All Forum Posts by: Tom Kitas

I have seen people buy property and not want to spend the $300 on a home inspection. Others who purchased a house and for additional $400 can have a home warranty that covers everything in the home in case of breakage and would not pay for it. Then of course they get into the property and find all these problems, which end up costing them thousands. Save a few hundred to pay thousands later. I see it all the time and it never makes any sense to me.

I am seeing more and more people buying property sight unseen. It makes no sense and this why people like Sean can get away with what he does.

I am actually a licensed Realtor in Florida. I am in Southern Florida about 3 hours south of you but the laws apply state wide. I am going to try to answer all your questions step by step.
First of all the chances of a property not hitting the mls prior to you seeing it is slim and none. Under a listing agreement with a seller we have to place all properties in the mls unless the seller specifically request it not to be listed there. I have one right now like that, but that is an abnormality not the rule. Once I have a signed listing agreement I place it into the mls the same day. The only other time a Realtor has knowledge of a property that is not in the "active" mls is because it is an expired listing. A lot of Realtors try and go after expired listings to get them re-listed. The problem with these is they were over priced listings to begin with and it is usually because of the seller wanting more money for their property then it is worth. The only other source that would not be found on the mls is for sale by owner (FSBO) properties. There are some Realtors that drive around different neighborhoods trying to get listings that way. If that is the knowledge of a property that is not on the mls that a Realtor may have then they would get a one time listing agreement from the seller. In the state of Florida it would have to be a transactional broker listing agreement for your scenario. This means that the Realtor does not represent either party in the transaction and is only there as a medium to get the deal done. The commission based on this scenario would come at closing from the listing agreement the seller signed. It is against the law in Florida for any Realtor to accept a percentage of a deal. This is called a gross listing and any licensee could lose there license.
Most Realtors will not work with someone who wants a sales and purchase contract assignable, myself included. This would indicate that you are trying to find an end buyer and have no intentions on closing the deal yourself. This would be a perfect waste of time. As mentioned before if you do not find an end buyer then the Realtor does not get paid. Next problem you will have is if you do not have a proof of funds letter that is independently verifiable or a verifiable letter from a lending institute stating you are pre-approved for a loan of up to the amount of the purchase price or more then your offer will not be taken serious by most Realtors. What that means is you would not be able to get the property under contract. One of the many jobs of a Realtor is to make sure the property for sale gets to the closing table. If a Realtor believes that will not happen then no property will go under contract. We only get paid if the deal closes. If we do not get to the closing table then we have also failed the seller. In both cases this is not good for any Realtor as most of our business comes from referrals and if we keep getting deals that don't close this will reflect badly on us. If we do not believe it will close then we do not waste our time. We pre-qualify all buyers before we make any offers. I am not saying that there are not Realtors that will place weak offers, but they will only get away with that for so long before other Realtors will make it very difficult for them to place an offer on any property. I am a listing agent and as such I make sure my sellers are protected every way I know. When I get offers from buyers agents or buyers I make sure the offer is strong prior to submitting to a seller. If it is not strong then when presenting the offer to the seller I will advise them on why it is not a strong offer and let them know the different possible outcomes if they should still want to accept it. Under no condition however do I accept or present offers that do not have a verifiable proof of funds or pre-aproval letter and a copy of an escrow check. This is agreed upon with the seller in advance and an escrow check to be deposited is required by law before the contract can be legally binding. Once I do get a property under contract I give a very small window of time to place that escrow deposit with a title company. If after the time passes there is no escrow check the contract becomes null and void.
On REO's curt stated it best. Banks are not going to waste there time with people who only want to flip to an end buyer. They require a 10% deposit with all cash offers and a verifiable proof of funds letter. The other thing you can expect from a purchase of an REO is a very long process. You will first have the standard Realtors sales and purchase contract that you will have to initial and sign. This is 14 pages long. Then if the bank approves the sale they will send you there own purchase and sales contract. This one is a book and has so much language in it. You cannot transfer the contract with REO's as they expect you to be the buyer. I have one right now that went pending a year and a half ago and the bank still has not made the final decision on whether they will accept the offer as it stands. Another thing to keep in mind that with the tight regulations on mortgages, people cannot get a mortgage on a house that has to be rehabbed therefore only cash buyers will qualify to even make an offer.
The only thing I can recommend for you is either to find private money to do a double closing or go after FSBO's without the Realtor. If you do not use a Realtor make sure you know all the laws and what forms are required to be filled out and signed with a purchase and sales contract. The last thing you want to have happen is end up in a law suit.

It is a common belief amongst people who try to sell their own home that they can sell it and "save the commission". In reality those type of sellers become victims of their own beliefs. When a Realtor is involved in the transaction it is to the best interest of their client and themselves to get the most money for a property. Since they have experience, they will protect the seller from any unscrupulous buyers. Also from the sellers having to waste their time with unqualified buyers. Another point you can make is a Realtor will keep all legal liabilities off the seller. Because a Realtor has to be licensed and insured they keep up to date and compliant with all laws. When they become a listing agent for a seller they make sure all laws are complied with. For example here in Florida there is a boat load of paperwork that has to be submitted with each sale of a property. Seller disclosures, lead paint disclosures if the property was built before 1978, Chinese drywall disclosure, etc. If you fail to have all these disclosure signed and properly executed, you as the seller would be financially liable. It could cost the seller more money than the property is worth.
Another point that can be made is that over 90% of all properties are sold through Realtors and they get more money than one a seller tries on there own. You can also mention the fact then when a seller tries to sell their own property the buyer automatically discounts that commission so the money they think they are saving is not going into their pockets. Then there is always the far better exposure a property gets with a Realtor. Either a Realtor spends all the money for marketing and advertising and the time and effort it takes for the property to be sold and gets paid the commission or the seller does it and actually loses money and time.

@Deborah
Sorry to hear about your bad experience. I was fortunate as this was not my first rodeo show. When they started with the high pressure and asking me how much money I had available on my credit cards to purchase property, a big red flag went up. For me I saw the scam and did not get caught in it. This was from getting burned on other deals that made me have the foresight. There are so many people out there that just want to take your money and offer nothing in return for it. Unfortunately, there very limited places you can go to online to find true information. This is one of those places but not always is this forum found in time. The real sad part for my experience with him was that he was referred to me by someone who I thought was straight shooter. Unfortunately, I think he just endorsed him for kickbacks and now he looks bad because of it, but he could have also been smoothed talked by him into believing he had a great product to offer his clients and stood behind the dog he was fed. In any case the biggest rule I have lived by is, desperate moves makes desperate mistakes. The fact that you drained your IRA for this move without leaving something for the future tells me that you were caught up in thinking you could make a great payday. Great pays are only done by your own fruits of labor. Nobody would give that up to someone else. In this market the most realistic return would be about 10% and that is if you are lucky. The only way you can make more then that is if you are a turn around person. That would be buying a B property in C property condition and then turning it to a B property condition. You must be able to do the work yourself. Prior to buying the property you must be able to do a full inspection. The days of buying properties sight unseen are over. I hope you can recover your money and I wish you luck in pursuing your justice.

I believe he is using technology that enables him to flag any comment that is posted on the internet about him. This is how he is finding all the postings. Everywhere I have looked at complaints he has been there giving a rebuttal. He is using tactics that image consultants use. It is effective to a degree or at least until you try those same tactics here.
What I have discovered is that any guru or company coming out of Utah, concerning real estate or investing, has a significantly better chance of being a scam then coming from other states. It may be because of the absence of certain laws, it seems as though it may be easier in Utah to do these types of scams then in other states. Not sure of the reason but statistically the state of Utah holds a higher percentage of these types of companies and gurus then any other state. Utah also has the highest amount of adult website subscribers compared to any other state. Not sure what one has to do with the other but I figured I throw it in anyway. :D

@ J Scott right at you. You are so correct. You need to look at the deal not the tax benefit. Another mistake that is made is paying too much for a property because of the "potential appreciation" after you put all the money into the property. When I hear that I just say then go ahead and make the repairs and reap the appreciation benefits.
AS far as CPA and financial advisers for that matter, most know the basics and what they learned. A lot of times they do not give good financial advise. I had sold a home to a woman who purchased it as a second home. She had the money in the bank to pay for it in cash. Instead her financial adviser told her to put 20% down and finance the rest. I agree with Jon, is the $1000 a month you pay in interest worth the $300 plus you save? I would say not. Given the option I would pick paying in cash over financing any day.
@Jak why would you pick a c corp over an S corp or LLC? C corps are subject to corporate tax, s corps and LLC are passive to the owners.

Yes it is 2 different people. The one I am talking about can be found on.

http://www.property23.com/
http://www.seanwhalen.com/sean-whalen-bio/

He originates from Virginia and now lives in Utah. This is the Sean Whalen I am interested in learning more about.
The other Sean Whalen does look like he is an honest hard worker.
Thank you for the effort though I hope someone knows this guy.

Hello everyone,
I was wondering if anyone has ever herd of this guru Sean Whalen who is the owner of what used to be the Empower Group and is now called property 23? From the research I have done he looks like another marketing guy. His background is in being an amateur fighter in the mixed martial arts world. I guess he couldn't make his big debut there so he decided to get into real estate. What he offers is properties he will sell you at wholesale and even help you find an end buyer. It starts to smell like BS because why would he not just find his own end buyer? Another thing that makes it smell like BS is the fact that he will allow you to purchase his property on a credit card. He has vacant properties he will sell you that you can flip and others occupied by tenants for a rental income and hold property. He does a lot of the hype claims as the other gurus. Personally I do not believe that this is real because if he has the ability to obtain all these properties why would he not just line up his own end buyers and get rid of them or become a landlord himself? Instead he has created this group in which he will sell you the properties and his staff is suppose to hold your hand through the whole process to help you gain the knowledge and confidence you need to do these deals.
What I have read on the internet is his company hires college grads who are paid on a high commission bases from any product they sell. Not sure if there is any truth to the claims or not. There are claims out there that also state that these college grads are doing high pressure sales in real estate for the high commissions and are not licensed as Realtor in any state they sell. Not sure if any of the things I read are true or not.
If he truly has properties he is wholesaling then I may be interested in taking a closer look. Right now though it smells like too much BS. Therefore before I look behind the curtain and have to find out at a high cost that it is nothing more than smoke and mirrors I would like to know if anyone has had any type of experience with him or his company?

I want to thank both Eric and Scott for there support by sharing their knowledge. You have put a lot of my question to rest so that I can feel much more comfortable to get a couple of these deals under my belt. You gave me the insight I need before I get into this and now I can with some confidence.
The example I used was an easy total hypothetical and not real in any way. I do know that if you can get a 20% spread on your deal you are doing good. Anymore and you have your work cut out for you. Scott joint venturing with transactional funders and also partnering with rehabbers are both great ideas I never would have thought of. You have gave me more alternatives for additional exit strategies in case one flies south on me.
Thank you again and if anyone else would like to add comments to help in my knowledge I thank you in advance and appreciate all help I can get.

Eric I want to thank you. You are right I am very over analytical. I was not always this way. I use to jump right into to something with both feet and learn as I go. My experiences doing that sort of thing has not been good and therefore here I am. Since I fell flat on my face one too many times and now it just plain hurts from all the falls I make sure I know everything there is to know prior to getting into anything that could potentially back fire on me. The only real risk I see in this so far is that you can end up with a property that you have no end buyer for which then would cause you to find a hard money lender and some cash out of pocket, neither of which I want to get involved with. The only reason I do not want to get involved in something like that is because I have been down that road already and when one mistake happens it is usually followed by a snowball of others that can wipe out all your savings. Not saying it will I am only speaking from my experience. In my experience it did. I jumped into something only knowing the basics and relied upon the on the job training to do the rest. That was a big mistake for me. Now I do all the learning before I jump into the lake, therefore I have enough knowledge from the veterans who have been there to know some of what may go wrong and how best to deal with it without getting myself drowned in the process. The only other pitfall I have found so far is after spending a lot of time on a deal you think is going to happen and have your C buyer lined up, the bank throws a monkey wrench into the whole deal and it falls apart and into the toilet. That is the price of doing this kind of business and I can deal with that. I just want to make sure there are no other problems that I should be aware of that could give me personally a lot of problems or hurt me financially. I am not saying that once I get into this field of short sales transactional funding that I will not encounter something unusual that may cause me financial problems personally. I am just trying to minimize the risk by learning everything I can first. This is why I am asking for help in the form of personal experience sharing. I thank you and anyone else who will contribute to my learning process as so I can avoid the most common mistakes and try to keep my wealth intact by preventing rookie mistakes from happening. Anyone who has any knowledge that they want to share about this whole process, I want you to know that I really appreciate it and I thank you.
Scott there are threads in this forum all over the place about this topic in some form or another. I have read them but I am wanting the most up to date information as this industry is changing constantly and what worked just a year ago may not work now. This is why I started this new thread to be able to get more up to date information on the process. You mention having a team in place but there is one very important thing you forgot to mention. You are only as good as the team you lead. You can only lead your team with the knowledge you have. If you do not have up to date knowledge then you will not be successful. My goal is to do this right, keep it legal and lead my team I put together in the right direction for the success of all. A quote comes to mind that can apply more towards this business then any other I can think of off the top of my head. "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."Thank you for your input as all information I get is helpful.