All Forum Posts by: Daniel A.

Shawn,

I am an investor in the Raleigh-Durham area. I would be willing to grab a coffee, and give you a little insight on the market. Lets see if we can align our schedules over the next week.

Cheers,

Dan

I am under contract on a "Subject To" deal in Cumberland County, NC. I wanted to know if anyone could refer a good attorney for the closing.

Thanks.

Terry,

Your fee should be whatever your investor is willing to pay. A finder's fee is in no way comparable to an agents' commission. I think that it is very short sighted for people to assume that you have added no value, and thus comment on what you deserve to be paid; without having any knowledge of what you may have invested (time/money) to lock that deal. In fact, they should assume the exact opposite, and counsel you on how to secure the fee for your work.

Those are my pennies my friend.

Good Luck with your deal.

I love it Brother J Scott. Thanks for the wise words.

I too am a fellow economist. UCLA Class of 96, Biz Econ. Good stuff. Thank you for your intelligent feedback and perspective.

Mark. Thanks for your feedback.

I love the low ball offer comment. That's great. It does seem like we as investors all too often are willing to continue to try and find ways to pay more, in order to get the "Deal", while the risk to the investor (as you pointed out in a very clear way) continue to rise.

Brother J Scott, I appreciate your enthusiasm. Spoken like a true investor.

To a large part, we agree on many things. I do hold the belief that you can not fully understand what investors do, unless you live this life. I am also one of the fortunate ones that buy deeply discounted property. That is the only way I buy, or I don't buy.

But your comments seem to suggest that as long as the banks have their heads up their (fill in the blank), that there will be plenty of deals to buy. If that is your meaning, I disagree. I don't believe that the exchange between all parties involved has to be win lose; or only available until one party can get their act together.

Regarding the type of legislation that could affect what you do, please take a moment to look up North Carolina SB1015. Although this law mainly affects investors who do lease options (I have never done Lease Option), it serves as a great example for what their lobby can do to limit and regulate investor activity. (I would be happy to forward you emails from investors/associates affected by this new law).

QUESTION:

Do we continue to let the chips fall where they may, in hopes that nothing comes down the pike that will directly affect the way we earn money?

All good feedback. Thanks again.

ADDRESSING A FEW REPLIES:

Steve B-
My quote came from the listing agent. And he was offered the both commissions. He simply said that he doesn't want to represent investors that make low offers. Obviously, that was a ridiculous statement, but the point of it was to shed light on the issue at hand.

J Scott-
You make many valid points. With that single minded focus, I am certain that you will continue to succeed in this business. That said, it would be a mistake to think that we can work in this field, without the knowledge of what the other side is doing or thinking. You are very correct to say that they don't know the ARV. We all know that ARV is very subjective. However, their judgement (right or wrong) of what we do, has an effect on the market place that we rely on to do business.

Again, as I said before, they tend to write laws that govern our day to day activity, and if you think that there are no investors consulting with the banks for investor insight, think again. They are not totally clueless. They need to know what we are doing, in order to regulate. The issue is that we are simply subjected to what they think and do.

THE AGENT:

Someone referred to agents as "scum", and although I do agree that agents and investors are a dime a dozen, and good ones are hard to find, I don't think they deserve to be called scum. (for the record, I am a full time investor, and have been for over 14 years)

Consider this:

ABC Bank gives a Broker/Agent 10 REO listings. That agent does a bunch of free work to get the listings, and then he or she is rated by the bank on how close to the asking price the listing is sold. The rating is actually more complex than that, but the entire purpose is to hire agents who recoup the most for the bank. Which is why banks tend to just collect offers for the first 2-4 weeks before making a decision. They are incentivized to just collect offers, and choose the highest and best. Thus the only party who is actually being properly represented by by the agent (making a full commission) is the bank. The agent is simply shuffling paper for you.

Most agents will just wait beneath the same "faucet" as all others do; waiting for the next batch of listings to drip out, so they can earn a living; and the way to ensure that the faucet keeps flowing for them is to continue to sell over priced investment properties, that often end up in the hands of another bank.

QUESTION:

What concrete ways do you have to level the playing field for investors?

How do we use our collective influence to produce a more investor friendly atmosphere?

Thanks Jon H.

The deal I use in this post is just an example, but I tend to buy $250k ARV homes for $125k and under.

That being said, many REO agents/brokers would consider $125k a low ball offer.

BACK TO THE CONFLICT AND QUESTION:

How do we get the thinking between the Banks, Brokers, and Investors more aligned, so that no one party must loose for the other to win, or exisT?

Remember, we are all needed in the process.

All good input guys. Thank you everyone.

Financialexaminer began to scratch the surface a bit more though, with his comment about "20% being kind of the limit set by many lenders". That Psychological barrier seems to be all too common when buying REO's.

How can we help them see things in a more investor friendly way?

Also, investors really don't have an active lobby to affect laws that could benefit us as a whole. This often leads to silly rules, like the 90 day hold before flip.

BACK TO OUR EXAMPLE:

Consider the total agent commission on both sides of the transaction.

approximately $9k on the purchase and $15k on the sell. Is it excessive to set a minimum return of no lower than 2 X the commissions ($48k)?

As Dan Koch said "they are not the ones with their necks on the line."

Please weigh in......

I am starting this topic to open a dialogue regarding acceptable investor returns. What I mean by acceptable investor returns is as follows:

THE TOPIC:

At what point is the investor being greedy?

I will use the example of a $250k dollar After Repair Value sale price, for the sake of simplicity.

$250k ARV
-$40k Rehab
-$20k Closing Cost (8%Total CCt, including commission).
________
$190k Available Gross Profit

Bellow $150k Purchase Price (PP) = $40k+ Net profits
$150k PP= $40k net profits
$160k PP=$30k
$170k PP=$20k
$180k PP=$10k

THE CONFLICT:

Many REO brokers are incentivized by their inventory source (the Banks) to sell at the highest and best price. Investors want to buy at the lowest possible price.

An agent told me "..I don't want to represent greedy investors who try to put in low ball offers" "I don't want them as clients"

THE DIALOGUE:

Whatever your background, please feel free to weigh in on this topic. Please be as open, and as detailed as possible with your reply.