All Forum Posts by: Cody C.

Hi Folks, 'been a long time since I've been around here, but it's good to be back!

Does anyone have any resources/people to talk to on doing sub2 or AITD/wrap deals as an agent in a state that requires all deals where the licensee is a principle in a Real Estate transaction to be brokered by the principle broker in the office the licensee is associated with?

Can someone correct/supplement my definitions?

I understand the general idea of a sub2 being: Transfer deed of property subject to existing financing, seller keeps the lien on the property in his name, buyer gets possession. Seller is responsible for the payments, so to set the seller's mind at ease, a servicing company is used in junction with a property management company to make sure the bill gets paid. If the payments are not paid, the lien is still valid, and the bank/mortgagor can repossess the house through the foreclosure process, and the seller would at that point take the credit hit.

AITD/Wrap (Same thing?)A new mortgage in the buyers name, that includes the current lien/mortgage on the property is taken out in the buyer's name. More expensive, requires better credit or creative financing, but puts more of the liability on the buyer, as the lien will be in his name. I'm not sure how it works with the original lien on the property here though, does it get wiped out? Or does the original lien stay in place, and the buyer's payment to his new lien get split up and sent to pay the initial lien?

I've asked my title company how they would go about doing a Wrap/Sub2, and she suggested doing a land-sale contract instead of a deed. Thoughts?

Hope you all are doing well!

My first thought would be that your sellers want to sell the house, and unless they've realized they do t want to sell it, why would they want to terminate the deal for th e earnest money? Also, if you have the earnest money with an escrow company, it'll take two signatures to get the earnest money out of escrow.

Why is the loan going to take so long?

I would suggest just getting an extension to the closing date with an addendum. Are you using a realtor?

Interesting concept... That is a complex set up... and I don't know the answer, but lets see if one of these guys do... (or at least know someone who might!)
Andy Chu, Jesse Tsai,Brandon Turner

J Scott, I think your point # 2 makes total sense, and after thinking about it and what you and the rest of these guys have said, it does makes sense that a seller has to price a home for those two purposes.

His class wasn't by the way, about "how to challenge appraisals and price how you think it should be priced regardless of the current standard"

Rather, it was "how to competitively price real estate." He also uses the term "comp" when talking to sellers to refer to competition, rather than comparables (which is for the most part the same idea, just a different connotation).

James Hiddle, I have been taught that I can't stand out as unique and great if I do what every other person is doing. While this particular situation may not be a successful example of "challenging the system," I believe that I will better myself by constantly testing the standard(whichever we are talking about) against new theories and unorthodox practices. I don't mean to sound rude, I'm just trying to explain why I would mess with something that already works =)

I agree that appraisals will justify a property using solds, but the problem with that mentality is that in the end, value is established by the seller and the buyer coming to an agreement (tempered by the appraisal in the case that there is an appraisal... i s'pose), not between the buyer, seller, and a bunch of other sellers.

That said, if you are pricing your property to sell, figure out what other active properties are on the market, and price just under the lowest priced property that is similar to yours (try to take subjective factors(E.g. View, location, design, etc.) into account as well as objective ones.) If you price based only on sold listings, then you aren't putting yourself in a competitive position, unless you initially price based on solds/pendings/appraisal/objective factors, and then adjust based on the competition in the market.

If we look at it in another context, how do car manufacturers price cars? Certainly not on what the last 10 similar cars sold for. They price them based on what similar cars are selling for on the market. Gold works the same way, as do Tshirts. Why would the housing market be different?

As far as appraisals go, can't you challenge them? If you can justify your price based on objective/subjective factors in a CMA, who says you couldn't challenge the lower appraisal with your CMA?

I'm sort of just rambling here, but I feel that this guy actually has a good point, that most people don't acknowledge.

Just listened to a neat presentation by a guy named Kerry D Bodily. He runs a company called "XpertCMA" and they have a very interesting idea on pulling comps when you go to sell/buy/price a property. Now, please keep in mind that he is gearing towards mostly home buyers to live in, or a normal seller.

The bottom line of his principle is that if you are taking comps from sold properties in an area, you are doing it wrong. The buyers don't see those sold properties, and they are no longer on the market, meaning they are not really what you should be pricing value against. Another good point he makes is that if appraisers are only pricing against what other properties have sold for, then why do markets increase or decrease? hmm...

I'm not sure if I'm fully onboard with his philosophy, but he makes a lot of good points. He gave his CMA software to everyone who attended the course, and the course was free. In any event, his book is called "how the real estate market really works." by Kerry D Bodily, when he did a second printing, he changed the name, but I don't have the new name handy.

What do ya'll think?

J Scott, the damaged sheetrock above the mantle is on the wall to the right of the second mold photo. So potentially some water in between those two rooms down the chimney? I'm a little worried about the asbestos/LBP issue in ripping out the sheetrock. Are those unfounded worries?

Just to add a few points to what Alyssa Craft said...

There are additions on this place that are most likely unpermitted, so we will likely be ripping out a lot of the sheetrock regardless.

We are sort of estimating a repair budget of 100k. (and still making a nice profit planned...)
That should include:
potentially all new flooring
complete teardown and re-roofing.
paint inside and out
maybe new siding
deck repair
mold repair
new sheetrock/insulation where needed
new kitchen counters/remodel
finishing the basement
any other unforseen repairs?

We are trying to figure out if this 100k is conservative or not so much?

Is it possible to purchase a property BEFORE auction when the property is listed with a company like auctionnetwork.com?

I found a property that will make a killer flip... I just would love to beat out the auction! is this possible?

Good Afternoon!(or whatever depending where you are...=)

First of all, I'm not 100% clear on the difference between a wrap and a sub2. So if someone could clear that up for me, that would be excellent...

However, I just got off the phone with a escrow officer at my local First American. My question to her was in regards to sub2 or a wrap mortgage, and if she had acted as an escrow agent with them in the past, and could she in the future.

Her answer was interesting because I hadn't heard of it before. She said that typically in a wrap situation, what happens is that the buyer has a lawyer write up a contract of sale, and a memorandum gets recorded with the county so the seller cannot sell the property. Essentially, Fee title doesn't transfer to the buyer, but they have a cloud on the title because they are in contract to buy it. What this does is circumvent the scary due on sale clause that the bank could call. (at least that's what she told me.) I'm meeting with her next tuesday to discuss this more, but I figured I would put this out there and see what you all thought of it.

Thanks,
Cody