All Forum Posts by: Charlie MacPherson

Especially as a new investor, you need your own agent.  A Dual Agency is legal in many states, but borderline unethical.

In that relationship, the agent is supposed to function as an impartial representative for both sides.  That means that if he knows something useful about the other side in negotiations, like "they absolutely have to close by X date", he cannot share it with you.

You need someone on YOUR side and in a Dual Agency situation, you don't have it.  There's a reason we don't let the fox guard the hen house.

Quote from @Abdul Azeez:

Quote from @Charlie MacPherson:

I'm confused.  You say that the offer came in higher than your list (asking) price, but was less than you were hoping for.

The buyer met your listing price and offered up to an additional $5,000 to cover any appraisal gap, bringing the offer even further over the asking price.

If I'm reading you right, you accepted the buyer's offer, but hoped to squeeze even more money out of them based on the appraisal.  That's pretty crappy business on your part.

IANAL, but if you did accept the offer and EMD changed hands, the three basic elements of the contract have been satisfied.  Those are:
1. Offer (the buyer made an offer to purchase)
2. Acceptance of the offer.  (You must have accepted it as you plan to close next week)
3. Consideration (something of value changes hands - normally that's EMD /deposit). 

Unless you had some weird language specifying otherwise, it looks to me that the buyer has a case, because a contract has been formed. 

This, it seems to me, is all on you.  You listed at a price lower than you wanted and somebody bought it. 

I get that in the red hot seller's market, one strategy is to list low and get a bidding war going.  But it sounds like you accepted the offer and formed a contract when you did so. 

If I'm reading this correctly, this is a serious mistake on your part and you could be sued for specific performance, meaning that a court will force you to honor the terms of the contract.  This is Contract Law 101 and I'll bet your attorney will agree.  The only way out is if the buyer fails to meet any of the other terms of the contract.

BTW, put yourself in the buyer's shoes for a moment.  The asking price was $1.00, but you really hoped for $2.00.  He offered $1.10 and the appraisal came in for $1.15, which he agreed to pay.  Now you want him to pay $2.00 for a house that just appraised for $1.15.

Why should he pay more than the actual value of the house?  Just because you want more?

Good luck.  Honor the contract you signed and close on the sale.  Take your lumps, learn a lesson and move on to the next deal.

Let me clarify as I don't think you are reading correctly.

lets say list price is $100
lets say offer price is $120 with a special stipulation that buyer will pay $5 over appraisal if it under appraises

Let's say appraisal came it at $102

Buyers are saying they will pay only $107

follow?

Thanks for the clarification.  The buyer is reducing their offer to less than the original offer because it appraised low.  They are paying $5,000 above the appraisal but less than the original offer.  Do I have that right?

If that's the case, you should be thankful that the buyer is paying more than the appraised price.  

Still, it appears that they are meeting the terms of their offer and I think you might be looking at a binding contract.

I'm confused.  You say that the offer came in higher than your list (asking) price, but was less than you were hoping for.

The buyer met your listing price and offered up to an additional $5,000 to cover any appraisal gap, bringing the offer even further over the asking price.

If I'm reading you right, you accepted the buyer's offer, but hoped to squeeze even more money out of them based on the appraisal.  That's pretty crappy business on your part.

IANAL, but if you did accept the offer and EMD changed hands, the three basic elements of the contract have been satisfied.  Those are:
1. Offer (the buyer made an offer to purchase)
2. Acceptance of the offer.  (You must have accepted it as you plan to close next week)
3. Consideration (something of value changes hands - normally that's EMD /deposit). 

Unless you had some weird language specifying otherwise, it looks to me that the buyer has a case, because a contract has been formed. 

This, it seems to me, is all on you.  You listed at a price lower than you wanted and somebody bought it. 

I get that in the red hot seller's market, one strategy is to list low and get a bidding war going.  But it sounds like you accepted the offer and formed a contract when you did so. 

If I'm reading this correctly, this is a serious mistake on your part and you could be sued for specific performance, meaning that a court will force you to honor the terms of the contract.  This is Contract Law 101 and I'll bet your attorney will agree.  The only way out is if the buyer fails to meet any of the other terms of the contract.

BTW, put yourself in the buyer's shoes for a moment.  The asking price was $1.00, but you really hoped for $2.00.  He offered $1.10 and the appraisal came in for $1.15, which he agreed to pay.  Now you want him to pay $2.00 for a house that just appraised for $1.15.

Why should he pay more than the actual value of the house?  Just because you want more?

Good luck.  Honor the contract you signed and close on the sale.  Take your lumps, learn a lesson and move on to the next deal.

If you're getting postcards, they're most likely from wholesalers.  By the nature of their business model, they cannot offer the market value.  Some will lowball enough that they can tack on $25,000+ to their offer and still have a good price for an investor.  IOW, they will make an offer that is WAY below market price and you'll end up leaving a lot of money on the table.

You might consider running ads on social media or using an MLS-only service that provides you listing on MLS, but no other services.  That assumes you're already familiar with real estate law in your area and are comfortable doing all of the legwork that a Realtor does.  Schedule showings, qualify buyers, run open house events, fill out disclosure forms, collect multiple offers and respond to them, coordinate inspections, etc.

If you're not already competent in all of those skills, you might consider using a Realtor to do a standard listing and market it as a fixer-upper.

Whatever you do, DO NOT FORGET TO GET ESTOPPEL CERTIFICATES.  That's a document that each renter signs that describes all of the details of their lease, even if it's month to month.  Especially important is the matter of security deposits and last month's rent. 

That must happen before you close.  Otherwise the renters can come back to you when they move out (months or even years later) and demand a security deposit that you had no idea about.  Also don't forget that if there are security deposits held by the seller, those should transfer to you at closing.

Good luck!

As a business broker (and former Realtor), I'm looking at this a little differently.  Let's assume all of your numbers are correct (Though $579/year per apartment for heat seems very low).

From 10,000 feet, I see an investment of $1,330,000 and a cash flow of $192,972 before debt service - PLUS - you're self managing, so you've pretty much bought yourself a full time job.

I compare this to other types of businesses.  A pizzeria for example (and not very far from Bangor).  Asking $325,000 with the owner working and a cash flow of $156,000. 

Yes, it's also a full time job, but the amount of hassle making pizzas and sandwiches compared to the amount of hassle with owning rentals is not even close. 

No evictions, no searching for new tenants, no CAPEX, no building inspectors breathing down your neck, no Fair Housing "testers" or lawsuits, no clogged toilet calls at 2 AM, none of the infamous "3 Ts" (toilets, termites and tenants), etc.

The trade-off is that you don't own the building and therefore don't have the appreciation in the real estate value.  However, if your build your pizza shop and maybe expand to new locations, you're building a business that someone like me can sell when the time comes.

Good luck!

@Victor Lee  There are a couple of ways to look at this.  If your attorney says you're not legally liable, that's one aspect.  There is probably no way to prove that the lead paint contamination came from your property either.

However, as a responsible property owner (and a decent human being), you have to think about your tenant's child.  It doesn't take a lot of lead paint to cause actual brain damage in a kid.  When I last took that training, the instructor said a single paint chip the size of a quarter was enough.  That can mean lifelong learning disabilities and having a signed disclosure from that tenant isn't a lot of comfort for a mom who has to face this.

At an absolute minimum, I'd perform whatever remediation the inspector recommends and then I'd re-inspect to be sure it's all gone.

Good luck.  I hope it works out for you and the kid.

I could be wrong here, but this feels like an ethics violation.  She is holding up the extension - to which it appears that you are entitled by contract - so she can squeeze an extra 2% commission.  

IANAL, but I think this qualifies as "interference with contractual relations" - a tort. 

I can't name chapter and verse (I'm no longer a Realtor), but it seems like a violation of the NAR Code of Ethics.  When I practiced in both MA and ME, almost everything in the NAR COE was reproduced in state consumer protection law.

If it were me in your shoes:

1. Make sure you get her threats in writing, so you have a paper trail.
2. Contact her broker and tell them that you want the extension immediately - and if you fall out of contract, you will hold both the agent and broker liable.
3. Prepare to launch a complaint to the state's Board of Real Estate and let both the agent and broker know that you intend to do so.

Good luck!

From what you've said, it sounds like you're trying to wholesale a property in Florida.  Unless you have a valid real estate license and are working under the supervision of a managing broker, what you're doing is illegal.  It's unlicensed real estate brokering.

Search through the forums, particularly pay attention to posts by @John Thedford on this topic. 

Why would you give up a percentage of your company when you could just pay a translator by the hour?

You can swat flies with a sledge hammer, but there are easier ways to go about it.