All Forum Posts by: Michael Baradell

Hey BP,

So I just had a bid accepted by the seller of a short sale property. Being a newer realtor, I am somewhat familiar with the short sale process but was curious if anyone can offer any insight from the banks perspective? I know I am in for a long wait to hear back from the bank, but is there anything I can do to help expedite the process? Any rules of thumb on what a bank will typically accept as far as how much of a loss they are willing to take on the property? Here are the numbers on my deal:

Originally listed for $235k

Reduced to $174k over the course of 3 months

My offer of $160k plus $5k for closing was accepted by the owner.

Through talking to the listing realtor I have found that the seller owes $210k

ARV for the property will be between $220k to $240k depending on finishes.

Projected rehab cost is $20k.

@Pete T. you are correct, my mind was made up. Actually, as a group we have came to a decision as well. I posed this question to see what kind of responses it would draw considering the conversation that myself and my partners had about it was pretty interesting. I love to be able to see different perspectives, best way to learn I think. So in conclusion, we have agreed that as the buyer agent I will receive 1% and have the remainder reduced off the sales price. I will not receive anything on the back end, but all marketing and expenses will be split. Right or wrong, it works for us.

@Joel Owens I agree that shot gunning offers can give you a bad rep. I have actually never done that. I was really just trying to show that having a realtor to submit offers at will for you has value. In this business, acting ASAP is vital. Especially when it comes to the MLS. We will resolve any issues/ disagreements we may have.

@Adrian Tilley you and Ed pretty much sum it up. The property search is executed 100% by me. I find the deals and present them to the group. I am in agreement that I should not keep all of the commission, but at lease a fair portion of it and forfeit the other portion to the sales price. When I say the partnership is equal, I am referring to all expenses, labor, time, profit etc..

@J Scott I do feel if someone brings a service to the partnership that will eventually be required or would greatly benefit the business, then yes I do think they should be compensated. Not necessarily retail value of that service, but nonetheless compensated. As a licensed realtor, would you submit tons of low ball offers for a client knowing that 99% of them will be refused? Of course not, but you will do it for your own business correct? That is significant value that you are bringing to the table. @Bill Gulley I am aware that I can not pay commissions to anyone but at licensed broker. I am only suggesting that the amount of commissions be either taken off the bottom line of the price or adjust the end profits accordingly to equal everything out.

@J Scott so you forfeit the commission and basically take that amount off the sales price? I am not opposed to that idea, but in the situation where the commission was paid out, I don't feel that should be an equal split. Because when its all said and done, because of the fact that there are taxes on the commission and expenses that I have to carry my license, its not be an equal split in the end.

@Joel Owens you are right Joel. And I can understand the fact that they see us as equals in the partnership, as do I, but I don't think that I should discount what I bring to the table as a realtor as well. In my eyes, those duties should be viewed as "outside" of the partnership. Being able to view properties immediately when they come on the market or making countless offers hoping to land one deal is a huge benefit to a real estate investment company. I do not think I should get full commission on both ends of the deal, but I do feel I should be compensated for the additional value I bring to the team.

@John Rooster I think you misunderstood the situation. Neither one of my partners were the purchaser. I am acting as the purchaser and Realtor. As I said before, I let them into the deal after the fact. The purchase agreement was accepted and terms were agreed upon without them having any part of the deal. I basically let them in because of what they will offer on future deals and since this was a solid deal, it would allow us to learn along the way. My original question is not in reference to this deal necessarily, but for future deals after a business plan is in place. I simply wanted to know that if I am acting in the capacity of the realtor and part of the partnership, is it reasonable to expect the commissions as well? And as for your comment about not partnering with me or a lawyer, I think one of the best attributes one can have when entering a partnership is to have an open mind. With the attitude you have, you may miss out on great deals.

Thanks for all of the input guys!! That's why I love BP!! As for the logistics/ legalization of the partnership, we are working on that aspect now. This deal initially started as a project that I would do alone, which is why nothing was drawn up from the beginning. I ended up partnering up with these two guys( who are very good, long time friends) because they both bring value to this project and future projects. With the value coming in many ways; financial being the biggest. I Absolutely know that setting ground rules and coming up with a rock solid business plan that we all agree upon is crucial for our success.

@Brian Mathews thanks for the response. The situation actually sounds worse in writing than it actually is. We meet frequently to discuss all issues/ questions we may have and that was one thing brought up. As for the specifics, the transaction was similar to any other sales transaction I've had in regards to work and time spent with paperwork etc.. The purpose of the property is a flip and I would say I am without question the lead guy on the project. The question that I have is, if you do not take into account any "work" regarding the project and renovation, but simply look at it as only Transactional, buying/selling, should I keep all commissions? Time spent on the project itself should be put in a different category I feel.