Has your “flip flopped?”

Posted by admin December - 31 - 1969 - Wednesday ADD COMMENTS

Had one of my Investor customers call me last week wanting advice. He has a $30,000 deposit on a house that will be completed next month. At that time he must come up with another $50,000 to close. He bought this house with the sole intention of “Flipping it for a profit. Thankfully I wasn’t the one who sold him this house. He made the mistake of getting in on this subdivision to late in the game. He also bought the largest model in the community. Never a good thing.

I pulled up the community of about 600 homes and found almost 100 active listings 1 pending and only 7 sales since January 1st. Needless to say he has a problem. He can afford to close but he can’t afford the payments and the rentals in this area will leave him with almost a $1,500 per month negative cash flow. So what are his options? The way I see it if he closes he is going to be throwing good money after bad. If he doesn’t close he will lose his $30,000. A very difficult position to be in. In my area I am expecting to get a lot of these calls over the next few months. The Realtor that sold him the houses loses, the builder loses, the mortgage company loses, the Investor loses and the subdivision loses. The only “winner” in this case is the infomercial guy who sold the “Can’t lose get rich quick in real estate or die trying six weeks to becoming a millionaire information pack available on cd or cassette tape guaranteed to work or your money back we promise” scheme.

Just another example of how investing in real estate is a serious business. The experienced Investors that I work with rarely sell anything. They make their money going in, cover the mortgage by the rent and wait. Flipping is great when it works and can wipe you out when it doesn’t. So, has your “flip flopped?”

Get your sign out of the tree!

Posted by admin December - 31 - 1969 - Wednesday ADD COMMENTS

$65.00. That can be the difference, from your listing selling or just sitting on the market for month after month. $65.00. That's the amount of money that could be standing between you and your next pay check. $65.00. This is how much it costs to buy a couple of worthless leads from a "lead mill". $65.00. This would pay for a mailer of 35 post cards that will get thrown in the garbage, or a hundred flyers for your listing that will end up getting wet and ruined in the brochure tube. $65.00. This is how much your bar tab could be while you are sitting there moaning because you haven't sold a house in 3 months.

$65.00. This is the amount my lawn service charges for one month of service on my listings. And the Seller will pay me back at closing. If they don't, who cares. I will take it out of my $8,000.00 paycheck.

Now here are some examples of what NOT spending that $65.00 will do for your listing. These homes are my competition. I took a listing this morning and snapped these photos while I was in the neighborhood. All of these were within 1 block of my listing. There were many more but I think you the point!

 

 

 

 

 

 

 

 

 

Now this is what one of my listings look like. All for $65.00.

So, folks if you want to get paid, provide some service for your sellers. Don't ask them. Tell them you are doing it. And while you are at it, pay a cleaning crew.

And most importantly……….Get your sign out of the tree!

If it ain’t on the HUD, it ain’t happening.

Posted by admin December - 31 - 1969 - Wednesday ADD COMMENTS

Let’s talk about Mortgage Fraud. Now I’m not an expert on this but I do see it quite often in my market. Or at least, what would be fraud, if my Seller and I didn’t just say no. These are a few of my favorite lines:

1. “Don’t worry I have a good appraiser, he’ll make it work”.

2.”If the Seller can give the Buyer a personal check for $5,000 at closing, we’ll get this closed”.

3.”No, it can’t be on the HUD”.

4.”Don’t worry this Mortgage Broker does this all the time”.

5.”The Lender said the Seller can hold a 10% second, after closing they can just tear it up”.

6.”Can we raise the price $20,000 and give the Buyer money back at closing?

7. “I have a buyer willing to pay $20,000 more for that property, will you give me an assignable contract”.

8. “What size prison uniform do you wear?”

9. “Can we be cell mates at Sing Sing?”

10. “You look cute, do you need a friend?”

Ok, maybe not all of those. I am surprised though how many times I get asked by Realtors to do things that are just plain fraudulent. Now sometimes, I like to think it is just out of ignorance. They figure if the Mortgage Broker said it is Ok then it must be legal. Don’t fall for it. The best rule of thumb is, “If it ain’t on the HUD, it ain’t happening.” Remember this line and use it often. As Realtors there are no excuses for not being able to recognize Mortgage Fraud when you see it. You need to be able to protect your customers and clients from these practices. Not to mention, your license and life as a free member of society. No commission is worth committing fraud for. Below are links to a few web sites that may help.

http://realtytimes.com/rtcpages/20050216_mortgagefraud.htm

http://www.fbi.gov/pressrel/pressrel05/quickflip121405.htm

http://www.click2houston.com/news/9584679/detail.html

http://www.usatoday.com/money/perfi/housing/2005-10-04-fraud-usat_x.htm

So remember……….“If it ain’t on the HUD, it ain’t happening.”

Did you know a fiduciary relationship is forever?

Posted by admin December - 31 - 1969 - Wednesday ADD COMMENTS

Did you know a fiduciary relationship is forever? When working for a Seller or Buyer as a "Single Agent" you are creating a fiduciary relationship.

Brief definition from Wikipedia: for full definition click

A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person they owe the duty (the "principal"): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust.

Once this relationship is established it does not go away just because your listing has expired or your Buyer is no longer working with you. You are still bound by this relationship. This means that whatever your client has told you in confidence must remain confidential until your client has given you permission to remove the confidentiality. And you have the duty of full disclosure to your principal. This is where in my opinion the problem comes in with having an Agency relationship in Real Estate.

Example: Suppose you have a listing as a single Agent and the Seller, your principal, has told you that she has been having financial difficulties. She is a few months behind on her mortgage payments and needs to sell quickly to avoid foreclosure. And she has asked you not to disclose this information to anyone. Ok, no problem, so far. A few months go by and your listing agreement expires and the Seller decides to list with another Company. About a month later you are searching for homes on the MLS to show the new Buyer that you are working with. This Buyer has signed a "Buyer's Broker Agreement" agreeing that you will work for him as a single Agent. The Buyer is now your Principal. Lo and behold the best match for your Buyer is the property that you had listed that is now with another Company. You take the Buyer to see it and he falls in love with the property. You rush back to your office and start writing a purchase offer and your Buyer looks at you and says "It looks like this property has been on the market for several months. Do you know why the Seller is selling?"

Here's your dilemma. You can't mention the pre-foreclosure or you are breaking your fiduciary relationship with the Seller and you can't not tell the Buyer because you owe him full disclosure.

This is a very simple and common example. It doesn't even take into account dual Agency or the fact that an Agency relationship starts with your Broker and filters down to all the Agents under that license. So what do you do?

About us

I am a licensed real estate Broker in the state of Florida. My opinions on real estate have been formed from my experiences and 15 years of working in the business. My opinions are in line with Florida Real Estate laws and the REALTOR(R) Code of Ethics. Your State’s laws may differ. So do your own homework before implementing any of my business practices into your business.