Comment

Comment by Elizabeth Monje on May 25, 2010 at 11:15am

Wow a lot of different points of view thank you all for replying! I am still in the mist of all because a restriction was put for the investor not to resale for 30 days!! WTH?! the fliiping restriction rule was lifted for a year as of this February I don't understand why banks are putting this restrictions for ( Well I do know why, lol ) because they want the profit but haven't they generated enough profit with all these bad loans? come on!!! If one buy low and sell for a higher price but still low enough for market price, why is this illegal. I see a lot of you are against flipping but I agree with everybody, sometimes an Investor is not the right choice for the seller but aren't we here to shed some light on these type of instances?
So did any one put ABC together? I din't I am still trying to figure it out

Comment by Terry L. Osburn on February 27, 2010 at 4:58am

I can understand that. I have had the same issues with BofA and going thru so many buyers but we did end up closing most of them. My hair is grayer and if it was not for the mochas and lattes would not have lasted.The ones that did not close was due to verbiage in the short sale approval letters they refused to change and attorneys told clients not to proceed. The clients took different action instead. A few years back we were seeing the lower end homes keep losing value. I can certainly see where we are different in this respect today. At least in our immediate area the lower end homes stabilized quite awhile back and have for the most part been getting multiple offers at or somewhat higher than list price The ones in our immediate area that have sat for awhile is due to their poor condition and/or were put on the market too high for what the area has been selling for those needing a lot of help will take an investor to come in low and to improve and resell higher. Unless the buyers use the FHA 201K to obtain the necessary funding for improvement.
Hopefully BofA is changing their ways. I guess we will see the full effect within the next year after Equator is in full swing and all the bugs are worked out.
Perhaps it is because we have had so many schemes and so much fraud in our area over the past years it has been daunting. The loan modification schemes were unbelievable as well.
The bottom line for any seller and agent for that matter is to have their legal counsel look at any contracts before they enter into them to ensure they are up to par. Just because an attorney is involved on the investor side does not preclude the other side from seeking separate legal counsel.

Comment by Bryant Tutas on February 27, 2010 at 3:35am

Terry. Just to reiterate..I do not do or recommend short sale flips. But I do know people that do them that are completely above board and providing a service. There are sellers that just want the house to be gone because they can't handle the stress. If the investor is truly willing to close on the deal there is an advantage to having a buyer(investor) who is knowledgeable and willing to go through the process.

I have several listings right now where we are on the 4th or 5th different buyer. These are BofA deals that we have been working for more than a year. Every time we get an approval the buyer walks and I have to start over again. With a good investor we could have closed on these properties many months ago. The values are still declining. The lender and the seller would have made out better closing at a lower price to an investor 6 months ago. Time has value.

In my market properties are being depreciated by appraisers by $150 PER DAY!

All I am saying is that a low deal now may very well be the highest and best deal if time on market is factored in. It's our job as agents is to be bale to look at these deals and see what's best for our sellers.

Comment by Terry L. Osburn on February 26, 2010 at 4:12pm

Bryant we are talking about entirely two different scenarios here.
I know there are good and bad investors.
You are referring to an entirely different situation. You are basically referring to a last minute bail out.....
What I am seeing is the questionable ones coming forward and whose tactics I greatly question.
I have been approached and asked for my short sale listings PRIOR to going on the market with the intent of purchasing at a much lesser price on homes that I know CAN bring in market value and WILL close as a short sale at that higher price.
They want to close concurrently the same day with another buyer at several hundred thousand dollars higher than what the investors are willing to pay.
How does the lenders feel about it ? I can tell you Wells Fargo is not happy as we have spoken about it.
WHY would any listing agent who knows they can obtain market value and know they can close the short sale put the seller in that place?
These guys do not want the homes listed on the open market.
My clients homes are not going to the auction...... Some have not even received NOD.
Even those slated for Trustee sales we have been able to secure at or near current market value and still close the short sale.
Are you saying if you are getting a short sale listing and you know the market can bring $600000 that you would encourage your seller to work with an investor whose intent is to purchase for $400000 and then sell it concurrently on the same day escrow closes at $600000? Do you really think the sellers lender understood this was going to happen?
I don't think so.
Now if I have a home on the market for months on end with no offers and trustee sale is looming that is something that would need to be considered BUT I personally would not represent the investors buyer.
But then our homes are not on the market for months on end without offers.
I realize there are more depressed market areas vs other areas and perhaps this is the only route to go.
I still believe caution needs to be heeded in terms of fiduciary responsibilities.

Comment by Bryant Tutas on February 26, 2010 at 1:24pm

Terry, I do understand. I do not do short sale flips either BUT I have thought about it. I have sellers call me needing help and they have a foreclosure auction scheduled to happen in a week or 2. In these instances U have investors that will make a cash offer on the property with full intent of closing on the transaction. The offers are lower than what the property would sell for if placed on the open market and given time. But unfortunately the seller hasn't any time left.

The only way to stop the auction is to get a contract submitted to the lender. I've done this about 4 or 5 times this far and in every case the deal was accepted by the lender and my investor closed on the transaction. Twice we resold the properties with the investor holding a mortgage. These were flips and were perfectly legal and helped the seller out of a bad situation. My sellers were thrilled. They were not however a-b-c flips but they could have been.

There are good investors and there are bad investor. Just as there are good and bad brokers. I don't think we can just draw a line and say all short sale flips are illegal or taking advantage of the seller. I would much rather see an experienced investor get the deal done than see an inexperienced agent allow a property to go to foreclosure because they took a short sale listing when they didn't know what they were doing.

We all need to understand how these flips work so we know when one is legal or not.

Thanks are not always as they seem.

Comment by Terry L. Osburn on February 26, 2010 at 7:44am

Bryant, the problem I have with short sale flipping , at least in the State of California, is the listing agents fiduciary responsibility to the homeowner(seller) to advertise and obtain the highest offer possible the market allows that will reduce the sellers deficit and decrease the banks loss(Fair Play-NAR standards) California is a fiduciary and full disclosure state.

I have been approached by several investors seeking short sales. They do not want the house on the market. They want to present a purchase offer the same day you take the listing and the investor group wants to do the short sale negotiating. There is no guarantee they will close the short sale. Most likely at end of six months if no approval or denied will drop the whole thing and the home owner has no backups causing the seller to go further behind and the listing agent will then have to procure and submit a whole new short sale package.

They are going entirely after the listings many times bringing in a straw buyer to begin with and then inserting another buyer at end time and then concurrently closing with another buyer at a substantially higher price.

Investors are investors and investors due what they are good at ....buying low and selling high.......that is not my concern.

As a listing agent , at least in the state of california, I cannot speak for other states, we are held to a higher standard in dealing with fiduciary responsiblities of our clients. Has a listing agent truly performed their due diligence and fiduciary by signing over their client to an investor group whose intent is not in reducing the sellers deficit or in fair play to the sellers lender reduce their loss?

I am just as upset as anyone as to how the banking industry has handled the housing market these past years.

But do we lower our standards and performance as listing agents to gain multiple commissions as well as our obligations and fiduciary to fulfill the wanton needs of the sharks that are swimming around this whole disaster to increase their profits?

So my question to you as well to the agents here doing short sale flippers WHY would I encourage my seller to list with me, bring a buyer in with a purchase offer $150000 to $200000 lower or more or less when I know my market and I know the seller could obtain much higher and successfully close short sale? As a fiduciary my obligation is to reduce as much as possible my sellers deficit.... and fair play to all parties involved.

We have had great success in our short sales closing.......It is extremely hard for me to wrap my mind around this by knowingly listing a home below the market and not fulfilling my duties and obligations as a listing agent.

Depending on the market trend we may list the property within 10 - 20% of last known like sale but in several cases we have listed at the market value and short sale closed with appraisals coming into value. Our experience has been the market will set the actual purchase price. On a few occasions yes the home did not appraise and appeals were made and new appraisals and pricing was adjusted and agreed to by all.

Will the actions of a listing agent encouraging the seller to use the services of these investor groups cause them even more harm as well as the listing agent and brokerage in terms of legal action for the difference made in profit from the short sale once a bank realizes what has happened?

What about the buyer who purchases the short sale at market value the exact same day it closes for hundreds of thousands of dollars less with no improvement to the home? Was there disclosure to the buyer?

If the property is taken by an investor and improvements made and then resold for profit I have no issue with that.

I am really uneasy at what is being suggested here. I realize other states are not fiduciary states and their laws allow for these type of transactions.

If the homeowners lender and the homeowner has been fully apprised of the intent and understand that a much higher price can be obtained by going on the market and go with the investors purchase offer instead and they give their blessings to the deal then there is no issue.

You and I know where this has already gone in many instances....... dejavue of the mortgage fraud of recent years gone by......

Comment by Bryant Tutas on February 26, 2010 at 2:16am

Short sale flipping can be legal and can be beneficial to all parties. BUT be sure to check your State's laws and have ab attorney review all paper work to make sure it is a legit deal. It is also imperative that the terms of the deal are fully disclosed to all lenders involved in the transaction or it could be mortgage fraud.

Tim. Short sale flipping does have it's place. I have no problem with this type of discussion taking place on this site. I'd rather be able to help people do it the right way than have them buy a course from late night TV and end up losing their license.

Now having said that, if the seller is harmed in any way by these transaction then I am dead set against them.

PLEASE SEEK LEGAL ADVICE BEFORE DOING A SHORT SALE FLIP.

Comment by Gwendolyn Harvey on February 25, 2010 at 3:05pm

This is my first short sale flip. My broker is not in favor of this type of transaction. But I have spoken to some other agents in my area that are doing them. They are popular in Florida.This is the way they explained it to me. I am presently doing a short sale flip now. I am the listing agent representing the seller. The investor (Buyer B) submitted an offer on the property. We have an assigned negotiator working on behalf of Buyer B on negotiating the short sale wth the lenders. We took the property off market when we submitted the short sale to the bank and showed it as contingent upon approval. Now we have recently got a counteroffer from the lender that we have accepted. I was advised by another realtor that does this type of transaction to place the property back on the market as Active to try and generate some buyer leads as back ups just in case the short sale is not approved for the Investor or if he is approved he can sale the property to them. If the Investor is approved, both closings for parties A and B and B and C would need to be set within 1 to 3 days of each other to close. So right now I am feeling my way through this just like you.

Comment by Tim Schmitz on February 25, 2010 at 2:51pm

This is the wrong site for these kind of shenanigans. You might want to go to www.biggerpockets.com to learn all of the illegal stuff.