All Forum Posts by: Max Williams

Mike,

You can have the listing agent show you the property right up until the bid opening because the they will enter the bid online. It is a good idea to have a HUD registered Buyers Agent working for you though. A good investor friendly Buyers Agent will often bring things to your attention that a listing agent is not required or expected to. I have often pointed out things to buyers I represent that have made them change their mind about a particular property. Best of all, that Buyers Agent does not cost you anything. He or she can be an important member of your team for comps, advice etc., once you form a relationship with them. Ask other investors for referrals or visit a local REI group to meet them. Best wishes in your investing.

Be EXTRA careful when it comes to values as a newbie. The popular valuators do not have the ability to analyze sales. For example, a person bought a home in 2006 at the top of the market and then was foreclosed last month. The amount of the foreclosure sale is about 30% more than the current value (plus fees and arrearage) in todays market. Zillow does not know this and simply uses that inflated amount (foreclosure sales price) as a comp. Now your ARV is inflated and you know the rest of the story. ALWAYS verify the comps with someone that can make sure they are arms length (normal sale) transactions and confirm condition. The MLS can't be beat.

Hami,

I would check your state laws regarding earnest money deposits (EMD.) In my state, the courts MUST decide disbursement of EMD if there is a dispute between the parties. This law applies to any escrow account help by attorneys, real estate brokerages and title companies. It may possibly apply to your County Clerk too. The real estate board for your state should be able to point you in the right direction.

People often think that a concept that they are not familiar with is illegal, unethical or simply wrong. When you say the word "flip" or "double closing", even some experienced real estate professionals immediately think of illegal activity even though there are excellent flippers that work in every community transforming blighted properties, making neighborhoods better and increasing the tax base for local government.

I would touch base with some local investors or a local investing group and ask about an investor friendly title company or closing attorney depending on your state. Don't worry, there is a local firm that understands the concept and would be happy to give you good service.

Each state has its own laws but the activity you described in my state (VA) requires a license. One way to possibly get around this (and protect your fee) is to get the property under an option or contract. Then you are no longer a third party. I imagine if the the parties tried to stiff you for your fee as a third party, you would not be able to say much if the activity you were involved in required a license in the first place.

If the listing agent / brokerage is properly licensed by the state and has a trust account this is a very common way of doing business. It is mandatory with some REO sellers. Thousands of transactions monthly are handled in this manner in each state without problems. In my state (VA and most others I suspect) disputes over EMD must be handled by the court if buyer and seller can't work it out. An attorney's trust account would be handled the same way. The attorney cannot be the judge and make that call on their own.

I disagree that the attorney has more to lose. There are plenty of brokerages that make the owner way more money that the real estate attorney / firm. Fraud (which is rare) with a trust account is a great way to lose it all in both fields.

The chances of the brokerage or attorney going on vacation with your money are slim. By the way, it is a good idea to use your own trusted investor friendly Buyers Agent to look out for you in the transaction, Especially if you are new to investing. It won't cost you a thing and can possibly keep you out of trouble.

It is amazing how such a well funded organization can be so dysfunctional. BOA makes Congress seem like a well oiled machine.

I have sold (as a listing agent) the same short sale 3 times and BOA has dragged their feet each time. Naturally, the buyers walked when the deal did not move forward. My sellers have not made a payment in over 2 years. Their Equator system is only as good as the unresponsive employees that sit behind the monitor. No wonder they are in such a bad situation. They are the absolute worst in the business in processing short sales.

Check with your local utilties because some have a program for home inspections. Unfortunately, many will hit you with a flat fee to activate a new account. I would get part of if from the buyer because he will need to do it in most cases anyway. If he gives you a hard time over $25, he is most likely not the right buyer (he is getting a wholesale deal.) Also, the utility may ask for a copy of the contract or the settlement agent info to verify.

Many traditional Realtor contracts have an inspection clause and part of that clause is the the seller will provide utilities for an inspection. The big exception here is with REO properties. Many REO sellers are too cheap to even activate the utilities.

Be sure that the inspection is for "information only" and that that it will be a "take it or leave it" situation after the inspection. On a normal transaction with a Realtor contract, buyer and seller negotiate on repairs and hopefully have a meeting of the minds.

On a wholesale deal, you don't want to get involved with repair negotiations. If the seller does not want to activate utilities, I would try to get the buyer to do it. If it is a good deal and he / she does not want to do it, you may want to bite the bullet yourself or split the costs to help get it sold if there are no other buyers on deck. Good luck!

I agree with Scott, Steve and David. You can do much better with a motivated seller. The numbers don't illustrate a motivated seller scenario that will maximize the return on your cash. $40K can go much further with the right deals.