Replies to This Discussion

Permalink Reply by Linda Baron on October 15, 2010 at 4:23am

My experience has been the same as yours ...very little activitiy this year. I was thinking that they had taken my name off of their list also, but perhaps you're right --maybe that got smart and realized that most of us won't do "their deal" -one sided with no real obligation on their part! Oh, that's my experience.

Permalink Reply by Jeff Payne on October 15, 2010 at 4:27am

Linda, one sided obligation, you got that right!! Just enough obligation to cloud the title!

Permalink Reply by James Lockard on October 15, 2010 at 4:49am

Jeff,

I know a Realtor who was working with one of these investors. The investors had contracts on 5 different properties and the investors negotiator was unable to convert any of them over the past year. Just like you said, the banks were not going to give the house away to them so it was not profitable for them to do the flip.

Permalink Reply by Marcy Moyer on October 15, 2010 at 4:53am

Not only are the banks not giving properties away but some make everyone sign something saying that the sale is not an option sale.

Permalink Reply by Joseph Kuhl on October 15, 2010 at 5:16am

I've got two going right now - they have been hellish. My investor is a pretty decent person, and has actually stepped aside for other deals (though even that is a problem now) The main problem is financing, particularly for income property (which I do a lot of). "Seasoning" has become a big issue, and I haven't been able to get a straight answer from the mortgage brokers, and they can't seem to get a straight answer from Fannie.

We do legal A-B, B-C transactions, with utter disclosure and 3 lawyers (one for each party). The problem is that the investor does not want to hold the property for very long. The safe seasoning time is 6 months, as it appears (but it isn't written,or the regs change every day - very frustrating lack of clarity). Very few of these sort of investors want to own the property that long -- too much risk, and hard money expense.

Works for fix and flip investors - except I've run into trouble recently because the buyer's bank was suspicious that the price was $100K higher despite the seasoning. And the guy worked his butt off but did it himself, so we had only invoices for materials.

Going to avoid a rant here about how banks shoot themselves in the foot on a regular basis. Except a general comment: I have a lot of small and mid size investors (a lot of them trademen) looking to buy and fix stuff up, and they know how to do it. There is a huge pool of skill and energy in the US that is not being tapped, because these guys can't buy properties that need repair. They are not going to live in the property, and even 50% down is not good enough to get a loan (in last case, the guy's credit score was 680 or so). They're looking to work and build equity and make some money, but can't.

Yanno who ends up buying the properties that need work, at dirt cheap prices (because others can't buy them with financing)? Guys with real money - god bless 'em (or I'd be broke) but the end result is to concentrate the wealth even more in the hands of those who already have it.

Permalink Reply by Joanna Durrant on October 15, 2010 at 5:58am

How could someone NOT figure out that lowballs and short sales don't go together rather quickly? After being told a number of times it won't work, it would turn into the "What do you not understand about NO?" question. What IS happening is companies/individuals purchase the note for pennies on the dollar (they negotiate it), the owner transfers the deed, they either pay off or foreclose out on any seconds, then they will relist the flip with you. I had that happen on my own personal home in Utah (obviously a different Realtor involved.) One company I've been communicating with lately that does that is Walk Away Today. They might help instead of the listing foreclosing because of an impossible second, like PNC. I haven't used them yet, so I don't know if they are legit or not. But I know it can work and does happen.

Permalink Reply by Jeff Payne on October 15, 2010 at 6:38am

I understand that system, that is vastly different than a company buying the note. Ironically I just got an email from walk away today and I am going to do just that, walk away from them. I am of the belief that if a mortgage has a due on sale clause, as soon as the seller deeds the property to the "investor" the balance of the loan is due in full IF the lender knows about, which they should if everything is disclosed.

Joanna Durrant said:

How could someone NOT figure out that lowballs and short sales don't go together rather quickly? After being told a number of times it won't work, it would turn into the "What do you not understand about NO?" question. What IS happening is companies/individuals purchase the note for pennies on the dollar (they negotiate it), the owner transfers the deed, they either pay off or foreclose out on any seconds, then they will relist the flip with you. I had that happen on my own personal home in Utah (obviously a different Realtor involved.) One company I've been communicating with lately that does that is Walk Away Today. They might help instead of the listing foreclosing because of an impossible second, like PNC. I haven't used them yet, so I don't know if they are legit or not. But I know it can work and does happen.

Permalink Reply by Jeff Payne on October 15, 2010 at 6:40am

Yes, that is the typical result, I have done a little research and can not find a single transaction in my county in which an option contract on a short sale has worked. I do know of one that the "investor" did nothing to try to get the short sale approved, and when the agent got it approved, the "investor" released his cloud on the title for the amount of the commission. All he did was cloud the title.

James Lockard said:

Jeff,

I know a Realtor who was working with one of these investors. The investors had contracts on 5 different properties and the investors negotiator was unable to convert any of them over the past year. Just like you said, the banks were not going to give the house away to them so it was not profitable for them to do the flip.

Permalink Reply by Joseph Kuhl on October 15, 2010 at 7:29am

This thread needs a little definition. There are a lot of fraudulent schemes out there and a lot of them are criminal in nature. The only transactions I have done involve an option contract where the buyer/investor also negotiates directly with the bank/investor. If that is successfully concluded, then the investor buys the property, and turns around and sells it - the closings are not simultaneous, but can be a few hours apart. I've had this extensively reviewed legally and it passes muster with full disclosure.

Are you folks talking about A-C transactions where the option is flipped to the end buyer? Those are pretty much illegal. Or variations on '"sign the deed over to your house and we'll solve all your problems" crapola?

As agents, it's your responsibility to act in your client's best interest. My opinion is that working with a legitimate investor can sometimes be the best route to get them out of a difficult situation. It is, of course, the agent's responsibility to make sure they are legitimate.

Permalink Reply by Jeff Payne on October 15, 2010 at 7:41am

Good info Joseph, I was referring to the option in which the investor never actually takes possession but flips his interest to party C.

Joseph Kuhl said:

This thread needs a little definition. There are a lot of fraudulent schemes out there and a lot of them are criminal in nature. The only transactions I have done involve an option contract where the buyer/investor also negotiates directly with the bank/investor. If that is successfully concluded, then the investor buys the property, and turns around and sells it - the closings are not simultaneous, but can be a few hours apart. I've had this extensively reviewed legally and it passes muster with full disclosure.

Are you folks talking about A-C transactions where the option is flipped to the end buyer? Those are pretty much illegal. Or variations on '"sign the deed over to your house and we'll solve all your problems" crapola?

As agents, it's your responsibility to act in your client's best interest. My opinion is that working with a legitimate investor can sometimes be the best route to get them out of a difficult situation. It is, of course, the agent's responsibility to make sure they are legitimate.