All Forum Posts by: Cara Lonsdale

I am a Realtor in AZ.  This market is solid right now with very few pockets that aren't moving.  Unless this property is in one of those slow moving pockets (if it is, why do you want it?), then the Seller will likely be able to get retail if that is where he is stuck.  If there is no further motivator (default, money issues, reason for moving), then he may run you around the block a few times before you realize that he doesn't want to sell within the range you are willing to buy.

I agree with the others....get to the root of his motivation.  If he doesn't have any reason to sell, why would he sell at a deep discount?

This is a good question, and one that many agents don't stop to ask, so I applaud your inquiry.  It is actually a little bit more complicated for your situation than everyone is letting on.

Your broker will be able to confirm specifics of what you can do as you practice real estate at the privilege of his/her brokerage, and many options that MAY be legal to do, may come with risks that your Broker is not willing to take on.  However, I can give you some options and things to think about with each option.

First let me say that LDAs (Limited Dual Agency) are awesome when used appropriately.  It is great to "double dip" on a transaction.

However, I think you will find that you will not be able to represent the Buyer and yourself in the transaction as you are not able to provide the same level of service to each party since you have an ownership interest on the seller side.  Let me explain....

In a regular LDA (Limited Dual Agency), either 1 agent represents both parties, or 2 different agents from the same brokerage represent 1 of the two parties (1 for the Buyer, 1 for the Seller).  Remember, it's all about the Broker.  With LDAs, your representation is limited because there are certain things you have to protect from one to the other.....for instance......Let's say the Buyer tells you that they would be willing to pay closing costs if the Seller counters with that.  IF you go and tell the Seller that they can counter on closing costs because you know the Buyer will pay them, you have just violated your duty to the Buyer.  In a NORMAL representation, if you would have heard something like that, you would run to the Seller and tell them because you only represent the Seller and their interests.  However, in an LDA, you have a responsibility to both and cannot disclose certain things about either party.

So, do you see now why YOU being the Seller representing themselves AND representing the Buyer wouldn't work?  Because obviously anything the Buyer would tell you would provide you an advantage.

You still have options....again please counsel with your Broker to see what he/she allows.

The safest option is to allow the Buyer to obtain their own agent, and not make any suggestions.  That way, any advice the agent gives them is not related to you in any way, and you limit your liability.

Another option would be to suggest another agent within your office.  You would then be in an LDA, but it would be ok because the Buyer had a representative that wasn't the Seller himself.

You could suggest another agent from a different brokerage as well.  You wouldn't be in an LDA at that point, and you could ask for a referral fee.

You could be the sole agent in the transaction and treat it like a FSBO in reverse (where the Buyer doesn't have representation) and you represent yourself (a written disclosure will be required where the Buyer acknowledges that you represent yourself and not them).

Lastly, you will have to ask your broker if you can even represent yourself. Many agents don't realize this, but when you represent yourself, you do not have the protection of E&O insurance as any error or omission is considered fraud on your part. Many brokers will be your agent on paper as a professional courtesy to avoid the E&O issue. Just another thing to consider.

I hope that helps clarify things.  Best practice is to consult with your Broker for his/her policy on Dual Agency.  Best of Luck to you!!

 Honestly, it just isn't a battle worth taking on.  Save your energy.  There are plenty more worthy battles out there.  LOL.

On a side note, you can still establish a relationship with a local title company for other deals.  Make sure you make them aware that you plan on doing multiple deals and want a volume discount.  Also, check in with their marketing rep.  They always have cool resources from open house registries to "How To" packets for various subjects, to sample contracts and so forth.  These services are usually reserved for Realtors, but I don't see why you couldn't request them if you are looking for deals and want the resources too.  Home warranty companies have marketing reps too.  They can provide you with cool marketing materials for going door to door or mailing prospects.  It gives you a warmer approach and save you on printing them up yourself.  You may just need to invest in a pre-inked stamp with your contact info on it, and postage if mailing.  

Just a little tip.   

This issue usually all boils down to relationships.  With VERY FEW exceptions, most of the title companies have the same offerings and are able to do the same things.  In fact, MOST of them are underwritten by the same companies (fidelity first american, to name a couple of the big ones that underwrite alot of them).

The benefit for the auction company and/or bank is that they probably get a discounted rate because of the volume they do there.  This is often times why banks will work with 1 in particular.

NOW, that being said, many states (AZ being one of them) prohibit a seller from requiring the Buyer to use a specific title company unless they (the Seller) are willing to pay the title fees associated with the forced choice.  So, the way Seller's get around this is similar to how utility companies get around the word "monopoly"....by allowing certain services to be shopped by other title companies.  So, that is why you were given the suggestion to use your title company for the insurance.  It is an option afforded to you.  However, in the grand scheme of things, the title policy at the Seller's title company will probably be just fine (and again, it may even be underwritten by the same company).  I wouldn't split the services.  

The Earnest money is a separate matter.  It sounds like Wells Fargo wants to hold your Earnest money, which would also tell me that they are probably considering it non-refundable.  You may want to check the terms to confirm that you can get it back if you decide not to purchase. Most likely, the bank isn't going to budge on their policies.  They rarely do.  So, making demands about using your title company or having your earnest go somewhere else may eliminate your offer from consideration.  

When dealing with big banks (Wells Fargo is among the biggest), just think David v Goliath.  Good luck David!  LOL

Best of Luck to you!!

Hey @Nick Burkhardt, I just PM'd you the LO contact for that FHA 203K or 203B renovation loan that I promised you yesterday. Hope that helps. Best of luck to you!!

Alisha, you can obtain a POF from your personal banker at the bank where the funds are held. If you don't want it to list the exact amount, then bring the offer for the banker to reference in the POF. Then, they can state that you have enough funds available in account(s) held at XYZ Bank to cover the offer dated XX/XX/2017 for the property located at 123 Easy Street. Make sure it is on your banker's letterhead. This should suffice for a POF. BTW, if you don't have a personal banker at the place where you bank, GET ONE. They don't cost you anything, and they can be very helpful in facilitating all kinds of things from notarizing documents, setting up loans, and providing POF letters when needed.

 You have stumbled on to something that is VERY smart, that many couples don't take advantage of.  HOWEVER, you are also dancing on the line of loan fraud, so I would tread lightly there.

First, the very smart part of your strategy.....buying separately. Married or not, this is a very wise way of purchasing properties because it doesn't tie up both of you in debt and credit. Most lenders will lend on the first 4 properties with no issues. Many lenders taper off from 5-10 properties and often times require a larger down payment (maybe from 20% to 25%). The pool of lenders gets pretty shallow after the 10th property. Equally, your credit score can fluctuate every time you make another purchase and secure another debt. So when married couples (or just couples in general) purchase properties together, they are, in essence, cutting their purchasing power in half. However, if both people have income to qualify for a purchase, and make their purchases separately, they can maximize their buying potential and purchase 20 properties between them without issues from the lender. Additionally, they can double up on resources like FHA, which can only be used one at a time, down payment assistance programs, and even discounted down payment programs (I'm thinking about HomePath that offered a 10% down for investors up to their first 4 properties).

Sharing a bank account would probably require an explanation letter to the lender that gives the other person permission to use all of the funds, but that is easy enough.

In order to have continuity as a team, you can create LLCs for each property, which you are both in as co-managers. Then you quit deed each property into its own LLC. That way, you both own it, without having you both hold debt for it. SMART!

Now, on to the danger of what you are doing.... Lenders require Borrowers to certify that they will occupy an owner occupied home within 60 days of COE, and continue occupying it for at least 12 months as their primary residence.  What you do after that is up to you, but that initial commitment being kept is crucial as you sign an occupancy cert at COE.  If the lender can prove that you are not living in the property, they can pursue you for loan fraud.  You didn't specify the timing of doing these purchases, so hopefully, there is enough time going by to satisfy the requirement.  However, when you talk about rotating through whatever 4 plex is available that night, it has me worried for you.  Just make sure you are following through with any commitments you have made, especially in writing under penalty.  

Best of luck to you!

I understand your challenge.  It seems like a conflict to be financially responsible, while also trying to get ahead in the investing world.  For this, you will need a pen and paper (or an excel spreadsheet if you are anything like my husband).

Some things to consider:

Will the money cost me more as a student loan, or an investment loan?  For that, I would compare interest rates and payment terms.   If the student loan interest rate is lower than the investment loan proposed rate, then it may be better to use any funds toward the investment loan in order to minimize the loan balance that you have to pay the higher interest rate on.

What will I lose by doing either option?  For the option to pay your student loan, it may be that you lose time and market value of an investment property.  For the option to buy now and maintain your student loan, it may be that you lose the ability to qualify for the property you want because your debt to income is too high, or that you lack the funds for rehab or maintenance.  

What will you gain by either option?  For the student loan, it may loosen your financial burden, and allow you greater opportunities for different property types or conditions.  For the buy now option, it may provide you with enough cash flow that the investment can make the student loan payment for you!

Without knowing the EXACT details, it is hard for anyone else to determine which is best.  It really comes down to a personal preference based on what you are comfortable with, and how you want to use the money.

How soon do you think you could pay off the loan?  If you thought it would be a short term thing, then perhaps a balance transfer to a 0% interest rate credit card would help as it would eliminate the interest portion of the payment.  However, I must caution against doing this without a plan to pay it back within the allotted time frame, or the higher interest rate would prevail.  

Best of luck to you!!

 I would caution against doing a flip with limited funds.  Any rehab expenses or unknown items that present themselves during your flip will break your budget, and if you don't have enough funds for the purchase and the rehab (with contingency for unknown items), then you are treading on risky ground.

How set are you in staying in your current home where you are?  Would you consider moving your family into a new property and renting out your current home?  This could be an option that would minimize the amount of down payment because you would now be considered an owner occupied borrower instead of an investor.  Additionally, you already know the condition of your current property, so you would know what items would need repair prior to renting it out.  If rents in your community are favorable, it may be something to consider if other options are limited by your down payment.

 If these are the only funds to work with, it is still the best option.  It is true that you use post-tax money to make the payments.  However, compare that to a loan provided by a lender??  ALL of that payment is made with post-taxed funds AND you don't get to keep the interest, then lender does, which is substantial in the beginning of the loan.

To speak to the post about leaving your employer and having the loan immediately due.  This is true, and something to consider.  However, it is not the only option.  If you are unable to pay back the loan at the time of discharge, you could take it as a withdrawal.  This is worst case scenario as it would require a 20% deduction for taxes and a 10% penalty for early withdrawal.

Again, the 401K is still a resource if no other resources for down payment exist.