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Once I sign the contract its bye bye title in my name, short sale done, foreclosure averted with no tax liability- DONE. If these guys are toying with the system well...
Bottom line: believe me, no one else is going to buy this home at 165k- NOT NO ONE.
I left these 2 statements because I think they speak for themselves.
1-It sounds like they told you that you're giving the title to them and they find a 3rd party to sell it to. This isn't entirely accurate if it's what the led you believe. You own the home until the bank approves the short sale. You can't just sign the title over to an investor and think the problem goes away. I'm guessing from what you're saying they take over, put a rent to own in there, collect the rent and a nonrefundable deposit, and it eventually goes into foreclosure. Once it's foreclosed on, then renter is hung out to dry and you're left holding the bag while they've collected rent and a deposit they keep. They'll be only one that comes out ahead. Google sandwich lease and see if you find anything. This is probably the reason why they won't work with agents btw. It reduces the probability of them getting it done. Agents are less likely to be tricked than a desperate seller grasping at straws. Seriously, you can't just "quit claim" a deed over to someone else with an existing mortgage. The mortgage has to be paid off first, hence the reason you're doing a short sale in the first place and why you need bank approval.
2-Why in the heck would they be willing to pay 165k for it as investor if everybody else thinks it's too much money, including yourself? If they are as good an investor as they make themselves out to be I wouldn't think they'd not overpay. Red flag #2.
I'm thinking some of the other agents on this thread nailed it already but I couldn't help but throw in my 2 cents.
I've been reading all the responses, and it boggles my mind that no one has mentioned the obvious. If the house was listed at $168k and there were NO offers, meaning the general market believed the house was not worth $168k, why in the world would "Investors" offer $165k?
If they are true investors, they want some equity in a house. Most live with their heads in the clouds wanting 30%. Some settle for 20%. I've never heard of an investor buying a house at market value as there is no money for them to make. If you can't sell it at $168k, how can they sell it and make money? Even if they plan on renting it out for a couple of years, it doesn't make sense to an investors' calculations.
Wake up. PLUS, you said the investor doesn't work with an agent, so what kind of offer did he write up? Was it on a legal document? Was it on an OfficeMax contract? Who's going to represent you when you fire your agent and your agent/broker comes after you for commissions?
FalconheadWest- their offer is on the standard 8 page CA RE purchase agreement contract.
Silverfall- Thank you, especially as a Realtor, for being the only one who seems to weigh the pro's and cons- everyone else here goes gung ho on the negative, ready to prove these guys guilty before a fair trial.
And perhaps you're right- I'm having trouble representing all the facts, as I'm emotionally distraught, leery and at the same time ready to jump- I'm panicked.
Let me try further clarification. The investors have already stated they're agreeing to the 165k price FOR NOW, since the lender currently won't budge and so doing this opens the door to a closing. Once there, as someone mentioned earlier, they then wrangle with bank and attempt to get it much cheaper. How they do this I'm not exactly sure, and the rep basically said this is where their and their lawyer's expertise comes in. All the while they assured me this stalls foreclosure and I get to stay in the house. In fact, the only written-in purchase contract stipulation was that I vacate only after the close of escrow, giving me 45 days from that date.
When I asked why they buy homes in this way and not wait for the foreclosure auction or REO status, again the rep wasn't really sure but said something about that it easier to buy this way, less fees, taxes, red tape, etc. Someone posted earlier mentioning the same thing, saying the buyer has more leverage or control at this stage.
So I don't see the harm in signing a standard purchase agreement, and watching where this this thing goes. My realtor still seems antsy, but he has agreed to be paid his commission out of my pocket, and to be there to review any documents and answer any questions I might have through the process.
I WILL NOT sign any quit-claim deeds or any other documents that could relinquish my title and still leave me on the hook for the loans. Taking the advice of other posters, I will have an attorney review my situation before going there, if it happens at all.
Also, investors don't care if I don't officially fire my Realtor. I at first thought it was a necessity (hence the thread title), but apparently it isn't. The rep said it's what most do, and that he was only trying to save me $. Maybe it was the way I represented my agent as being one without experience in these matters, along with not having done a heck of alot with the listing, 6 months passing by, etc. So now that my agent has agreed to "step aside" and allow the investors to negotiate, and without his name anywhere in the documents, this is all that the investors really wanted.
Also, investors don't care if I don't officially fire my Realtor. I at first thought it was a necessity (hence the thread title), but apparently it isn't. The rep said it's what most do, and that he was only trying to save me $. Maybe it was the way I represented my agent as being one without experience in these matters, along with not having done a heck of alot with the listing, 6 months passing by, etc. So now that my agent has agreed to "step aside" and allow the investors to negotiate, and without his name anywhere in the documents, this is all that the investors really wanted.
Okay that is weird. The investment clubs here ask the agent to step out of the negotiation, meaning that the seller signs an authorization for their team to talk directly to the bank. The agent steps aside for the negotiation with the bank part. They are still listed on the forms as representation for the seller and are involved behind the scenes so to speak. I think CA is the same as OR that any agent representation has to be part of the offer. So if your agent isn't on that form, then you have no representation and you actually fired your agent.
DMenscha...help me here. Does CA work like OR in that regard?
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by Silverfall
Okay that is weird. The investment clubs here ask the agent to step out of the negotiation, meaning that the seller signs an authorization for their team to talk directly to the bank. The agent steps aside for the negotiation with the bank part. They are still listed on the forms as representation for the seller and are involved behind the scenes so to speak. I think CA is the same as OR that any agent representation has to be part of the offer. So if your agent isn't on that form, then you have no representation and you actually fired your agent.
DMenscha...help me here. Does CA work like OR in that regard?
Yes CA and OR are the same. However, almost nothing else seems right in this whole scenario.
Yes CA and OR are the same. However, almost nothing else seems right in this whole scenario.
No disagreement there. It's just hard to know if the investors are legit and the OP is not understanding what they are saying, or if they are truly shady. The OP is clearly hearing what they want to hear so what is really happening is being filtered through that bias. I am concerned that the OP clearly has no idea what they are talking about and now they don't appear to have any representation.
The investors aren't going to offer $165,000. They will probably offer $155,000 which is why they are telling the seller he needs to pay the commission out of his own pocket. They need to keep the net to the lender as close as possible. I bet they are going to try and wholesale it or do a fast flip. Pay cash get the $155,000 price okayed by the bank for the short and then flip it fast as a regular sale.
I have no idea if the house has condition issues that can be corrected quickly to make it more marketable. I also know that buyers here steer clear of short sales as they are not considered desirable to make offers on those.
I'm not convinced that the investors are shady. It is possible that they are, but it is also possible that the OP is misconstruing what they are saying and so things sound shady when they may not be. It's hard to tell.
Falconhead is right. And I feel dumb for missing the obvious especially because I am an investor. $155,000 wouldn't be worth it if it isn't even worth 165,000. It isn't a big enough window to allow you to make anything when you consider the costs. Any anyway nothing in today's market will flip fast if its priced at top dollar or above. If it wouldn't sell for $165,000 then 155,000 is likely still not a bargain.
Falconhead is right. And I feel dumb for missing the obvious especially because I am an investor. $155,000 wouldn't be worth it if it isn't even worth 165,000. It isn't a big enough window to allow you to make anything when you consider the costs. Any anyway nothing in today's market will flip fast if its priced at top dollar or above. If it wouldn't sell for $165,000 then 155,000 is likely still not a bargain.
The OP is missing something in the investor's strategy. Rookie investors will go for small profits on their flips, and I know I'm getting a lot of calls by rookies wanting to dive in and do exactly what is being described to the OP. They carry a hard money loan for 30 days or so and make maybe $5-$10,000 on the deal. The seasoned investors are mentoring the rookies, and of course getting paid for that.
During the boom everyone fixed and flipped. The latest craze is lock in the short sale and secure a new buyer prior to close. My concern for the OP is that, at least out in my area, banks aren't giving in on short sales anymore. They are selling much closer to market prices than last year.
You might not have to owe anything to the Realtor in a short sale. My Realtor had our house on the market for 15 months with no luck in selling. She was a great Realtor and really did a lot trying to sell the house, but the market is just so bad where I live. I did a short sale using a different agent because they were experienced in short sales...my current realtor was not experienced. As soon as I signed the short sale papers, the bank owned the property and my realtor had no choice but to terminate her listing with no commission offered in any way. IMPORTANT NOTE: make sure you find an experienced Short Sale agent in your area that has experience/relationships with your current mortgage lender - it can make the process so much easier.
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