Isn’t it crazy how there’s seemingly just no end to the amount of info you can find on the interwebs today?
I mean, even our own tiny little corner of the real estate investing net, it’s like an ever-daunting, ever-expanding ocean of endless information.
There’s so much great stuff out there - and more all the time - the real problem isn’t lack of info and resources, but more how to find it all and keep it all organized so it’s useful to you and not just another time-sucker - or just another handy link, quickly misplaced in the “lost and found drawer” of your computer.
Wouldn’t it be nice if someone could just do us all the favor of compiling a big, fat list of juicy REI resources …say…567 or so …and then handed it all to us on a nice silver platter?
And maybe for…say……FREE?
Done.
Meet REI Power Links…
It’s the brainchild of my Hawaiian friend and birddog-savvy investor Andy Proper. And quite simply, it rocks.
Here’s my 7 minute review that gives you the full scoop in a nutshell, including how it’s organized and “the catch”…
But the bottom line is, it’s completely free and you NEED to have it in your tool chest. Seriously. Just go get it. It’s yours, no strings attached.
Enjoy,
…jp
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567 Top Real Estate Investing Websites
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When most people hear the word “bankruptcy,” the first reactions are intimidation and avoidance. The fact that it’s a legal process involving the Federal government pretty much explains both reactions.
From our informal surveys of many investor groups across the country, most real estate investors react precisely the same way … largely due to a lack of education and experience.
However, there are so many opportunities for real estate investors in the bankruptcy niche, that my partner, Mark Klee, and I have made it our personal specialty to remove the fear commonly associated with bankruptcies.
And when you consider the current economic climate, it’s only common sense to realize that even though the economy is in a recession, the bankruptcy market is exploding … heck, it’s downright ”recession-proof!”
Let’s address the some most common myths and misconceptions…
Myth #1: “Bankruptcies are too legally complicated for the average real estate investor…”
Truth: That’s ridiculous.
Do you need to be familiar with bankruptcy terminology and the general process of how a bankruptcy proceeds? Sure. Do you need to understand the basic differences between a Chapter 7 and a Chapter 13? Of course. Do you need to know the responsibilities and perspective of the Trustee? You bet.
But you can easily learn all of these details and more by simply finding the right materials/seminar and being open to grasping a small pool of information.
Myth #2: “You can’t buy a house in a bankruptcy…”
Truth: Hogwash! Sure you can! It does require an extra step compared to buying a house that’s not in a bankruptcy, but it’s more than worth your effort.
The fact of the matter is it’s really a pretty simple process to get educated enough about the bankruptcy process and terminology to be able to speak intelligently with sellers. And the paperwork required to purchase a home in a Chapter 7 or a Chapter 13 is also very basic.
- The magic piece of paper you need from the Trustee in a Chapter 7 case is called a “Notice of Abandonment.”
- If it’s a Chapter 13, you need to file a “Motion for the Sale of Real Estate.”
Myth #3: “Only attorneys can deal with the Bankruptcy Court or a Bankruptcy Trustee…”
Truth: No way!
The Court system is designed for “the people.” It’s also where many attorneys earn their living. If you’re filing for bankruptcy, we certainly recommend that you do so through an attorney, but if you’re just trying to purchase a home involved in bankruptcy, you can do it on your own.
Further, the Trustee is an officer of the court whose responsibility is to protect both creditors and debtors. As a potential purchaser of a property under the control of a Trustee, you can certainly contact that Trustee and walk through the process.
Myth #4: “If there’s any equity in a house, the Court won’t allow me to buy it…”
Truth: Indeed, one of the Court’s responsibilities is to evaluate the debtor’s estate and see how as many creditors as possible can be paid.
But there’s a big difference between a house having enough equity for the Court/Trustee to want to go to the trouble to sell it and a house having enough equity for a real estate investor to find a good deal.
For example:
(a) The Court will have to factor in a Homestead Exemption payment to the debtor (a real estate investor doesn’t have to do that).
(b) The Court will also have to factor in “yellow pages” prices for any necessary repairs (most investors have less expensive resources).
(c) The Court will be selling the house through a full-service realtor, who will be charging a 6% or 7% commission, whereas an investor may use a “flat-fee” listing service or want to keep the house as a rental.
(d) The Court doesn’t have the opportunity to negotiate a “short-sale” with the lender(s) and we all know that investors can make TONS of money in the “short-sale” market.
Myth #5: “There are no pretty houses in bankruptcy…”
Truth: People with nice, expensive houses get in financial trouble just like folks with more modest or “ugly” houses. In fact, some of the biggest deals Mark and I have done have been with VERY nice houses in VERY nice neighborhoods! We’ve each had the opportunity to do “short-sale” purchases on homes in the $300,000 - $500,000 range.
Myth #6: “There are no investing opportunities for houses in bankruptcy, because mortgage balances are too high…”
Truth: This issue was dealt with briefly in Myth #4, but there’s more to know. In fact, because of the circumstances leading most debtors to file bankruptcy, there may be MORE opportunities in bankruptcies than elsewhere. Five reasons for the many opportunities are:
(a) Most investors are afraid to deal with a bankruptcy or don’t know how. So there is less competition. Where there’s less competition, there’s more opportunity!
(b) Speaking of opportunity - right now in 2009 the American Bankruptcy Institute projects bankruptcy filings will increase by 30-50% over 2008. That translates into an estimated 1.4 million new bankruptcy filings in 2009. In 2008 bankruptcies increased 30% over 2007. How many niche markets do you know with this kind of year to year growth … or should we say explosion?
(c) We’ve heard all sorts of figures, but (conservatively) 70 - 80% of all Chapter 13 payment plans fail, which leads to extremely motivated sellers!
(d) Many debtors were facing foreclosure when they filed bankruptcy so when they realize they may not make it through the bankruptcy, they often realize they have run out of options and they MUST sell their house to avoid foreclosure.
(e) Mortgage companies that loaned money to these debtors have really been drug through the legal system - foreclosure, bankruptcy, then back to foreclosure. So, the mortgage companies can also be extremely motivated to negotiate a “short-sale” so they don’t end up owning the house via foreclosure.
These are just some of the many myths surrounding bankruptcies and the many unknown opportunities for real estate investors. A little education can go a long way if you can see the incredible profits available in this niche market!
About Caryn McKinney:
Caryn McKinney partnered with Mark Klee in 2002 to create PostBankruptcyReport.com. At the request of their subscribers and others, they have now developed quality training materials. Their simplified and detailed information includes everything you need to know as a real estate investor wanting to purchase homes in the bankruptcy niche market.
Thoughts? Question? Comment!
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Top Six Myths of Investing in Bankruptcy Real Estate
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]]>Controversy: Should Real Estate Investors Kill Bill? (HR 1728)
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OK here we go, folks. Hang onto your hats…
A couple of days ago I got word from Peter Conti of an ominous piece of legislation that just flew through the House and is now apparently being fast tracked in the Senate.
In summary Peter warned this bill threatens to not only severely limit the way creative real estate investors do business, but even more importantly is an inexcusable infringement of the property rights of all Americans.
As a result I posted this: “STOP H.R. 1728: Anti-Property Owner, Anti-America” (And if you didn’t catch it yet, that’ s probably the best place to start before continuing here.)
Basically this bill focuses upon reforming predatory lending practices by imposing a stringent list of requirements on mortgage brokers, servicers, appraisers, etc. Unfortunately, owner financing gets caught up in the broad strokes, and the impact could be devastating.
So essentially anyone who sells more than one property every three years via owner financing will be in violation unless they are a ‘licensed mortgage originator’.
Controversy Arises Within REI…
What’s interesting is that a number of our industry leaders seem divided on whether this pending bill is a big or small issue, and more importantly whether we should be up in arms over it or not even worry about it much.
Late yesterday (6/11/09) Attorney Bill Bronchick posted this retort, first to a popular online forum, then emailing it out en mass:
From: Bill Bronchick
Re: The truth on House Bill 1787I’ve received a number of emails from people claiming that House Bill 1787 will eliminate owner financed deals to once every 36 months. This is patently FALSE. Become an informed citizen and read it yourself: http://www.govtrack.us/congress/bill.xpd?bill=h111-1728
This bill aims to include owner financed deals within the definition of “Truth in Lending” law. I’ve always instructed in my courses and seminars that you should comply with Truth in Lending, which requires just a few simple disclosures.
The bill also would, in theory, make a person who sells a home a “mortgage originator”. This would require compliance with RESPA, which I’ve always instructed in my courses and seminars that you should comply with anyway.
Finally, the bill would require that you actually qualify your buyer. It prohibits, “lending without due regard of the mortgagor’s ability to repay”. Duh! Only a fool would put someone in an owner financed house deal without checking their income, debt and credit.
All in all, there’s nothing to worry about here for investors, it’s just a matter of compliance with some federal rules and a couple of disclosures. Any comments or questions are welcome.
However Other Industry Leaders Strongly Disagree…
Late yesterday, I was invited to attend an impromptu teleconference on this issue, lead by:
- Peter Conti (Longstanding Industry Leader)
- Vena Jones Cox (Industry Leader, Radio Host and RE Goddess)
- Jeff Schiller (Attorney)
- Clint Hinman (Editor, The Noteworthy Newsletter and 15-year veteran of the seller-financed industry)
- Charles Tassell (Lobbyist for National REIA)
Everyone leading this call stated unequivocally their stance that it would be foolhearty to view this bill as “no big deal” to the REI industry or to private property rights.
They also outlined a specific strategy for effectively fighting this bad legislation, including how to be heard and not ignored on this issue by the legislative powers that be.
Listen here 
Download audio file (06-09_HR1728.mp3)
Or download the MP3 here…
If possible, I urge anyone interested to listen to the entire conference call. It’s only about half an hour long.
The Noteworthy Newsletter is taking it seriously enough to have put up HR1728.org in an effort to unify the REI front online against the bill. They’re view is definitely that this bill is a big problem and that it must be dealt with. As they put it…
Just as egregious is the loss of private property rights. The government should have no power to legislate how property owners dispense of their properties. If a property owner is willing to finance the sale of a property to a buyer, whom is the government trying to protect by making the transaction illegal? States already have usury laws and servicing requirements that protect the purchasers.
If passed by the Senate, this legislation will:
1. Severely limit the number of property owners who can legally owner finance the sale of their properties.
2. Make violators out of everyday Americans who, unaware they are breaking the law, are merely trying to sell their properties and/or offering financing to prospective homeowners who cannot obtain conventional financing.
3. Require obscene amounts of due diligence on the part of note investors to make sure all facets of this legislation have been complied with.
4. Give prospective homeowners even fewer options to realize the American Dream of homeownership.
5. Cost the U.S. taxpayers over $400 million dollars to enforce.
There’s also been interesting “behind the scenes” flurry of emails back and forth over the last few days among REI leaders, with some taking one stance and others taking the other.
Where do I stand?
For what it’s worth, my opinion is still that this is a big issue. I agree with the Noteworthy assessment and Uma Thurman’s sentiment quoted above. I believe this bill should be KILLED as it’s written right now.
Even if it doesn’t directly effect you now, it’s an inappropriate, needless attack on private property owner rights in this country. The strokes they’re painting with here are needlessly broad and personally I’m asking real estate investors to take it seriously and act against it.
But what do you think? Which side are you on? Chime in below and tell us what you think…
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Controversy: Should Real Estate Investors Kill Bill? (HR 1728)
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Hey, guys!
Yep, that’s right, it’s time for another FREE REI form and video! Yay!
This one comes from my buddy and short sale sherpa Shaun - and actually I had to get special permission to use it, as it comes right out of the forms videos included in his full Short Sale Wealth Academy home study course.
This form is very similar in function to my Affidavit of Equitable Interest, but does have a few differences. The video below explains it.
Key Resources:
- If you haven’t already picked up my goody bag full of other forms, you can get ‘em now at FreeREIforms.com…
- I want you to know Shaun is co-teaching two phenomenal events next week you might want to check out. They’re both extremely fairly priced and chocked full of great education:
>> REI 2009: What’s Working Now…
>> Who Wants to be a Lifeonaire?…
And now without further ado, please enjoy the free video…
Please share your comments on this below!…
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The Memorandum of Agreement Explained (Free)
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The U.S. Senate is considering a bill that would severely limit the way you do business as a creative real estate investor and, more importantly, is an inexcusable infringement of the property rights of all Americans.
HR 1728, which you can view in its entirety here, deals with a plethora of mortgage-related issues, mostly around limited terms and fees on residential loans.
But the heinous piece of the legislation is in section 101(3)(e), which defines the affected principals as:
(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 1 property in any 36-month period, provided that such loan:
(i) is fully amortizing;
(ii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;
(iii) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and
(iv) meets any other criteria the Federal banking agencies may prescribe;
Yeah, I know, confusing. But here’s what it says:
You are NOT subject to the law as long as you DON’T sell more than 1 property with owner financing every 3 years!
Or, to put it another way, you ARE subject to the limitations of the law if you DO sell more than one property every 3 years via a land contract, owner-held mortgage or wrap-around mortgage… and who knows if they’ll define lease/options as owner financing, too?
So what does it mean to be “subject to the law”?
Well, at the very least, it means that you will have to comply with a long, confusing, and penalty-filled piece of national legislation.
Here are the types of transactions that you would be restricted from doing more than once every 36 months:
- Selling YOUR OWN HOME using a land contract or owner-held mortgage so that you can get a quicker sale, higher sale price, or better rate of interest than is available in other investments
- Carrying back owner-held second mortgages on investment properties that you sell
- Doing any kind of installment sale on residential properties including homes, condos, mobile homes, and even raw land that is zoned residential
Yes, there will undoubtedly by ways to “get around it” - some have suggested that getting a mortgage broker’s license and then learning and following the vast new set of regulations would circumvent the “problem”.
But the bottom line is this:
This law has to be stopped and it has to be stopped NOW.
Here’s why:
- Congress is trying to regulate the wrong thing.The deals we make are not “loans” - they don’t involve the transfer of money, or points or closing costs or adjustable rates or any of the other things that caused the mortgage crisis to begin with. They are INSTALLMENT SALES.We don’t give money to the “borrower” and wait for it to be paid back: we give a property to the borrower and wait for it to be paid off. Regulating this will have no effect on the foreclosure crisis.
- It is a completely unacceptable infringement on private property rights.When I own a piece of property and I find a ready, willing, and able purchaser, I should be able to control the sale of that property within the existing laws of my state, which already regulate the interest rate that I am able to charge and some of the terms of the sale.The government does not have the right to tell us that we need special licensing to sell our own properties; nor do they have the right to further regulate the terms under which we can sell or burden small investors with a new set of rules that we can’t comply with.
Not only will this new law, if passed as written, effectively choke off owner financing as an exit strategy for you, it will also take away housing choice for your buyers. The millions of Americans who’ve been through foreclosure in the last 3 years can’t buy a house in any way OTHER THAN to negotiate owner financing with a seller - and HR 1728 would greatly reduce the number of properties available in this way.
Millions of potential home owners who would otherwise be able to re-start the process of paying off a home, and get the tax advantages of ownership, will be reduced to renting until they are able to qualify for bank financing.
Here’s What to Do Right Now:
This bill has already passed the house and is waiting for Senate approval. Please contact your senator via email and snail mail to let him know that this law MUST NOT PASS in its current form. You can get your senator’s contact information here:
http://www.senate.gov/general/contact_information/senators_cfm.cfm
As always in cases like this, you have an automatic handicap to overcome… the fact that you are a real estate investor and are therefore viewed as part of the problem. So when you write, don’t emphasize the nature of your business, just that you and your buyers would be greatly aversely affected by the new law.
We need THOUSANDS of these communications to go out in the next few days to have a CHANCE of stopping this in its tracks. So whether you’re a new or experienced investor, PLEASE take the time right now to write your elected representative!
Here are some sample letters or emails…
Dear Senator [name]; My name is [insert name here] and I am a life-long resident of [insert city name here].
I am writing you to encourage you to vote NO on HR 1728, the “Mortgage Reform and Anti-Predatory Lending Act”.
While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of [Ohioans] and the ability of home owners to sell properties in this already-slow market.
As a real estate broker, I have seen several dozen cases in the past year of home sellers and buyers coming to an agreement for an installment sale on a property that the owner desperately needed to sell (often to avoid foreclosure) and the buyer desperately wanted to buy, but could not raise the downpayment needed for conventional financing.
In all cases, these sales turned out to be win-win deals for the buyer and seller; the seller was able to get rid of an unwanted property to a buyer who loved it, and the buyer was able to get his new home at an affordable payment and interest rates with none of the usual costs (points, application fees etc) inherent in more conventional mortgage transactions.
In [Ohio], these transactions are already regulated by state law: a low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.
In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the “owner financing” market that is the only way that many sellers can sell and many buyers can buy right now.
PLEASE DO NOT LET THIS RESTRICTION ON PRIVATE PROPERTY RIGHTS PASS THE SENATE. It is unnecessary to stop private buyers and sellers from transacting business that is beneficial to both of them-they are not the problem that the bill seeks to solve. HR 1728 would be extremely harmful to thousands of your constituents.
It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.
Thank you for your consideration;
Insert Name
Licensed Real Estate Broker license #
Phone #
email
Dear Senator [name]; My name is [insert name here] and I am a life-long resident of [insert city name here].
I am writing you to encourage you to vote NO on HR 1728, the “Mortgage Reform and Anti-Predatory Lending Act”.
While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of [Ohioans] and the ability of home owners to sell properties in this already-slow market.
As a professional housing provider, I sell several houses each year to home buyers on installment sale [or, if you have not purchased a property, add here: “I had planned to sell several houses this year on installment sale]-a practice that would become impossible under this law in its current form.
I find that in today’s slow market, the best way for me to help buyers who desperately want to become homeowners, but who cannot raise the downpayment or meet the other terms needed for conventional financing, is to allow them to make payments directly to me.
These sales are win-win deals for both the buyer and myself; I am able to turn over homes that I’ve bought and rehabbed (often from foreclosures) to buyers who love and can afford them, and the buyer can get his new home at an affordable payment and interest rates with none of the usual costs (points, application fees etc) inherent in more conventional mortgage transactions.
In [Ohio], these transactions are already regulated by state law: a low maximum interest rate is already in place, and both the buyer and seller are protected by other regulations at the state level.
Without the ability to sell homes in this way, I will no longer be able to invest in and renovate any of the tens of thousands of vacant, ugly houses placed on the market by the foreclosure crisis, and my small-but-beneficial business will literally be in ruins. Perhaps more importantly, the homeowner-buyers that I serve will be forced to rent rather than moving toward the American dream of home ownership.
In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the “owner financing” market that is the only way that many sellers can sell and many buyers can buy right now.
PLEASE DO NOT LET THIS RESTRICTION ON PRIVATE PROPERTY RIGHTS PASS THE SENATE. It is unnecessary to stop private buyers and sellers from transacting business that is beneficial to both of them-they are not the problem that the bill seeks to solve. HR 1728 would be extremely harmful to thousands of your constituents.
It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.
Thank you for your consideration;
Insert Name
Perfect Properties, inc.
Phone number
email
Dear Senator [name]; My name is [insert name here] and I am a life-long resident of [insert city name here].
I am writing you to encourage you to vote NO on HR 1728, the “Mortgage Reform and Anti-Predatory Lending Act”.
While many of the provisions of the act are positive steps toward mortgage reform, the inclusion of private owners in the act (see section 101(3)(e)) will enormously reduce the housing choice of [Ohioans] and the ability of home owners to sell properties in this already-slow market.
In the past year, I have purchased and renovated several homes-made possible only because the sellers of these homes were able to sell to me using owner financing in an unrestricted way.
For many of these property owners, seller financing was the only way to unburden themselves of an unwanted property that, in some cases, was headed toward foreclosure before I purchased it.
Without this ability, I can not continue to buy and renovate properties in the neighborhoods that so need me and my colleagues to invest our time, energy, and money in rehabbing properties. Bank financing is not an option for these properties because of the condition; only financing carried by the sellers will suffice.
Section 101(3)(e) would keep my sellers from utilizing this method of getting rid of unwanted properties in today’s market, should they have more than 1 to sell.
In defense of private property rights, owners should be exempted from the burdensome and unnecessary rules that this law foists upon them. In its current form, it would all but shut off the “owner financing” market that is the only way that many sellers can sell and many buyers can buy right now.
PLEASE DO NOT LET THIS RESTRICTION ON PRIVATE PROPERTY RIGHTS PASS THE SENATE. It is unnecessary to stop private buyers and sellers from transacting business that is beneficial to both of them-they are not the problem that the bill seeks to solve. HR 1728 would be extremely harmful to thousands of your constituents.
It will exacerbate the problem OF foreclosure, as fewer sellers will be able to sell their homes to avoid it, and CAUSED BY foreclosure, as fewer buyers who have recently experienced foreclosure will be able to re-start the process of home ownership inexpensively and easily by negotiating owner financing.
Thank you for your consideration;
Insert Name
Perfect Properties, inc.
Phone number
email
Thanks to Peter Conti for article content and to Andy Proper and Sam Bell for bringing this to my attention.
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STOP H.R. 1728: Anti-Property Owner, Anti-America
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And seriously, folks. This was truly an insider’s look at one how one of our industry’s most respected voices is engaging today’s market very profitably.
Through sharing, photos and Q&A he walked us through his most recent flip deal, including exactly what he’s doing differently now that’s working so well, and why.
And one unexpected bonus…he was actually closing DURING our video conference. I mean, literally, he put us on hold a couple of times so he could interact with the title company and correct the HUD. 
Points of Interest with this Case Study:
- This was an unscripted, off-the-cuff walk-through of Steve’s most recent flip deal
- It was a light rehab sold below market value, with a full price offer in one day, but eventually sold to the eighth offer in under 60 days (yeah, in this market)
- Estimated profit: $32,000 to $33,000-ish
- This deal actively demonstrates a number of current-market tactics Steve’s aggressively using to get his houses sold and get paid quickly while others around him are struggling or going under.
- The closing was literally taking place during this case study (Steve had to get off the phone a couple of times to interact with the title company)
- We talk about how he acquired and funded the deal (w/no monthly payments) extent of “sprucing” that was necessary and why, staging (which made a HUGE difference) and how/why he liquidated it so fast.
- This is solid, real-world, practical stuff, folks. Learn and enjoy!
3 Easy Steps…
Step 1: Enjoy the full case study…
Step 2: Check Out “REI 2009: What’s Working Now” (Opens in New Window)
Step 3: Please share a comment below!…
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New Case Study: Steve Cook, Nothing Held Back
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I’m wholesaling a couple of properties and a real estate agent brought me an investor/buyer for the properties. The Agent says he needs to get a commission but I’m just assigning the contract to his investor/buyer.
Who pays this guy his commission? Is it legal for me to pay it? He wants the commission on the full amount which includes my assignment fee. I’m kind of lost here …any thoughts?
Thanks, Robin
Hi, Robin – great question.
Without knowing a little more about the situation and the relationships, I’ll have to make a few assumptions in my answer.
Also, please don’t take this as legal advice. You know, consult your own attorney and all that.
First let’s deal with what’s legal…
If the agent in this situation has a legal contract establishing an agency relationship with someone, then any obligation for commission due would belong to that person – the person who entered into an agency relationship.
To be clear, if no agency relationship is clearly established, then no commission is legally obligated by any party.
(Interestingly it’s for this reason that being a “buyer’s agent” is inherently riskier than being a selling agent. If the seller doesn’t voluntarily agree to “co-op” and pay the agent a commission, then he either has to try and collect it from his client (the buyer) or he just gets stiffed – yikes!)
From what you’ve said, it sounds like any agency relationship that may exist is between the agent and your investor/buyer. So any legal obligation for commission due should be between your buyer and his agent only.
Now let’s look at what’s “Kosher”…
The agent, if he’s bringing a legitimate buyer to the table who you wouldn’t have had otherwise, deserves a commission in my opinion.
Someone (be it the buyer, the seller, you, or some combination thereof) should ensure he’s fairly compensated…and in my opinion 3% of whatever the buyer’s paying for the property is a fair compensation in most cases.
So if I were you I’d first ask the homeowner if he’d be willing to pay a buyer’s agent’s commission if you can get the house sold quickly. If he says yes, then yay for you! If no, then my “Plan B” would probably be one of two things…
Option 1) Either I’d just pay the agent’s commission out of my wholesale profits,
Option 2) Or (more likely) I’d approach the buyer and explain it’s a great deal, but to make room for the agent to be fairly compensated the price would need to be adjusted enough to cover the agent’s commission. Either that, or he needs to compensate his agent himself.
Which of these two I’d take depends on a number of factors, including how badly I wanted to get the deal sold, how much money was in it, how much time I’d spent on it thus far, etc.
The main thing is to try to find a way to make the deal work where everyone’s happy…your seller’s getting his house sold, you’re buyer’s getting a fair deal, the agent is compensated for his part, and you get yours in the middle.
Understand who’s legally obligated for what. But also understand that everyone deserves to be fairly compensated when they bring value to the table - and agents can be some of your best friends in this business! It only makes good sense to do give them every good reason to keep bringing you great deals and/or great buyers for your deals.
Heck, some wholesalers even go all out to over-compensate people as often as possible. I know that’s Erik and Steve’s approach. As a result, guess who’s called first when the hidden diamonds come to surface?
Make sense? Hope it helps, Robin!
PS. Please share your thoughts in the comments below…
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Wholesalers: Who Pays Your Buyer’s Agent?
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It’s kind of a “white paper” special report that lays out a workable plan for how you can use your part time real estate investing endeavors to achieve full time freedom and kick your J.O.B. to the curb in 12 months or less.
Now clearly this is just one plan - there’s more than one way to skin this cat. But I really like how methodical Steve’s approach to this is, and I think you’ll find thought provoking and inspiring at the very least.
And hey, the price is right! …
How to get it for free…
Apparently my friend Dan Auito has just released a big, honkin’ e-book that’s basically a handy compilation of over 95 real estate investing authors. While he’s offering it for what I think is a pretty reasonable price, he’s also giving away the first few chapters free for a limited time.
And included in those chapters? You guessed it…Steve’s “1 Year Job Elimination Plan”
So the deal is, you don’t have to buy anything unless you want to. Dan’s book may be great - I honestly haven’t had time to read it. But I know Dan and like him an his moustache a lot.
(…OK, that’s not really Dan…but you gotta give mad props to that guy! Dan runs a great community over at Magic Bullets and he does have a ’stache, but not nearly as crazy awesome as this one! :-),
So I suggest taking 30 secs to at least get the freebie chapters so you can read Steve’s Job Elimination Plan if nothing else.
Update: Dan’s Offer on Steve’s 1-Year Job Elimination Plan has since expired. But since Steve’s a friend of mine, he’s allowing me to continue providing you with his plan, free of charge.
Click here to download Steve Cook’s
1-Year Job Elimination Plan FREE…
My best
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FREE 1 Year Job Elimination Plan
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]]>…Good evening and welcome to the Annual Contractor Awards….
…This year’s proud nominees are…
And the Winner Is!…
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Annual Out to Lunch Contractor Awards (In Pictures ;-)
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]]>Case Study: How 2 Guys Rake In 6 Figures Quick-Flipping Houses in a Stinky Market
]]>This time it’s the systematic interrogation of a couple of guys who are currently extracting big profits out of one of the nation’s worst markets.
Meet Erik “MLS Sniper” Stark and Steve “REO Shotgun” Mills
This was a big, meaty interview, well worth hearing.
And just so you know, there’s nothing for sale inside. It’s an actual case study of how these two guys are tearing it up and bringing in 6-figure profits wholesaling in today’s arena.
Erik and Steve, Part 1…
Download audio file (04-09_erik_and_steve_pt1.mp3)
Download MP3…
Erik and Steve, Part 2…
Download audio file (04-09_erik_and_steve_pt2.mp3)
Download MP3…
One interesting point is that both of these guys are KISS Flipping members. 
Also, in case it’s helpful, I’ve pasted my own notes from our conversation below. Glance through ‘em real quick and you’ll get a pretty good snapshot of what’s inside the interview.
Cliff’s Notes by JP:
Brief history of two “Average Joes”:
- Started as bad Realtors
- Been in the game for 3 yrs
- Teamed up as partners a year ago-ish
- First deal as partners: March ‘08 (MLS find)
- First REI eduction: “Wholesaling for Quick Cash”
Currently:
- Buys and sells 7-10 deals a month on average
- Average profit range: $6k - $15k per deal
- ($40k-$100k/mo?)
Tactical:
- Make a point to PAY WELL for referrals, and get called first as a result
“As wholesalers, who are most of your buyers today?”
- Landlords
- Bargain hunting retail buyers (Wholetale)
Market Snapshot:
- Average house price for 3br/2ba 1,200sf 2car: $120k - $150k, but recently dropped to $70-$80k; retail $90k
- Rental market (lower end) houses can commonly be picked up for $5k to $15k right now.
VERY INTERESTING:
- Uncovered a unique niche recently selling to the parents of fist time homebuyers, who turn around and owner-finance it back to challenged end-buyer.
“How are you effectively selling your wholesaling services to area landlords?”
- Saving them time
- Saving them effort
- Finding better deals
2 Awesome Tips:
- The exceeding value of branding themselves locally as, “The guys who can close in 48 hours”
- The impressive impact seeing this as a “relationship business” has had on thier bottom line.
“What are your best working deal finding strategies today?”
- REOs (special broker relationships built as “the guys who can close”)
- “Mining MLS Loopholes” (I never thought of this before!)
“What’s your business overhead like?”
- Remodeling costs
- Paying bird dogs well
- Commissions
- Salary (to themselves)
“How’s your partnership structured?”
- 50/50
- Erik focuses a lot on marketing, closings, back office stuff
- Steve finds the money, negotiates deals, the “people” stuff
Noteworthy!
- “The Velocity of Money”: The value of putting it back to work as soon as it comes in.
- The Kiss of Death: Partnering with someone who’s too much like you
- Partnership Strength: Complimentary skillsets and genuine accountability
“What educational resources have had the greatest value to your business?”
- A local mentor (name not mentioned)
- Bob Norton
- Steve Cook
- Preston Ely
- Than Merrill
- Chris Daigle
- Cris Chico
Note: Only took from each guru what they felt they could apply to their current model. (i.e. never lost focus on their primary plan, but rather pulled from these guys to amplify and improve their plan)
“What advice do you have for others who want to follow a similar path?”
- Connect with local top dogs
- Get your first deal under your belt and LEARN from it
6 Profit Killing Mistakes Others Typically Make:
- Writing too much on your bandit signs
- Not ensuring others are well paid
- Trying to be a “lone wolf” and do everything yourself
- Disregarding “gatekeepers” or treating them poorly
- Don’t sweat the small fees/costs on a deal (pride themselves on taking a beating)
- Not having an ongoing hunger for knowledge
“How did you go from only 1 to 4 private lenders in an 8 month period?”
- Stumbled upon their first private lender b/c they were aggressive
- Some of their best lenders are their buyers
- Story of how they creatively financed a small apt complex with their buyer
- It’s not a secret formula, it’s taking action and money magnetism
My own private money-getting tips:
- Farming REIA connections
- Closing attorney’s client network
“How should wholesalers find buyers in this market?”
- Reverse MLS search for cash buyers in last 7 days
- Call every “for rent” sign in the n’hood
Hope you enjoyed! Please comment below!
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Case Study: How 2 Guys Rake In 6 Figures Quick-Flipping Houses in a Stinky Market