All Forum Posts by: Steve McGovern

@Luiggi Perdomo, I hope that you don't mind my curiosity here--  it's fascinating what we all find in different areas, despite the prevalence of the IRC.  

This would absolutely not fly in my jurisdiction... but that's not saying anything about yours.  Have you asked around at the City/County Building Inspector or CEO's office?   Sometimes, you're fine "until as soon as you touch it or around it,"  Then you're under obligation to bring it up to code.  

Also, keep in mind that any Fix & Flip is (1) assumed by the buyer to be actually fixed(!) and (2) that the buyers, too, will be doing their DD including home inspections.  If you're willing to fix everything else, put it on the market, and when asked, discount your price somewhere between $5 & 7 grand (inconvenience fee) then by all means, have at it. 

Furthermore, if they negotiate a Mortgage Contingency and the Mortgage Co. won't lend without insurance and their Insurance Co. won't insure without grounds, then you've wasted a lot of time. This is exactly how we got a Seller to pay about $8 grand to upgrade Knob & Tube wiring in a recent transaction of mine (and another $12G upgrading the panel to 200A).    

Aside, I have a three-pronged outlet tester that cost me less than $20.00 at one of the home stores.  When you plug it in,  It has three lights, and tells you if there's an open hot, open neutral, open ground, or mixed-up wiring on any standard grounded outlet.  (An open ground would tell me that you did something like @Brian Pulaski was describing, unless those outlets went back to the panel with BX Cable or something.)  The little tester has certainly been worth the price.   

Either way, the people who know what's expected in your area are in the city/county CEO's office.  Good luck, and keep us posted!  

I hate to say that I think you're missing something here...  

 Speaking, very, very  generally:  

--An REO is by definition a property that's been foreclosed-upon, and taken back by the Lender.

--The lender, usually but not always a Bank, (Something institutional: Credit Union, Mortgage Co/servicer, CMBS, CDC, Local Housing non-profit, church group, etc.) has an interest in selling its property for at least the value of the outstanding debt, but up-to whatever that market-value is for the property, in both that property's current condition and with the AS-IS Tenets that the Lender would want to place upon the property (YMMV based on jurisdictional law & regs placed upon transactions in your state/county.)

--A Lender's Asset Manager, usually has a myriad of options for bona fide, active Agents in the area. 

--A Lender has an interest in retaining access to the most-traditional, wide-spread and professionally managed brokerages as possible to market and unload their assets as quickly and cheaply as possible in the above-mentioned ways. 

Assuming all of this is true, especially the list of lenders as noted above (and not for example a "lender" under a Deed Contract or Installment Note to Mom & Dad, Aunt Judy or Farmer Bob), and assuming that we're not in an absolutely rural locale, where the REI/Wholesaler actually may have a better network than an area's licensed Agent from 5+ miles away...

 ...Then what possible value could a wholesaler actually add **from a Lender's point of view** in an REO transaction?

(** this is the key point:  they need to want to pay your fee. You need to show value above & beyond traditional methods. )  

...and better yet, as has been asked in a very recently-circulating thread, how can the Wholesaler (assumed unlicensed) actually expect to protect his/her interest /money in these circumstances?   (Seriously, I'd advise you to seek that thread out.  Good info there.)  

Most Lenders I know won't even consider transacting with a "private party" without a significant amount of vetting-- to the point of exhaustion, even.  

I'm quite interested in the community's thoughts here. 

Slainte, 

Steve

@Eunice L. , @Laith Ali absolutely has a point in there.  She is correct that when leverage is evident or when one is able to stand his/her ground, then negotiation 'tactics' are moot.  In fact, in many negotiation training sessions, the first lesson taught is that sometimes, you simply can't negotiate. 

However, there are lots of gray areas.  More than you can count.    As a basic example, we're not always talking about money or inventory.  Maybe a tenant or buyer is giving you a hard time about money, and you give up.  After you both walk away, you may learn that they were more than willing to come to terms with your money, "if you only could have done this..." and sometimes "this" is something that would have been very easy and/or that you never would have thought to consider.   

Another example-- think about the last time you had to make a deal with someone who inherently made you angry or uneasy.  No matter what you did, it was hard to shake the little monster jabbing you in the pit of your stomach, right?  Even if you could tell that they were about to say "uncle,"  you were more likely to want to squeeze them just a little harder.  Whether you acted upon it or not,  you wanted them to feel it just a little more than the person you met the week prior-- the one who approached you earnestly but respectfully and said he/she had a problem with your proposal that he/she was willing to try to work out with you.  

You were looking for good negotiation books from the community, so, here's a quick list, in my opinion,  of what a good book should cover:  

 Good negotiation books (and training) tend to focus on sound communication and extracting data so you can make everyone's life easier-- yours, and your adversarial partner's.  They also focus on those emotions-- keeping yours in check whether you're the aggressor or the pursued.  Good resources help you identify the most important pieces of the puzzle so you don't get caught up losing a good deal over a "Want" as opposed to a "Need"  and no matter whether you're up against the jerk or the nice guy.  

 Good negotiation books and training are not about ways to over-use your leverage, to bully an adversary, or to get everything you ever wanted through scorched earth tactics.  Instead, they provide ideas to think outside the box, to identify and maximize opportunities,  and get to the table.  The sole objective is--  without caving on the important pieces in your deal-- to get to the table. 

Finally, a good book should focus a healthy amount on people-- every situation is different because the people driving the situations are different.  Until you build rapport, you have no idea who's on the other side-- and even then, one of your most trusted confidantes can throw you a curve ball if something riles him/her on that particular deal, too.  That's happened to all of us, whether the topic is a multi-Million Dollar real estate transaction or who's bringing dessert to a holiday dinner with family.

There are lots of other topics, but this is, in my opinion, what should be present at a minimum to be a 'good' book on negotiation. 

If you are still looking for resources, you're welcome to PM me.  

Happy New Year, 

Steve

I hate to ask and add to your misery, but did you review the property dockets at Zoning, Planning, and Building Inspection prior to purchase? Those are public record, and IF (if, if, if) there’s a violation or permit or note in the files, then seller could argue that you Should have known. I can’t say this enough— ALWAYS pull the building, zoning, and planning files with the muni/county offices.

David Mejia Manolo D. What is stated above is true, but it’s a severe understatement— low-e glazing blocks UV from entering a room, which has the effect that Manolo D mentioned. However, in cold climates, it also reflects heat back into a room, reducing heat LOSS from a conditioned space. Finally, as noted, it also blocks Radio Frequency waves from entering the space. Pretty interesting stuff, but don’t simplify it when you do your research. Weigh all the pros & cons.

Jurisdictions may vary, BUT “acceptance” is a requirement of the validity of a deed in most jurisdictions. In other words, if you don’t accept it, the property isn’t yours. There are many reasons for this to be a sound law to prevent fraud, for example— imagine getting an absolutely filthy property with huge environmental issues without even knowing it’s been conveyed to you. The question is whether you passed that requirement either when your brother recorded it, or when you acted upon it later. Further issue will be proving you didn’t accept it at this point. Hire a lawyer— a GOOD one who practices land use or contested real estate matters. Better if this person knows his or her way around probate, too, as these issues sometimes arise in estate cases. Good luck

Attend the local REIA meetings. Yes, you heard that right: attend the local REIA meetings— you know, the ones with the people talking about tax liens and wholesaling and little condos. When I attend, I’m surrounded by Real estate pros— attorneys, brokers, appraisers, lenders, and tons of investors, of course... investors with part time, full time, and corporate interests in mind. ...but yet, I’m often the only one in the room that focuses on commercial. Enough said? Also, don’t disregard groups like BNI.

@Bradley Sindt  Assuming you ARE in the Zone, you will definitely want flood insurance. Assumption is that you have a Lender, and the Lender will require it, but if that's not the case, don't be silly-- get the Insurance.   You'll grumble at every payment, but one of these days, you won't regret it.  Just consider it one of the challenges in dealing with good property in areas near water, account for it, and make sure your numbers work with the Insurance payments.    

 Have you reviewed the FIRM to see exactly where in the flood zone (and therefore how prone to flooding they may be)?  that quick search may tell you "This risk is ok, but I'm not touching that one."  

https://msc.fema.gov/portal

Follow the directions there and print out a FIRMETTE.  I recommend that to all my clients & colleagues, on any property where water is a question. 

Occasionally, but only occasionally, I have found that properties are in the flood zone based on simple proximity to water, BUT when the topo is considered, these properties should NOT be in the Zone.  Review the results with a topo map and consult an Attorney who does a decent amount of Land Use if you think the results don't mesh. You wont win every battle, but sometimes it's worth it. 

Hope that helps  

@Steve Osowicz --  I see that you're a commercial broker, so I'm assuming that you're not going to be surprised at anything I mention next: 

You've asked for help on U&O, but you've said nothing about market rents for any asset class, the trending ebb and flow of any asset classes in this area,  demographics, highest & best use,  what services are needed in the area, access to main highways, access to downtown/village/commercial areas, nearby services already present, or the ease or difficulty in re-zoning/ changing that property's use in this particular jurisdiction, zone, or overlay.

We really can't help you much without any of that info.  

 That said, in terms of the options you've mentioned so far,  I like (1) the best as long as this is in or near a suburb or city with reasonably small living spaces and where people can't simply chuck a shed in their yards or put their junk under a tarp on the front lawn.   

Reception halls are tough-- their business is absolutely tied to micro and macro economic events, not to mention susceptible to being undercut by competition (Unless they have a great hotel or restaurant name attached to them-- those tend to be the qualities that mitigate reception-risk.)  Additional concerns are all the usual Building/Planning/Zoning PLUS Board of Health.  Who's going to build out the commercial kitchen? The Tenant/Occupant?  Lots of moving parts = lots of risk.  

Flea market--  Um,  it can work in some limited cases but...   well,  go back over all the things you already mentioned, and now add the transiency factor.  

Best,

Steve

Interesting question to me, too-- I don't tend to practice in this circle... but I'll offer the following simply as food for thought/conversation:
 

 In Mass, at least, it's illegal for a Broker to compensate an unlicensed person  (specifically, his/her Licensed Broker) for any brokerage-type services related to the property. the actions required to wholesale-- specifically the marketing of a property, representing a Seller in his/her efforts to sell an asset, and/or finding buyers for an asset, may (*read: DO) violate exactly those tenets.  Full or part time time paid (salary or hourly) Management Company employees, for example, have carve-outs from the law that allows them to market properties without a license.  

So without a license, your options are (1) don't list it-- at least not through an Agency.  You need to use your personal network;   2) execute an agreement to take a cut of the sale proceeds directly from the Seller upon the conveyance; or (3) double-close as others have suggested.  

In either 1 or 2 above, you may still find yourself practicing w/o a license.

....now, the practical:  people wholesale all the time, so how do they do it?