii Revised Statutes Ch 467-1:

Real estate broker" means any person who, for compensation or a valuable consideration, sells or offers to sell, buys or offers to buy, or negotiates the purchase or sale or exchange of real estate, or lists, or solicits for prospective purchasers, or who leases or offers to lease, or rents or offers to rent, or manages or offers to manage, any real estate, or the improvements thereon, for others, as a whole or partial vocation; or who secures, receives, takes, or accepts, and sells or offers to sell, any option on real estate without the exercise by the person of the option and for the purpose or as a means of evading the licensing requirement of this chapter.

Hi John:

Of all the "flippers" who use an option to purchase to control a commercial or residential property and then then sell that option in the open market, acting as a principal in the transaction, of the tens of thousands doing that, how many do you think have RE sales licenses? or RE brokers licenses?

I do not personally flip that much, but I know of hundreds of real estate investors that do.

Then can be legislative rules like you stated in HI, and TX has outlawed lease option sales.

We as real estate investors have challenges as far as the A.G. is concerned in "foreclosure rescue" et al. Mass, IL, FL and TX all have A.G.'s trying to make names for themselves and catch the ruthless REIs. And truth be said, there are unscrupulous acts being committed by some investors.

But acting as a principal and later doing as you see fit with the residence, whether it be a land contract - installment sale, lease option, seller carry back, master lease, life estate, equity share mortgage, et al, the following is the litmus test of most states:

1. Are you at risk in the transaction? An agent is not. An Investor - Principal is.

2. Are you "acting as Agent" for the principal (seller or buyer)? An Agent or property manager obviosly is. An Investor - Principal is not.

I dont have any answers to the mess caused by the Mortgage Securities Fiasco, but I do know that if Sellers could get some professional coaching in creative financing, many could move their house in a week.

That's just my humble opinion.

All the best,

Brian Gibbons

PS Many states have restrictions on creative tools, and many RE attorneys are inept due to many reasons. Note brokers know all about creative tools, such as cashing out land contracts at a slight discount.