Division of real estate complaint
I have a legal question. Recently i had a jealous real estate agent start trouble with me. Im a wholesaler in florida and was doing a wholesale deal on a hud home. I had the house under contract with hud, and i was advertising it for sale on craigslist. well this real estate agent made a big stink about it and made a complaint on me. She was saying i was advertising on craigslist as the owner and im not licensed to sell real estate. I told her i had it under contract and will be doing a double closing. My contract states i have subject property under contract with owner of record and i intend to sell it immediately after closing with owner of record.Well now i just got a letter from Division of real estate and regulations saying i have 3 options (election of rights). Just curious if anybody has any good advice as to what i should do.
Per HUD, you are not allowed to market properties that you have under contract. Unfortunately for your agent, the only repercussions from HUD would probably be against the agent and not the buyer.
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@Greg H. Curious, what are your 3 "options" to respond. Read FL Statutes chapter 475, in depth. You may be surprised what you find.
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Get your real estate license this would solve any of these issues. And please share the 3 options it would be very interesting to all that wholesale in Florida to know the DRE's position in this matter.
I think this whole industry of wholesaling and flipping contracts ( and we have beaten it like a dead horse) but it really comes down to if you have someone file a complaint against you then I think most state's will take the position that your selling RE without a license if you are just tying up a property and then advertising it for sale.. with the only intentions to close on it is if you can find a buyer. But for everyone person that may be in Eric's position there are probably 100 doing the exact same thing every day of the week.
He had to have had an agent to place the HUD bid and that is the agent that could be penalized by HUD
@eric mul
Hi guys. This is a really interesting thread about a possible liability in wholesaling. I am just trying to get my head around all the different players. Who is the Division of Real Estate and Regulations? Is it Federal (HUD) or is the State (FL)?
Stephen
@Eric Mulhern I'd investigate her (even just google her) and find out her problem.
PS I'd drop the vernacular ("double closing") when dealing with an Official Agency;-)
Its charges from State of Florida, department of business and professional regulation.
I have 3 options
1. Dispute the charges and have a formal hearing in front of division of administrative hearings
2. Do not dispute any material fact. i will be given a hearing pursuant to section 120.57 and have the oppurtunity to present written and oral evidence
3. check this one if i dont dispute and material fact and waive my right to any form of hearing. this means the department will recommend a penalty on the charges
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Sounds like what your business practice entails from the DRE standpoint is that you are selling RE without a license..
So do nothing and be convicted ... Hire and attorney and tell the state why they are wrong.
or go to a deposition with the state investigator and please your case.
It is a shame that the OP will not provide the real estate agents name.
Joe Gore
@Account Closed
What do you think the agent did wrong Joe ?
No offense Eric, but at the very least you put your agent in a position to lose his NAID number and not be able to sell HUD homes
As far as the wholesaling issue I don't really have an opinion one way or another but HUD does not allow the marketing of their properties prior to closing. I would take the letter seriously and not ignore it.
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The state and HUD are different matters. . if you take option 2 and fail, you can then appeal and get an attorney. You may have the same issue with HUD.
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I guess the only way to know if the agent has any culpability in the matter is if the client that got the property tied up specifically told the agent hey I am going to put this one on craigslist and flip it. At that point the agent would need to tell the client just what you alluded to you cannot do that and we need to rescind the contract.. And Mr. client when you have the cash to actually buy something then we can make offers on HUD homes..
I have been buying about 4 or 5 hud homes a home lately and I have to send in POF which is a copy of my bank statement that match's up to the name in the contract.. Not sure if its mandatory but the HUD listing agents make it seem so.. And of course we close with our own funds and off we go. We never try to market something prior to owing it.
I was doing another one in KC were it was a fail sale because of inspections and the agent threaten to turn us in for contracting with no ability to fund...And or she thought we were going to flip it... She did not ask for a proof of funds when we made the offer.. I set her straight though on the ability to buy and she calmed down. However she was specific that she would turn us into hud and have us banned from offering on HUD homes.. So as you state Greg I think that can be done.
Originally posted by @Account Closed:
It is a shame that the OP will not provide the real estate agents name.
Joe Gore
The agent did nothing wrong. HUD homes can't be marketed before they are bought. Plain and simple.
Originally posted by @Jay Hinrichs:
I guess the only way to know if the agent has any culpability in the matter is if the client that got the property tied up specifically told the agent hey I am going to put this one on craigslist and flip it. At that point the agent would need to tell the client just what you alluded to you cannot do that and we need to rescind the contract.. And Mr. client when you have the cash to actually buy something then we can make offers on HUD homes..
I have been buying about 4 or 5 hud homes a home lately and I have to send in POF which is a copy of my bank statement that match's up to the name in the contract.. Not sure if its mandatory but the HUD listing agents make it seem so.. And of course we close with our own funds and off we go. We never try to market something prior to owing it.
I was doing another one in KC were it was a fail sale because of inspections and the agent threaten to turn us in for contracting with no ability to fund...And or she thought we were going to flip it... She did not ask for a proof of funds when we made the offer.. I set her straight though on the ability to buy and she calmed down. However she was specific that she would turn us into hud and have us banned from offering on HUD homes.. So as you state Greg I think that can be done.
HUD will not ban someone from bidding on their homes for not having funds because the agent said so. HUD has very specific requirements for a proof of funds letter and they will not sign off on the contract until those are met. They do not further investigating of the ability to close and they take the investors earnest money if they don't close. You have to do some pretty egregious things with HUD to be banned from buying their homes like pretend to be an owner occupant pr make repairs prior to closing and even then they still may not "ban" a buyer.
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I do believe Joe and others are correct that HUD homes cannot be marketed before you own them. DO BE CAREFUL in how you word you ads as well. There are certain terms that may imply you are acting as an agent. The last thing you want is anything from DRE! In this situation, it might be wise to consult with an attorney ..and quickly...before responding. Also, talk to your HUD agent and inform him of the situation (which he may not be happy with). It is best to clear this ASAP and learn from the experience.
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Sounds like the genie is out of the bottle regarding the DRE and this Investor.
Pretty hard to make the argument your not acting as an agent when you post to resell something you don't personally own...other wise why would there be a need for a real estate industry in the first place.
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Yes I believe this agent in KC was huffing and puffing... suffice it to say from my experience as long as the name on the purchase contract is the same name on the checking account in my case its my POF then all is good.
If its a lender then I guess you need to disclose that when you buying and have a POF from the lender... Does HUD put more weight in the cash buyer ? or is it first come first serve in you experience?
Originally posted by @Jay Hinrichs:
Yes I believe this agent in KC was huffing and puffing... suffice it to say from my experience as long as the name on the purchase contract is the same name on the checking account in my case its my POF then all is good.
If its a lender then I guess you need to disclose that when you buying and have a POF from the lender... Does HUD put more weight in the cash buyer ? or is it first come first serve in you experience?
They only care about net to them. If they get a cash offer $1 less net than a 203k rehab they will take the 203k. They make their system very objective to try to take out any human error or bias.
You are right. I did make an assumption that the agent was not informed as to the buyers intent
I don't see how HUD could ban an investor as I could just form a different LLC. They put the onus on the Broker to secure the earnest money and all the documentation and we even have to sign the buyers owner occupant if they intend to occupy. I have known a fee brokers to lose their NAID number and not be allowed to place bids anymore
On a side note, I had a guy on BP ask me for my NAID number so he could place his own bids. Ii had never even spoke with him. How do you think that would have worked out ?
My visual has you posting at 140mph