All Forum Posts by: Bryan Scott

@Chris Corey.  So the listing agent is a dumb sh_t, right!?  Who cares?  Even if you had one, Seller's Property Disclosures, quite often, are not worth the "paper" they are printed on.  As a contractor, depending on your background experience, I'm guessing that you can walk-through and decide whether the property is worth pursuing, and, 15 minutes later have a fairly detailed rehab estimate.  At that point, the numbers either work, or they don't.  We've all met some shady listing agents - don't walk away from a good deal just because the LA is a moron - only because it doesn't pencil.  Competent inspectors should be able to provide the added confidence needed to proceed after the inspection period, but it depends on their experience as well.  I ALWAYS have separate pros inspect the roof, HVAC, structural (if something is seen that warrants it), sewer main (or, septic, including separate sewer scope for drainfield AND perk test), and water well (bacteria and pump flow, etc.), if not on public water.  Beyond the above, if not using a competent buyer's agent, I hope you've done these transactions a whole bunch.  If not, don't fight it, just hire a buyer's agent. 

@Karen Higgins.  My version of Self-Scheduled Showings in 2 Steps:

1. Step One:  Direct interested parties to go online to my single-property website and look at my professional still photos, my high-res, 3D, Matterport Tour - including a Walk-Through Video (available inside the Matterport Tour and posted as a separate MP4 video on YouTube or Vimeo), look at my floor plans w/measurements and look at all of my 360 panoramic photos for the exterior of the property.  And, if situation warrants, look at my Aerial Photos or Video.

Like what you see?  Direct them to my online Rental App, Agree to my Terms and Conditions, then pay your App Processing Fee, which qualifies you to attend my next physical OPEN HOUSE, occurring on Sat or Sun following whatever ad you just responded to.

2. Step Two:  Conduct OPEN HOUSE, Sat or Sun from 1-3 or 2-4, for all who completed my Rental App and paid my App Processing Fee.

Still like what you see and want to move ahead?  Perfect!  Now, pay me a refundable HOLDING DEPOSIT of 1/2 my Security Deposit Fee.

After the physical OPEN HOUSE is complete, I will make my selection by close of business on Monday and let you know same day.  Any who I did not approve will receive their deposit fee back 100%.

@Ilya Z. According to NAR, Open Houses (for buyers) sell approximately 6% of homes that conduct them.

So far as Open Houses for Brokers, I agree with @Derek Hamilton, but with a twist - only if the property is more "one-off" in terms of design or style typical to your area.  You do this to showcase features not easily seen in still photos.  Otherwise, my opinion about Opens is that they are a waste of time and money except for mining new buyer leads, or talking to the neighbors in the immediate area, whom are mostly just curious, but who may also become good leads down the road for your agent.

Assuming you have done a great rehab, are you maximizing exposure by using professional photos, 3D tour and floor plans? Have you done a great job demonstrating livability and sense of community via MLS public remarks and other advertising (such as a single-property website and social media; Facebook, Twitter, Instagram, YouTube, LinkedIn)? Do you have the listing shown everywhere (via MLS and syndication)? Do you have the property priced at true, researched, market value, or did you start at "Cost + Desired Profit = List Price?"

As a last question:  When your agent listed the property, did you agree with their market value assessment?  If not, why not and what is your agent doing to resolve the issue now?

Your market appears to be a seller's market, however, your price point appears to be well above the average home value.  This said, what are the market conditions in your price point?  How does your property compare to this and have you thoroughly discussed this with your agent?

I know you are feeling the pressure, but selling real estate is not dissimilar from baking a really good chocolate cookie -- you follow the recipe and it happens.  Don't and it fails.

Short and to the point - yes, it happens.  Could be a breach of ethics on one hand, but could also be in the best interests of their client.  Will these antics cause you to make a higher offer?  They hope so!  Don’t chase.  Stick to the plan

Recently, I was searching around for emerging markets to purchasing rental property and ran across this website for purposes of looking at cost of living by city: 

https://www.bestplaces.net/

Not sure how the data accuracy compares with others, but it's gotta be better than 2010 Census data.

@Javier Rosales  Your question, "What the difference between an Real estate Agent and a realtor?" answered below:

All real estate licensees are real estate agents, but not all agents are Realtors.

The primary difference is that Realtors are members of the National Association of Realtors (NAR), the [insert name of state] Association of Realtors and most often are board members in a local Association of Realtors.

According to Realtor Associations, board-member Realtors are held to higher standards and a strict code of ethics. Additionally, both NAR and the state associations are heavily involved in lobbying efforts with lawmakers to protect homeowner's rights whenever needed.

In some cases, Realtors are also offered FREE, continuing education credits, or exclusive education classes not available to non-Realtors. Beyond this, in some locations, in order to access the MLS that serves a specific area, you have to be a Realtor, because most MLSs are owned and operated by Realtors. In other locations, both Realtors and Non-Realtors have quasi-equal access, but very often the subscriber fees are larger. Quasi- because some MLS features and benefits are not offered to Non-Realtors. Such membership, even for a Non-Realtor, typically requires taking and passing an Ethics course.

I have been both Realtor and Non-Realtor. Other than the usual camaraderie that exists when you are active in any organization, there isn't much difference from my perspective, however it is a fair amount cheaper on an annual basis for a Non-Realtor. In my particular area, Non-Realtors all have access to the MLS, however, just 45 miles South of me in the Colorado Springs market, you must be a Realtor to gain membership access to that MLS.

There are other, more subtle differences, primarily in the areas of education and other minutia, but the above are the differences that I can think of that might matter.

BTW - I have NEVER had one client ask me if I was (or was not) a Realtor, which continues to tell me that most clients either don't care, don't understand the differences, or if they do, don't see it as an advantage or disadvantage one way or the other.  

@Julian Montes The fact that, in 11th grade, you are seeking such advice to begin with is commendable.  In fact, you are already ahead of at least 90% of the pack at this point, so congrats!

As I am old enough to be your grandfather, if I had it to do over again and I was as excited about the prospects of a real estate career as you seem to be at such a young age, I would graduate HS, then immediately enroll in an real estate undergrad program.  When you get to your 3rd year, as with most degree programs, you will need to enter some sort of apprenticeship program for college credit (paid or unpaid) in order to complete your degree.  Up to that point, my guess is you are working the same types of jobs most college kids find in order to help pay for college and/or earn spending money.

My further guess is that any worthwhile apprenticeship program will be with a larger brokerage (think ReMax, Coldwell Banker, Keller-Williams, Bershire-Hathaway), either residential or commercial, but will get your foot in the door to further your career once you graduate.  Whether you get licensed before or after graduation is up to you and the available opportunities at the time.

Once you are graduated and licensed, I would seek to become a member of a team as an admin, transaction coordinator, or even a buyer's or seller's agent in a learning environment from a team leader or managing broker who can and will take you under their wing and teach you the ropes, which will launch your career the right way.

From there, with some success on the residential side, I would proceed on the commercial side to round out your education, then decide from there where you really want to place a stake in the concrete and move ahead.

The above may well be a 5 year plan at minimum, but no one ever got anywhere in this business of any other without a plan and a roadmap.

Best of luck to you!

Julia, On the unpermitted improvements, not sure how this is handled in TX, but in CO no one seems to care so long as the improvements meet code.  Sometimes, inspections reveal issues and if something comes up, you just deal with in in the inspection period stipulated in the CBS.

If your commission-approved CBS doesn't provide a dates/deadlines page, then the buyer's agent will surely know how to handle it.  Yes, disclose on whatever Seller Disclosure you use in your brokerage, or not, and it's the buyer's caveat to sort out.

On the last point, not so recently when representing sellers, I have pushed them hard to get pre-listing inspections done on their property so they know what the buyer will find when it gets to that stage in the contract.  I can't tell you how many contracts I've seen fall apart at the inspection stage, due to some issue that might have been handled prior to listing.  If such a "surprise" comes up during the narrow inspection period window, the contract might be canceled outright, or at least create some drama no one wants or needs.

Contract cancellations are expensive for everyone involved and totally unnecessary if you get your own inspections up-front so you have time to resolve the issues that may scuttle your deal and make the sales cycle take longer than it should.

Good luck with it.

Julia, I agree with @Kerry Baird. Based on your last reply, it may make sense to focus more on DSCR than DTI, which may very well free up some or a bunch of your capital. Then, it's a whole bunch more about the property or the portfolio and not just you and your W-2/1099 income. At 30% - 50% down, everyone runs out of money at some point. Usually, this means working with a more nimble portfolio lender vs. a regional or large bank. I have no experience with the lender Kerry mentioned, but that one would be a good place to start. If interested, another thought is to ask members of your local Houston REIA group, because I am confident you are not the only investor who has run into this problem.

I also agree with @Guy Gimenez, especially on the topic of having your private mortgage buyer sit down with an RMLO - this process should be documented and you should keep copies in your property file.  Though states can make it more onerous, this is not specific to Texas.  I mentioned this in my first reply, but didn't really elaborate on why this is such an important step.  Per the Dodd-Frank Act, or whatever modified version we are still living with today, it can be construed as a requirement, despite the fact you may only do one of these each year, or even less often (rules are different if you do more than 4 or 5 of these per year vs. just one), but the buyer needs to understand what it takes to qualify for their take-out loan prior to the maturity date of your balloon (assuming you impose one).  They also need to sign up and pay for credit counseling - another part of the original DF Act.

In summary, all the steps you and your buyer take in the process between contract and close are incredibly important to protect not only you, but the buyer from themselves.  Especially important given you are licensed.  You (we) have a target on your (our) back already.  Doing private financing just makes the target larger.  So, don't shortcut the need to treat this transaction exactly the way you treat it in your brokerage business; state-approved CBS, dates/deadlines, prelim title, inspections, survey, insurance, appraisal, title, RMLO process/credit counseling (takes place of loan approval), then on to title co escrow close.

Finally, as @Guy Gimenez also mentioned, you absolutely should use a note servicing agent (think "arms-length"), which very nearly always is covered by the buyer (both one-time and recurring costs). FYI - these "qualified intermediaries" are not always easy to find, but you can ask your title co or your real estate attorney for references, or post the question on your REIA's website. Last one I used is called Evergreen Note Servicing near Seattle, NoteCollection.com.

Personally, for the time and risk, I would rather do commercial (5 or more units), or earn 8%-13% doing multiple, short-term, real estate crowd-funds, or both, and not worry about it.

I will say this though, of all the private funding type deals I have done since 2004 (50+), I have had the most success with seller carry wraps (all of mine had underlying mortgages), especially when compared to my second best - Land Contracts (contract for deed) and the ultimate bottom-of-the-barrel play - lease options.  This said though, compared to crowd-funding, I will NEVER do another seller wrap again, but I will remain a happy landlord and have no problems with tenants and toilets!

Have fun with it!

@Felipe Regueira Is your family friend Realtor under any sort of buyer-agency agreement with you, your Wife, or your Mother-in-Law?  If yes, despite your relationship, they may be held to the terms of such an agreement by their own employing/managing broker.

Absent the above, why not present the value this person brings to the transaction and split whatever the fee becomes with the seller, who BTW also needs someone to prepare the transaction and guide them through the process right along with you.  This agent could easily act as "Transaction Broker" for both parties and not violate any related dual agency rules or statutes so long as he treats you both equally as he cannot be fiduciary to either of you in that case.  The agent will still use a title company to close the transaction, but your agent can put together the offer, get it signed, then lead you both through the dates and deadlines phase and into close.

The other solution is to just pay them hourly for their work and he just handles only your end.  For guidance purposes, given you have already found the deal, you have taken at least 1/2 to 2/3rds of the time usually spent by a buyer's agent totally out of the equation.  This means  your agent will spend, at most, 8-10 hours on your deal.  When I consult, I charge $125/hour - you can run the math from there.

Good luck with it!