All Forum Posts by: Dion DePaoli

A "true" buyer's agent is supposed to protect your interests or negotiate in your best interests as a buyer. If the property you get involved with has a listing agent then the buyer's agent will be able to collect the agent commission offered. If there is not a listing agent then you will have to negotiate with the agent you are using.

Assigning a contract means you are a principal in the chain of the contracts. At a point in the chain you are recognized as a buyer.

Agents only recommend EMD to sellers. A seller has a right to ask for any EMD they desire, usually this is by the recommendation of their listing agent. In a contract a buyer and a seller are the principal parties, the agents are 3rd parties to the contract not principals, they represent the interest of the party they are loyal to.

A buyer's agent, who has loyalties to you as the buyer should not be negotiating against you by offering higher EMD or any other term not in your best interest.

It is all workable and boils down to preference and hassle.

If you just need value feedback, perhaps strike a deal with an agent or an appraiser. Nobody likes to work for free and nobody likes to do a lot of work for peanuts.

I am happy to discuss with you as needed but you may also get some other ideas and input from other members on the public post.

I am not sure what clear answer you are looking for. Can you refinance the loan after 6 months? Yes, provided you have LTV and Loan parameters that meeting a loan. Can you be added to a company that owns the asset? Yes, provided the seller wants to do that.

I am not positive what you mean by them referring to DOS.

If you pay him his equity upfront with cash, then essentially you purchased the deal. I assume the rest of the money for the deal pays for the current debt on the property, thus not to the current owner.

Transferring the property from one entity (person or company) to another (person or company) may trigger a Due On Sale clause inside your loan. This would mean the lender wants payment in full. The key is to work within the scope of the current or future lender's guidelines to carve out a refinance otherwise it is a simple purchase transaction.

How is the property currently vested? (natural person or company)
If company, is it the only asset/property in the company?
What general loan terms do you seek when you refinance (LTV, Cash and what is the cash for?)
What type of property is it?

In order to take over the existing financing you can assume his loan. This will require current lender approval and is dependent upon that provision being present in his security instrument (mtg/dot). Once the lender approves you, you should be able to vest title to the property in your choice entity and the lender will prepare paperwork to follow the same.

Another idea may include purchasing the LLC as a company which still may create some underwriting from the lender since the ownership is changing of the LLC. In this case, it is already in an LLC. If this is possible you have to ensure you do not inherit liability on the LLC from the previous ownership.

In regards to refinance in the future, once you own it, you can refinance it when you want in accordance with the loan parameters on the property.

If you are trying to tap into some equity at closing, let's say. This gets a little more involved but it can be done. You could ask for a temporary or conditional equitable ownership of the property with the current owner. This will put you into his LLC as an owner. (that is where it is sticky but it has been done depending on how you negotiate). Then you can pursue a new lender altogether to refinance and pull cash out under the pretense of a buyout of a partner. The current lender may do this too. The lender may have guidelines which you will have to understand on how soon the seller can vacate the company with cash or how long you would have to be a member for them to lend, etc. As I said more involved, but it works if you do it right.

Ann Belleny is correct in the statements whereas predominantly those forms are used in residential transactions. Many hard money lenders including myself have used TIL's in our application process as a typical affirmative defense in Florida foreclosure is high cost loan and the state in general always had a hard stance against high cost loans. Also the line blurs quickly when lending to a natural person as a hard money lender. The nature of a loan is determined typically by the collateral and the borrower. In situations where the borrower is a natural person and the collateral is residential, the loan maybe deemed residential by the courts if it goes there. Good hard money lenders in Florida will cross their "t" and dot their "i". This will mean that disclosures at closing will be presented to be signed, some of which may address some of the concepts discussed herein.

Its not a bad idea to have your attorney read over the closing packet for your protection prior to closing. A title agent is not there to protect your rights and your lender is not really your friend, they will position for their best angle not yours.

A fee agreement must be executed in order for the lender to legally collect fees. Depending on the language of the term sheet, it may be included in that document or it may be a separate document. Either way a contract needs to be created between you and the lender or you and the broker for the fee in accordance with the law for them to collect a fee. The fee has to be clearly defined along with when the fee is considered earned and due from you. Typically this may include an initial agreement signed at application and one updated and signed at closing. This covers the lender regarding compliance in case of any loan changes.

A fee maybe paid in advance, paid at closing or rolled into the loan. I have seen a very wide array of loan structures but typically fees/points are due upon closing of the loan. It is a fairly equal percentage of being paid with cash at closing or being rolled into the loan.

It is probably important to point out that some of this is very dependent on who your getting your loan through. Directly from a lender or through a mortgage broker. If the lender than the paperwork should be pretty straight forward. If through a broker you will see paperwork which establishes your relationship with the broker and then paperwork which establishes your relation with the lender. Each party has a different role in their obligations to you and to compliance. If this is the case just ask the broker what you are looking at signing is from the lender or broker, they should tell you. Compare and contrast for your protection as needed.

In regards to how the title knows what to add to the closing statement, well that comes from the lender. The lender will deliver to the title company a full set of instructions which includes fees and paperwork for the title company to prepare. The title agent will prepare as suggested by lender provided it is compliant with their closing obligations. The title company will support their lender instructions accordingly as from time to time title companies can get dragged into problem hard money loan situations. Remember a title company is not there to take sides so they will not protect your interests they are suppose to be objective third parties and will cover they own operation liability as needed.

Hard money loans are good tools to use in this space. I see many folks get very hung up in interest and fees/points and forget to scrutinize the rest of the parameters of the loan. The adage of plan for the worst and hope for the best applies. Taking a hard money loan out puts the lender in a very favorable equity position into the property with superior legal rights. Some lenders practice "loan to own" operations which is predatory type lending and they attempt to fly under the flag of commercial loan so as to void the protection that would be extended to a borrower. Some lenders are egregious with their fees. And some lenders are great to work with. If you are new to this I would definitely get some legal counsel on your side of the fence to look after your best interests.

Perhaps find a different agent that one doesn't sound willing to help you. Your county has an on line court house where you can look up the assessor's value of the property for tax purposes. It does not, that I could find quickly, allow you to cross search comparable properties.

The property not being listed in MLS does not prevent the agent or any other agent from pulling up comps close to the subject property. They just need to want to do it and do it. I would point out my earlier post regarding Zillow as it seems to list a fair amount of data for your county.

A fact check on your value would have to also come from your investor on the backside too right? He is not going to just take your word for it right? Perhaps you guys can come up with a agreed upon appraiser who you use and then that person would have incentive to work with you since they are going to get paid.

On the finance thing, I think you miss understood the program. FHA desires title seasoning of 90 days or more. They do not have loan programs for flippers, their programs are more opposed to flipping than for flipping.

In Florida only the Mortgage is recorded at the county a promissory note is not recorded. When a modification or amendment is completed that is recorded and will carry note parameters on it. A mortgage generally does not carry the all of the note parameters on it. A mortgage is granting of the collateral, the note is the IOU thus the note has the full loan terms on it, the mortgage reference those terms to structure the collateral obligation.

In the court record the mortgage and note are both submitted as function of the foreclosure complaint. Not sure after I reread your post if that is what you meant by recorded.

Points and fees would be from the HUD 1 statement and is dependent upon the defense the borrower attempts. In the event they are trying to point out Section 32 loans which is a high cost loan they would need to support that by showing the HUD. The HUD is not recorded and would have to come from either the lender, borrower or title company.

Not sure what you are trying to accomplish. If you are trying to compare mortgage offers you should use your TIL (Truth In Lending) form which will show you the true APR of your loan but tends to not be fully accurate until you get closer to funding.

If you give a little more information on your intent, might be able to point you in the correct direction.

It could be worked with but the numbers don't seem to work out with the input information you mentioned.

Loan $30,000
Interest: 11%
Term/Amortization: 15 years
P&I Payment = $340.98
I/O Payment = $275.00

I assume it is suppose to be P&I.

HOA at $140 per month is not crazy high depending on your geography. It would have merit to look at the HOA budget and see how financially sound they are. Special assessments have been issued in many complexes where HOA dues have dropped and they need to repair something etc. If it is just the normal rate, again not all shocking.

With HOA your cost is %480.98 with your tax allocated on a monthly basis your cost is $537.65 ($56.67 in tax @ $680.00 per year)

So based on your rental market rates of $650 plus you have some money you can make but right now you seem to be in the red. If you pull off the higher market rent, I would say you are doing pretty well based on the numbers. ROR runs from 4.5% to 8.5% based on $30k all in.

I would get a copy of the rental agreement and see when it expires and if there is any language preventing new ownership from increasing rents. Provided that is workable you are sitting fine after fixing that situation but maybe see if you can chat with tenant or have your buddy do it since you all know each other. If you can keep the same tenant, not sure I would worry about repairs all that much since you have a tenant in the property and you could defer the repairs and use the rent money overtime to finance those repairs.

I would check with the private lender and see if they will charge a fee to allow you to assume the note. Based on that being a nominal amount of money (typical fee is around 1.0% of the balance) you have some equity, again according to your post of about $8,000. I might offer $1,500 to $3,000 with a heavier focus on the lower number (but I might also try ZERO). You didn't mention what you buddy purchased it for, so I assume he is in at the note value. I wouldn't max my offer out at $38k and might be happy around $33,000 all in. Remeber closing costs still apply to get your title insurance and record a modification to the mortgage and update the note, etc.

What ever he is in at, I would not just give him a huge upside by giving him more than $3k which would be just shy of 10% gain. It seems the situation is stacked in your favor so I would also keep that in mind. In a after thought, perhaps you can do some deferred sharing arrangement to cut your upfront costs down.

All in all, I think you have a deal, you just need to clean it up and ensure you get yourself into a good position for it to move forward.

Good Luck.

I saw this in Palm County Florida and a fine was issued by code enforcement from the city. The rule was 2 unrelated parties but the larger issue was sub leasing. In this case it was a tenant who was from overseas had issued sub leases which created a heftier violation. That being said it was just a fine and the landlord had to file for a specific license to designate the occupancy at 3 unrelated parties.

I am going to out on a limb and disagree with all of the "NO" answers here on the thread. First Zillow, a public company would not do well with completely unusable data. Secondly they use the same data feeds that appraisers use but in some situations they might not have paid for the data feed or the data feed may not be digital as is the case with some counties in the US. Every county tends to have its own MLS so purchasing and integrating IDX records has been a daunting task but I believe for most major areas they have what is needed to review accurate live data.

I have personally found the values to be on the high side of the estimate opposed to the low side. Perhaps I am a bit conservative though.

What separates Zillow from an appraisal is the human interface and "manual adjustments". Zillow is an AVM or Automated Valuation Model, a very commonly used system of estimating value based on algorithmic equations. Other AVM's are HPI (Home Price Index) and large companies such as Core Logic use AVM's as well as banks on widespread occasions.

An appraiser pulls the same sample comp set but is more capable of deploying standard appraiser practices such as staying in the subdivision or adjusting for water features, etc. On Zillow the sale price and sale date are typically pretty up to date and accurate (again geography based) and some have a more detailed level of data as well. A bigger discrepancy would likely come from Pending Sales data as MLS access is at the local level and Zillow has spent the last several years purchasing those data feeds (IDX records) and then programming them into their system. Also the public has some edit capacity which causes some problems in data integrity. I would argue a recorded sale is a recorded sale, not really a moving target like a listing.

I find that looking up my own comps works best. Keeping in mind that comps should be similar in size, date and features filtering search results is fairly easy on the site to delimit to less then 6 months old and less than 1 mile away.

As a free option I find Zillow extremely valuable and time saving. But you can't just take it at face value which neither could an appraiser. When it is all said and done you can get into the ball park with value and remember it is defined as the price a seller sells and a buyer buys in an open market arm's length transaction.

That is the legal balance of the foreclosure suit. The actual winning bid may be different from that number. When a lender sends the asset to sale they deliver a bid to the court which is the minimum they are willing to take on the property. They can receive up to their full legal balance if the auction merits such. In some counties and states minimum foreclosure bids are directed by local law which can be at the least x% of the legal balance. This is problematic for areas where asset values have dropped significantly and legal balances are still high. It prevents many assets from actually selling at auction. For instance legal balance is $200k and property value is $50k a bank might be forced to bid 30% of the $200k or $60k which is not a bid that would be delivered at auction by a buyer so the property reverts back to the bank.