The Real Estate Sage at The Real Estate Investment Institute - REII

This is not your Father's real estate! Thank God! Remember when Oldsmobile changed their product and advertised that "This is not your Father's Oldsmobile?" Do you remember your Fathers Oldsmobile? Do you remember Oldsmobiles? Well the Chicken Littles of real estate, the excuse makers, the near do wells, the pessimistic, the lemmings, those people with six months experience many times over are blaming the market shouting There are indeed few if any Fathers that have ever seen such a market. Falling home prices and extremely low interest rates don't go together in your Father's conventional financial models! Low mortgage rates have always allowed higher montages and cause rising home values. Falling home values allow higher mortgage rates, but don't necessarily cause higher rates. Or, so your fathers were taught and it was reinforced until recently by their experience. So it is possible that "This is not your Father's real estate!"

                                                                                                                                                                        

"This is not your Father's real estate!"  Real estate though is more that the dollar value of a house, more than the cost of money! Real estate has a functional value, every one has to live and work some where! Real estate and the shelter it provides is one of life's necessaries! Real estate has an intrinsic value! Until recently everyone wanted their progeny to live a better easer life than they do/did! Real estate has an esoteric value known only to the home owner! The value of individual real estate normally far exceeds the sum of it's parts!

When you realize the necessity of real estate, the intrinsic value of real estate, the esoteric value of real estate, the people factors of real estate they maybe right. "This is not your Father's real estate!" Indeed this is the people business. This is your Grandfather's real estate!

                                                                                                                                                                               

What your Grandfathers knew was that there is no value to real estate except in it relationship to people! What they knew was that the dollars don't matter the market will be great for those agents that concentrate on solving people problems!

　

It's not a lottery it's a losetery! In a lottery the first tickets sold have as much chance of winning as the last one sold.

Short sale sellers and there listing agents are being advised to submit multiple offers to the bank being shorted! This advice in itself is questionable with at least two major companies discouraging them. I'm not at this time considering the seller's position, which may included throwing as much... at the wall as possible while praying that some thing sticks.

See a great if lopsided discussion at: The real top reasons that short sales are not approved or do not close  Ken Lawson JD explains that multiple offers are legal if the buyers and the seller agreed. I agree if each of the accepted offers contains a provision allowing it! My problem is if any one buyer's contract doesn't contain such an agreement!

If a buyer didn't agree to such nonsense and the seller signed or had signed another contract they're guilty of "bad faith" this is not a crime, but they may well be subject to a tort action for damages by all, but the winning buyer. Then there is the listing agent! The listing agent is not a party to the offer & acceptance, purchase agreement, purchase offer or what ever you chose to call the agreement between the buyer and the seller. If the agent encouraged and participated in submitting multiple offers they could and should be pursued for interfering with a contract! Possibly even conspiracy to defraud, which could be the basics for both civil and criminal damages. Assuming of course that you are a looser and that you, the buyer didn't agree to let the seller accept and submit multiple offers.

The logic offered by those advocating that the buyer should agree to this is that with more offers that bank is more likely to accept one, it may be true! But, what about your offer? Your offer if it's not the highest offer will be used to justify the higher offer, but are you willing to post a deposit and tie up your life and finances for months to justify some one else's offer? If your offer comes in late and low why would the sellers accept it? They'd counter because every dollar over the existing offers would mean the bank being shorted gets more of their money back and is more likely to accept the smallest loss!

So unlike a lottery where every ticket has the same chance, the last offer submitted is likely to be the highest, if countered and the most acceptable to the bank. The other offers made in good faith are not being accepted in good faith, but rather to justify the last offer. I know of only one other similar situation where such thing occurs, buying from the FHA.

I am not an attorney, but for many years I was a true buyer's broker, contracted with and paid by my fiduciary, and many more years as a teacher and real estate author and I could never in good faith advise my clients or students to accept such a clause allowing their time and money to be so abused.

I do also teach selling and listing and if my fiduciary were on the other side, I might selectively feel different. Provided every accepted offer included the right to accept and submit more than one offer.

As my readers know I'm a people centric pragmatist. I believe in total fiduciary to my clients, students and readers. I also believe there is always more than one way. I'm always in search of or evangelizing to the simpatico consumers and professionals.

Active Rain offers us a chance to find the like minded like no other! "It has given all of us the opportunity to share the knowledge and experience of the old sages and the bright beginners, it is wonderful!"

It's not always easy to find what we need, but it's normally there! I took a call for The Real estate Investment Institute Wednesday from a lady looking for information and classes, well I could help with information, but she's a commercial mortgage underwriter. Now I teach a lot of relevant information, but I don't teach commercial underwriting.

I've invited her to join our group, but can anyone in the Rain recommend classes for her and connect her with other commercial underwriters?

Thanks for the help!

Of course you can!

The big question is should you? Do you have the temperament to buy a Short Sale home?

Short Sales, where you buy your home for less than what the seller owes on the property are probably the best buys in real estate since Peter Minuet bought that island from the Indians.

Short Sales are normally even better buys than REO's, homes the bank owns after foreclosing on them. REO's have almost always been great buys and most still are.

Short Sales unlike many REO's are generally well keep and occupied like most seller occupied homes. You can see that the systems work the heat or AC is on or can be turned on at the thermostat to be easily checked.

Incredible values, better condition, easily inspected there is only one problem with buying a Short Sale home! Short Sale Sellers have no right to "short" the bank, most can't deliver title without the bank's permission!

The contract you execute with any seller is of no value unless the seller is prepared to pay off his bank or can reach an agreement acceptable to both the seller and the bank.

Don't make the mistake so many consumers and their agents make! Your contract is enforceable! As a buyer you might lose your deposit or worse, you might face a specific performance suit, possibly even a suit for damages!

If you are an Active Rain member see: http://activerain.com/blogsview/1189663/short-sales-who-gets-the-earnest-money-when-buyers-walk- in in which Ken Lawson, JD from Idaho believes their can be substantial damages due from a defaulting buyer to the seller! I don't necessary agree with Ken on this subject, but I highly respect him! State laws differ. The point is anyone thinking a buyer can just walk away form a Short Sale purchase agreement is wrong. Anyone advising you that you can just walk away from a contract should not be representing you! It doesn't matter weather Ken or I is right. if you default on a purchase contract and you're sued your attorney fees alone will spoil your day!

You're a good guy, why would you default? Time! Uncertainty! Frustration!

From a consumer's point of view there is nothing very different buying a Short Sale than any other house. The seller and his REALTOR® have control after the offer is made, you and your REALTOR® do nothing unusual except wait and wait and wait and wait and wait... As the seller through his REALTOR® or a specialize mediator deal with the seller's bank. The reasons for the delays are irrelevant here, they exist!

The question is are you willing to wait? Are you willing to possibly loose the house? Do you have the time?

If you need or want a home there are only two excuses for not availing yourself of the great opportunities offered by Short Sales, you don't have the time or the temperament.

Watch for our up coming blog "How To Buy A Short Sale"

Do you know the difference?

Do you reason or justify?

Are your arguments logical?

Do you think or hate?

Do you have factual support for your conclusions?

Do you think shouting adds to your validity?

Do you believe if you hear some thing often it must be true?

Do you redefine words to deny the obvious?

Do you practice "CYA" in lue of "CYC*A?" *Client's

Do you decided rationally or just go along?

Do you believe some of the comments people post rationalizing their position rather than logically explaining it?

Do you believe there is a right and wrong?

Do you teach or indoctrinate?

Do you...

Bill

William J Archambault Jr

"I shot an arrow into the air,
It fell to earth, I knew not where;
For, so swiftly it flew, the sight
Could not follow it in its flight" 

I don't know who wrote this.

I don't know where their arrow went.

I shot a blog into the web

where it fell I know well.

It landed at three of the top four returns on Goggle!

Such is the power of Active Rain.

Bill

William J Archambault Jr

 

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Duel agency is a travesty! For more than a hundred years real estate brokers as we know them represented the seller! The agents represented the seller because he paid them, the selling agent was not a buyer's agent! The selling agent was a sub-agent of the listing agent.

Obviously there were major problems with this system. Major conflicts of interest.

The listing agent's fiduciary duty was too the seller and then as now most did a reasonable job, the commission based on a percentage of the final sale price encouraged the agent to get the highest price possible. Of course not being paid until and when the property sold, compromise many. But, it's a reasonable system and it's worked reasonably well for a long time!

The selling agent as a sub-agent of the listing agent also owed his fiduciary to the seller! This was a big problem! Unlike the listing agent who gets paid when the property sells regardless of which buyer finally buys it, the sub-agent only get's paid when his buyer gets the property.

Then there was the buyer, no one represented him! A the sub agents were legally bound to the seller, information, even public records could not be legally and ethically disclosed if it were detrimental to the seller's desire. The agents to a listed property were only required to treat the other parties "fairly" an ambagious requirement that the NAR has since dropped.

The logical consumer saw that he was not represented. If the agent whom he had assumed was his agent did advise him they were breaking the law, violating the very listing contract that had the seller paying them, and abandoning ethics they so proudly spouted! Good agents, yes very good people had a real problem trying to walk the line, helping the buyers that came to them for help, while under contract and being paid by the seller.

There was and is a solution! A true buyer's broker contracted with and paid by the buyer! A true fiduciary of the buyer! Listing the buyer! Such brokers were often employed in investment and commercial property and by assorted other specialist. Buyer's brokers were and are almost universally legal, I don't know of any state where a real estate broker can't operate as a true buyer's broker.

But, there were several problems applying this to SFR, single family residential practices. First and foremost Fanny Mae, Freddie Mac, and Ginny Mae, while naively we believed these agencies should have welcomed a true buyer's repressive, to protect their borrowers, they steadfastly refused to include or recognize any fees paid a buyer's broker as part of the acquisition cost! If a buyer pays his agent directly then it's out of his pocket in addition to his down payment and other closing cost!

In the eighties the savings and loan debacle heighten consumer awareness and brought the issue to a head. Consumers demanded equal representation!

There were two routes to fix the problem, Congress could have had those quasi governmental secondary markets recognize buyer's brokers fees, but they were busy forcing them in to social reform. The NAR, the National Association of REALTORS® didn't take a stand. The final solution was a patch work of state laws creating "Buyer's Agents" that has the sellers paying agents who's fiduciary is now supposedly with the other side. The laws of agency.

Such is the outrageous atrocity, the travesty, the fallacy of "duel agency!" There is no way any one agent/agency can exorcize his/their fiduciary duties to opposing parties! The so called "designated dual agency." where two agents from the same firm supposedly represent different parties to the same transaction is a lie! It's smoke and minors! Real estate salesmen, agents, even associate brokers work for the employing broker, the broker who owns all the contracts! Consumers don't and can't employ or contract with the individual agents.

There is no way any one or any one brokerage can exorcize his fiduciary duties to opposing parties! Buyers and sellers are opposing parties no matter how civil!

Recognizing the problem some states, most notably Florida, have created "transactional brokers" with no fiduciary to any one! If I didn't know some "transactional brokers" that I'd trust with any and every thing, I couldn't imagine why any one would employ a "transactional broker" they don't seem to have any statutory value. Like every where else in transactional states "The only protection the consumer has is the personal integrity of his agent!"

The good thing about the "transactional brokers" is their position is completely declared! I wish we could say the same of our fiduciary brokers many of whom use 20 page contracts not to aid the clients, but rather to disclaim their statutory and fiduciary oblations. Others including individual agents are claiming that any advice, any opinion they might express could be practicing law and there for illegal.

Such is agency! Rely on well chosen people not verify poorly though out law to protect you! Remember "trust, but verify!"

Bill

William J Archambault Jr

The Real Estate Investment Institute

By TwitterButtons.com

A friend Jeff Belonger blogged Mortgage Junk Fees - And FHA loans are more expensive!!!!! Trying to explain that today's FHA loans are not your father's FHA loans! Today you have to look at FHA because it may well be the best loan available.

He also got into "junk fees" the multitude of line items that appear as charges on so many Good Faith Estimates. He suggested that they should be combined with the points to make the Good Faith Estimate cleaner and more of the cost deductible.

.This is a fair question! If Jeff has to ask then there must be a lot of people with a lot less experience also wondering.

There are two reasons!

One, Brokers unlike bankers can't control the final disclosure, our wholesale source will show their charges as line items. We can't change them.

Two, I explain to my clients that the line numbers on my "Good Faith Estimate" match the line numbers on the HUD-1 they'll get at closing. I instruct my clients to take our original "Good Faith Estimate" to closing to check one against the other! If we made a mistake in items we or our wholesale source charges differently, we'll make it good, then and there! It may only be a "good Faith Estimate" but we're talking about my good faith!

Why junk fees, because they have to be paid even if I pay them they will show up on the closing statement.

It's simply a matter of emphasizing the truth in Truth in Lending!

Please remember two things:

"It's the total cost not the number of line items that comes out of your pocket that's important!"

In the end "The consumers only protection is the personal integrity of their agent!"

Bill

William J Archambault Jr

The Real Estate Investment Institute

For the record: Jeff's good protection, even if he's strictly a mortgage banker, and his bottom line, his total cost are hard to beat! It's Jeff I call about FHA questions.

 

By TwitterButtons.com

If I'm to believe the bloggs my students do a better job interviewing sellers both FSBO's and listed sellers, than many pro's!

I'm tired of reading about agents being surprised by the sellers defaults and NOD filings. So I'm posting a redacted version (Almost like what you get from a FOI request) of the check list my students use.

Opportunity Check List

When I write about real estate, I have my son Eric, a mortgage broker, he grew up in real estate and my wife Brenda, world's most tolerant spouse, she's lived thru 35 years of my 36 years in lending and real estate, to proofread my work for content. I have my friend Bob Martel proofread it to make sure I'm communicating to non-real estate people. Bob read my latest book "Flipping For Fun And Profit" he suggested that I needed a check list in addition to explaining the research and exhibits necessary when buying a house to "flip," Something covering the area between finding the opportunity and closing on it.

　

This form assumes you have located a property and its owner/seller, and that you have had my class or read my book "Flipping For Fun And Profit" or read my book "One House At A Time / Finding And Buying Single Family Rentals" or a similar real estate investment program.

1. Determine the sellers' problem with regard to the house.

2. Determine the sellers' time frame, how soon do they want/have to move? If subject to a NOD, how soon are they going to lose the house? How soon do they need cash?

3. How long have they been trying to sell? Why do they think they haven't sold it yet?

4. Ask how much cash do they need at closing to get on with their lives?

5. Ask what they will do if they don't get that much?

6. Ask what will happen if they can't stop the foreclosure?

7. Ask how much cash do they need at closing to get on with their lives?

8. Ask what they have been offered so far?

9. Ask about the existing liens, how much do they owe?

10. Ask if there are any liens besides the mortgages on the property?

11. Ask about their taxes? (Property taxes will have to be paid. Has the IRS filed a lien? If so what do they owe the IRS?)

12. Ask what will happen if they can't stop the foreclosure?

13.

14.

15.

16. Ask if you gave (get) them a little more than their last amount (name a dollar amount) would they sell you the property?

17.

18.

19.

20.

21. * Fill in the option (listing) form (your personal information should already be on the form).[....] Don't discuss what you're doing just write up the offer (listing)! No matter what happens you are going to leave them a copy of your offer, with the cash listed along with your name and phone number.

22. ... Net Offers" is another article in "A Baker's Dozen / A Real Estate Anthology" and discussed in "One House..." and "Flipping..."

23. Explain that you'll have to talk with their lender and have them sign a permission letter letting the lender talk to you. (This letter should be attached to your option form.) Ask for a copy of their latest correspondence from the lender. You'll need the name, address, phone number, and account number.

24. Pass them the option (listing) to sign while you're signing the check and explaining that this is theirs to spend today regardless. Ask about getting contractors thru the house. If there is any hesitation ...

25. Get out of there! Once you've got the deal any excess talking can only cause you trouble.

26.* Call your title company order a "preliminary title report and property profile," order this immediately! Pull your car over as soon as you're out of sight of the house!

27. Contact the lender, you'll have to fax them the permission letter before they can talk to you, do so. Get the details on how to bring the loan up to date and a break down on the charges due. Remember you are trying to help the home owner never say you're buying the house!

28. Do the same with any other lien holders.

29. Determine who stands to lose money or who has to pay good money to protect their interest in this property.

30. You must come to terms with everyone who can make a claim against the property before you are committed to anyone!

No one has any reason to negotiate with you (your client)if you've have already cured the problems that outranked them! The same secondary lenders that may be willing to waive accrued fees and interest, possibly even discount their principal balance when facing a superior NOD want every dime the moment you've cured the problem! If you hope to deal you've got to do it while the problem exist and you've got to get it in writing!

Keep in mind the only way you're going to negotiate anything is if you can improve the other person's position! FHA lenders are not going to lose money on a foreclosure, they are not going to give you any thing. Lenders with PMI, insurance are not going to lose as much as you might expect. Superior liens aren't going to lose money when a subsequent lien forecloses. Don't waste your time trying to negotiate property taxes they are in first position, on the other hand the IRS liens come in as they were filed, (like everything except property taxes) they can and will negotiate.

 

31. Make sure you have all agreements in writing and signed! (Faxed copies are fine, if they were signed!)

32. .... Schedule a closing time.

33.* Meet with your escrow officer and have them close the loan. Yes, I do close my own deals when taking the property "subject to," but I've been doing this for thirty-six years. You're going to need title insurance when you sell the property. There is no better way to be sure that your title will be insurable than to have an escrow officer do your closing.

There is a list of exhibits you'll need to get at closing in "Flipping For Fun And Profit" you'll need to provide your requirements to your escrow officer. It's rare that the escrow office will know much about "flipping", their job is to make sure you get a marketable title. Spend the money normally only $100.00 to $300.00. If you have to go back to the seller after the closing, you're going to have to pay!

(...)

(You're also going to discuss "mechanics and suppliers liens" with your escrow officer. You're going to want to sell the house as soon as possible if you don't have the proper paperwork from contractors and suppliers you may have to wait out a 30 to 180 day filing period before you can get title insurance on the property. Do it right!)

34.

35.

36.

37. Don't spend your profits until your buyers check clears!

* Let no guru mislead you! You are going to need a real, real estate education or you are going to need to hire someone with one!

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That's it. Save your surprised looks for when you find couples doing what couples do in a vacant house! They didn't tell me is know excuse for you not knowing! Knowledge is power whether you're the listing or buyer's agent. One last unfortunate note: Never trust an unknown agent's information.

Now go list a house!

Bill

William J Archambault Jr

The Real Estate Investment Institute

By TwitterButtons.com

Allowed and allowable!

Unquestionable and proveable!

Accepted and acceptable!

Common and rare!

Good and great!

Educated and knowledgeable!

Many among us will realize that "allowed and allowable" are terms most commonly applied to tax law. Allowed is based on statute, the law as written. Allowable is based on case law, the record of the courts decisions interpreting the law.

If the statutes say some thing is legal, that's unquestionable, that's accepted, that's common, that's good, it doesn't meant that any thing else is illegal!

It's hard to argue with the inexperienced that there is any thing wrong with sticking to the "allowed," "the letter of the law!" I'm an ultra conservative, but I believe in the whole body of the law, the statues and the relevant case law! My clients, my students, deserve the benefits of the whole body of the law!

The point in question, where is the line between practicing real estate and practicing law? I'm not a lawyer, when I went to law school it was to visit our daughter, not to study. I'm not a CPA, I've had one class in accounting. I do have a lot of experience and training in REAL ESTATE! I have always been my client's fiduciary, my client's advocate and as such I provide my advice, my opinion and my knowledge to my clients. That this advice deals in real estate law, contract law, and tax law is unquestionable. But, it's always been incidental to my real estate or mortgage practice. When I teach, write or council it's to train real estate practitioners.

I don't supply answers directly, I ask the questions! I do provide projections, analyses, contracts both standardized and created as necessary, that's real estate! I protect my license and my client in that order, to the full extent of my training and ability. My services are legally allowable, proveable, acceptable, rare, great, and knowledgeable! Which of your clients deserves less!

You're not here to replace the attorney or CPA your job is to conduct and orchestrate the transaction! Now take your wand and lead!

Bill

William J Archambault Jr

The Real Estate Investment Institute

Please see: Michael Clarkson's though provoking article: Realtors®/Brokers - NEWS FLASH !!!! YOU ARE NOT ATTORNEYS!!!!! And Jon Zolsky's response: I Refuse To Shut Up. I Refuse To Be A Robot When some one of Michael's high compatance misunderstands the question of where the line is we have a problem! I highly respect Michael and recommend you subscribe to both his and Jon's bloggs, I do!

By TwitterButtons.com

Who would imagine so much of their life frustrations could be summed up in one word?

Who would imagine so much could be explained with just one word?

My Mother, all my teachers, my professors, my employers, me editors (truth is I never did have an editor, I worked directly for the publisher, I had a designated speller!) And, even my wife. Never knew so much of me could be summed up in one word!

Cacography: bad hand writing and poor spelling! Just like it said on so many report cards!

Bill

William J Archambault Jr

By TwitterButtons.com

Brenda and I were suppose to go to Houston's Theater Under The Stars Friday night to see "Twelfth Night" but it rained earlier and look like it would again. So I was reluctantly resoled to going to going Saturday night to some other long since forgotten Shaksperinan lore. When much to my surprise Brenda came up with tickets to Sean Hannity's Freedom Concert. What a great evening!

Lee Greenwood, Charlie Daniels, Michael W Smith and Billy Ray Cyres. But, for us the night is not about country music, not even about patriotism it was about the crowd!

We had been to the "Theater Under The Stars" to watch Lauretta Switt from MASH fame in "42st Street" it was a pleasant evening until we were leaving and suddenly the crowd turned vulgar. Very vulgar with what seemed like variations on just two adjectives repeated loudly over and over again. All this from a group dressed like adults not street people. Not derelicts.

It's the behavior of anonymous masses that destroys a great evening. It's the behavior of Hannity's audiences that restores my faith. To be in a crowd of thousands where the most dominate four letter words are "love" and "vote" is such a pleasant change. To be in such a group with no personal ulterior motive, was so pleasant.

We had a similar great time two years ago in San Diego see: Humble Patriotism

It was a great evening surrounded by great people.

Bill

 

By TwitterButtons.com