All Forum Posts by: Cara Lonsdale

 Okay, so as we peel back the layers on the onion of this transaction, it is becoming more of a stinker!  So sorry to hear that.  

All Realtors are real estate agents, but NOT all real estate agents are Realtors.  Realtors subscribe to a higher ethical standard of practice, and agree to not only abide by that higher standard, but be measured and disciplined by it as well.  Realtors are required to take continued ethics training, and be a responsible agent within their community.

Real Estate agents who are NOT Realtors do not do any of the above.  Now, that's NOT to say that all real estate agents are unethical.  Just that Realtors agree to, and are held to, a higher standard.

I guess, before doing business with any real estate agent, I would ask them if they are a Realtor.  If they aren't, I would want to know why.  Why wouldn't they want to abide and be held to that higher standard for their real estate business?  

Let us know how it goes when you contact the broker.  

WOW!  There is alot to know before going to auction.  There are also different types of auctions.  So I will just speak to trustee sales (foreclosures sold at the steps of the courthouse or trustee's office).

For starters, you need to know that you are actually bidding on the 1st lien holder, so that you are awarded the property, and not a jr lien holder's debt against the property.

Of course Comps to know what to bid.

Do a drive-by.  You can't go in or disturb the occupants (unless the property is actually listed for sale).  Make sure the structure is actually there, and observe as much as you can from the street.

Put together a budget for rehab.  I usually do 2; a light remodel and a full gut.  Build in a contingency budget for unexpected items.

Confirm money.  Confirm money.  Confirm money.  There is a bidding deposit due the day of the auction, which is usually $10K in certified funds.  Then the balance is due within 24 hours of winning bid.  So, as an agent assisting a client, I would make sure they understand that this is not a normal sale where they get 30 days to close and can obtain a mortgage.  There ARE hard money lenders that can provide loans within that quick turnaround, but if you are using one of them, you need to have that lined up ahead of time.

You have to know how to take title.  

You have to know what the process is in your state for evicting anyone living in the property if they don't vacate after the sale is complete.

Just to name a few things...... :)

What a cute house!  I love the kitchen!

Before dropping the price anymore, I would look at the full picture.  Walk the property as a Buyer.

Without having physically walked through it, I can only provide limited feedback, but here were some of my observations.....

The front brick looks tired, and there appears to be some patchwork..??.  The front is your first impression to the Buyer.  This should be your first "WOW".

The only thing I see inside that gave me pause were the wood floors, and how they go in different directions.  Was that for a specific purpose?  I am not a big fan of that.  They look like some type of mistake, and the seams jump out at me in the pictures.  

Outside of those couple of items, I would then ask is it too cold as people walk through?  Too hot?  Is there a musty smell or something unfavorable as you go through?  Too dark?

Then I would ask your Realtor a few questions like... how much are you offering for the co-broke? There is usually a standard co-broke for the area. If your agent is offering less, then you may not be getting the other agents' support for your property. What are you doing to market the property besides MLS and open houses? What other feedback are the other agents providing about why their Buyer isn't writing an offer?

Another good thing to try instead of continuing to lower the price, is offer a selling bonus to the selling agent (not your agent, but the Buyer's agent).  Create urgency by requiring a deadline for the offer to close and/or getting full price.  EXAMPLE:  $2,000 Selling bonus for accepted offer that closes on or before 12/15.

Hope that helps! 

 I am truly sorry to find out that he is a real estate agent.  That is disappointing on many levels.

So as I mentioned before regarding him as a agent, this shouldn't have to go further than the Broker.  The Broker should resolve this for you ASAP in terms of the financial part!  Additionally, you can submit a complaint to the GA state department of Real Estate.  I would also submit the complaint to the real estate board that he belongs to if he is a Realtor (FYI, not all real estate agents are Realtors).  This will ensure that he is properly disciplined, which may include stripping him of his license.  

Keep us posted!

Alot of good advice so far.  There are a few components to sort through, so I thought I would just add a couple of thoughts...

Auction.com is here in AZ as well.  They charge a $10K non-refundable deposit for any winning bids.  I have been to alot of them, and have gone through the bidding process and have completed the sale.  All that just to say I have experience with Auction.com and they seem to be a pretty reputable business...at least here in AZ.

I DO know that on all of their contracts, within the "fine print", there is a reinstatement clause which covers their butt in the event that the owner has somehow reinstated their loan with the lender, or filed bankruptcy to halt the sale, or SOMETHING to legally halt the sale.  It's not exclusive the auction.com.  It's that way with all trustee sales. 

Regarding the agent/helper that assisted you....was he an actual Realtor?  Many of these trustee sale guys aren't licensed, but they go to these things all the time and know the system, so they offer assistance to people who aren't comfortable with the process.  They get paid by the Buyer for their assistance.  Sometimes that is in the way of a flat fee for their time and research beforehand, as well as their expertise in bidding and advising you in how high to bid.  Many of them require payment for that help regardless of whether your purchase comes to fruition or not.  The rationale is that if they spent the few hours at the auction with you and the time beforehand to research properties, that time is valuable and should be paid for, regardless of the outcome that is out of their control (being outbid, etc).

IF this person IS a licensed Realtor...WHOA!  This is super illegal.  My guess is that 1 call to his broker will solve this problem right away.  Between the betrayal the broker will feel in his wallet, and the liability that this agent has brought on to the broker's business, I would be SHOCKED if you had to go any further than the broker as it will be HIS business impacted by an legal action, along with the agent.

Now, on a side note, you mentioned that you signed some type of agreement with this guy beforehand.  I would want to know what those terms were to accurately determine whether or not he is entitled to any funds from you.  The agreement should accurately define how he would be entitled to a fee and/or commission from you.  Make sure you have that in front of you when you call the broker.

Please don't let this experience sour you toward Realtors OR Trustee sales.  It sounds like you found a bad seed, but in general, Realtors are a great tool and resource to guide you through this process.  As a 20+ year Realtor here in AZ, it breaks my heart when I hear about these kinds of experiences.  That is never how it should go.

Best of luck to you!

 Again, I don't see the issue.  Just because you hold (or once held) a Real Estate license, it doesn't require you to provide a fiduciary duty to every person you come into contact with.  It's business.  Look at all of the "We Buy Ugly Houses" people in the Valley.  They don't pay NEAR market value for properties, and many of them are agents or brokers.  What you are doing isn't far from that model.

Disclosure is key, and avoiding ANY type of language that would convey to the Seller any type of agency relationship.

Do you drive without insurance too?  What about Health insurance?

Homeowner's insurance is a necessary expense for protecting you as an investor.  You mentioned a bunch of "what if" scenarios, but it's what you DIDN'T plan for that the insurance will help you with.

Properties....especially when vacant.... can be very vulnerable to anything from theft to arson and everything in between.  Many policies can be customized to reflect the status of your property.  In fact, make sure you tell your agent that the property IS vacant because if you don't, many standard policies exclude coverage after a 30 day vacancy period.

Someone is watching.  If you are rehabbing a property, it means that you have valuable materials going in like appliances, cabinets, fixtures and more.  It would be a huge loss to you to lose those items and have to start over.  That would eat into your profits far more than a hazard insurance policy will.

Plus....it's tax deductible!!  :)

Best of luck to you!

You haven't entered into any type of agency relationship with the Seller, right? If not, how is it any different than dealing with a FSBO (who often times give away properties for less than market value)?

You MUST disclose your agent status to the Seller (and make sure your contract reflects agency as being "Represents the Buyer Only" on the signatory pages), but other than that, I don't see an issue with being a wholesaler.  What are you doing about your broker?  Hopefully, you are running these contracts through your broker.

Callfire is another one that is good.  They have text, voicemail, and all kinds of other services to choose from.  

@Tina Acevedo I can appreciate your situation.  On the one hand, you are building equity in a property that is valuable.  On the other hand, it isn't completely covering itself, and is costing you money.

I think to come to a wise decision, you need to vet each option accurately in order to compare them and determine where your money is best invested.

First, to discuss the loan and/or the option to refi... Did you purchase this property as an owner occupied Borrower 2.5 years ago? If so, any refinance MAY end up raising your interest rate as interest rates are higher for investors than owner occupied Borrowers. NOT to say that you couldn't still find a favorable loan that would at least take you out of the ARM in favor of a fixed rate, but it may not lower your payment. It may raise it instead. I would check with a lender to get your options there.

Secondly, selling the property just because you don't cash flow on it right now isn't always the best option.  So, while I can appreciate and respect the other investors' thoughts on the matter, I don't agree that it should be an automatic decision to sell.  Sometimes making more in equity means making less in cash flow.  You trade pennies for dollars.  You have to determine if your $356 investment (That's what it is) is better served in helping to pay on this investment while the value continues to rise, or investing it in another property.  Only you can determine that once you have the options in front of you.  

My suggestion would be to look at other purchasing options.  Run numbers for what the mortgage payment would be...and the rental rate.  Compare that property to the one you already have and see which one would be more fruitful.  Ultimately, YOU need to determine which investment is better for the investment strategy you have chosen for yourself.

As a side note, you DEFINITELY need reserves for anything you do.  So, please at the very least build some reserves.  As you add to your portfolio, the lender will require anywhere from 3-6 mos of reserves for each property's expenses.  Some lenders require 6% of the assets' loan balances, which may be even more than the 6 mos figure.  So, be aware of what the lender will require to make sure you are prepared for your next purchase.

Best of luck to you!