All Forum Posts by: V.G Jason

 They still own the house though. In a TK--they basically sign over control & overpay, but don't sign over equity.  Unless I'm off?

 The "passivity" is worth 50% of equity versus other forms of investments available in the market?

It's an opportunity cost, just like anything else. I'm still confused on why someone does this. 

The real question is duration of these tariffs. 

It'll be confusing in the short term, I think people assume it's inflationary. It is, on paper. 

If this happens for sub 3 months or longer than 9 months, it'll be inflationary. On the former front, the consumer will eat it. The latter part, the supplier will eat it. Anywhere in between, I think it's deflationary because consumer won't continue to eat it & supply side is still long enough to not warrant new supply at tariff related prices.

We really need to see how long this lasts. 

@Shiloh Lundahl  No reason to get upset. V.G Jason merely pointed out what you are providing to the hypothetical partnership  can easily be performed through  contracted services with proper vetting and without having to give up 50% of the upside. Most individuals can originate the debt these projects require as well so its not as if your signature is opening the doors to properties these partners couldn't purchase on their own either.  You mention you would also share in losses, but you aren't investing any capital so poor performance would lead to your partner realizing a monetary loss before you.

 Here's what rubs me about this situation: the market has gone down since 2022. So why would you pay what they paid then? Like you said, it was a strong seller's market then with steep appreciation, multiple offers, way over-asking price offers, escalating clauses, appraisal gap coverage, buyers waiving all contingencies, etc. It was crazy. Most people who bought in 2022 overpaid. The tables have turned and it's a buyers market now with values flat or declining, much longer days on market, price drops, listings expiring, very rare to see full price offers on new listings, etc. 

So why would you pay even close to what they paid at the peak of the market in 2022? Even with having made improvements, anyone selling now who purchased in 2022 should be expecting a loss. You basically made a full price offer when you didn't need to. That makes no sense. Never pay full price in a buyer's market! 

Let's compare this to a deal we did last week: Seller had purchased in 2022 and listed the property for around 5% more than they had paid in 2022 (there are a lot of highly unrealistic/hopeful sellers like this currently who overpaid in 2022 and need to sell). They had no other offers so we offered 30% under ask. They countered and we met them in the middle at 15% under, and then negotiated an additional $15k off during inspection, so total discount was around $150k off list price/ what they paid in 2022. Seller had also made $100k in improvements btw. We also got them to have it professionally cleaned, ducts cleaned, they threw in some furniture for free, paid a lot of the closing costs that buyer usually pays, paid most recent mill levy instead of prior years taxes, paid my 2.8% commission, etc. because it is a buyers market and that's what you can negotiate in a buyer's market. This is a more typical deal for the current market, and what yours could have looked like if you had someone who knows what they are doing representing you. 

This is typical of what I see when buyers or sellers "go it alone": the unrepresented side gets the short end of the stick every time. They often think they're getting a good deal and tell their friends they got a good deal, when they really left money on the table unknowingly. I've seen buyers leave $500k on the table and tell their friends they got a good deal by not having an agent involved. Filling out the contract etc. is not that difficult but without being active in the market every day and having expertise that comes from doing deals all the time, beginner mistakes like this are going to be made and money is going to be left on the table every time. It's no different than anything else that people try to DIY: it can be done but beginner's mistakes will be made, the end product usually isn't as good as a professional would have done, and it usually takes longer and costs more. 

Frankly, this seller is really lucky you came along and were willing to overpay by 10-20% in order to "save" 2.5%. If it had been my client buying this property, they would have paid a lot less even with the full commission factored in. 

It seems like the property works for you at the list price and you're fine with what you're paying, so that's great. But don't kid yourself by thinking you saved any money here by representing yourself when you are overpaying compared to what most buyers are currently paying. 

Savvy buyer's agents look at stats like sold price to list price ratio trends and watch specific properties to see what they sold for compared to what they were listed for to really understand the market and make offers accordingly. You clearly misread the market here and could have done a lot better IMO. Good learning experience for you, but better to learn by working with a good agent and saving money until you have done at least 10-15 deals, rather than learning by making mistakes and leaving money on the table IMHO.