BP has many great blog posts, BUT ....
Real Estate Investor · Sebastian, FL · Member since 2014 · 812 posts · 432 votes
A recent blog post really, really struck me as bad advice.
http://www.biggerpockets.com/renewsblog/2014/10/08...
This is not the way we want investors to be representing us, and definitely not the kind of advice that this site should be spreading!
Hey @Walt Payne - I'd love to hear more of your thoughts. I think the point of the article is more of a "when negotiating, include everything" and I don't think the intent is to take advantage or be dishonest. I mean, when I'm negotiating for a deal, I'm obviously going to mention everything I find wrong with the property to get the best deal. But I think this is an interesting topic for discussion - so what, in particular, would you disagree with? I'm sure this discussion will help others as well!
Brandon,
I have to disagree with you on this. The blog poster admits that he enters into the contract knowing his intention is to strong arm the seller once the seller can no longer field other offers.
I don't believe that the blog post should be removed but the O.P. definitely operates in a gray area & @Walt Payne brings up some valid ethical points.
I don't know if there really is a right or wrong answer to this debate.
Thanks Will, I'll go further and suggest that some podcasts might be reviewed a bit closer too!
I'll try to do better with shorter posts, like this one. LOL :)
I agree with the opinion that if it has "BP Blog" associated to it, that the site has a higher obligation to make sure that the opinion of the blogger is not suggesting anything unethical. That blog really should be removed.
I am not going to quote your post because I am not sure if the BP server can handle it. Although I agree with you 100% about the blog needing to be removed, I think you are walking a very fine line regarding the buyer's inspector and your "knowledge" going forward.
@Bill Gulley I like your suggestion about reviews.
The combination of the blog having the BP name, and being directed at new investors was what prompted the original post.
And that post above made it in under 30 words. Wow! Your posts are always informative, but rarely the short story. ;)
Well, that's my opinion from the RE Broker days as to knowing vs. having received second or third hand opinions from a source attempting to buy a property, it's not my knowledge. Now, if the issue is obvious or a matter where, as an owner I should have known, then I'll disclose it, considering the findings. But, the presentation that I must disclose all defects he believes to exist are not valid matters placing a greater obligation on me as he implies. Horsefeathers! :)
Hmmm, counted 83, with the edit I'm under 93! LOL
Dang it, laughing cost me 100!
I am going to try this one more time...
I see two separate issues-
1. Whether BP should be held accountable for the content of blogs/postings/podcasts
and
2. whether this blog contains illegal or immoral advice.
1. Obviously BP has the right to censor the content on it's site and does so. I dislike the concept of having every blog post and podcast (as previously suggested) vetted by a supposed panel of experts. I come here to learn what people are actually doing. If they are not in jail, I would like the opportunity to hear what is going on out there. The blogger/poster is solely responsible for the content and will be held accountable as such. Don't try to put this on BP's shoulders. Please don't dumb down the content to the lowest denominator.
2. Happy to have this discussion. I disagree with most of you. If I follow the blogger's advice, then I have entered a written contract, paid earnest money, hired two contractors, met with the seller in person, and used the actual condition of the property (known and unknown prior to the contract) to work out an AGREED price based on the most accurate information possible after giving the seller advice (right or wrong) on his duty to disclose. Could someone show me were you get an intent to not perform going in? I have a bit of a problem with so many people jumping to a legal conclusion that is difficult to prove when there are actual facts much less in a hypothetical. As to the disclosure, I can testify that people give each other bad legal advice all of the time. Not a good business practice (In my opinion and in my situation), but there are fact patterns where he may be right. Btw, I am not giving legal advice:).
Point #1:
My objection is not that the general population of users would be unable to sort out the issues here, but that a new investor might consider the source (BP official blog) and not SEE the issues.
I am not sure that censorship exactly is the right way, but there is a definite problem with an official BP blog that includes ethical issues. Maybe create some way for a blog to be flagged as not endorsed but published as an opinion?
Point #2:
The part of the process that you are not seeing, I think, is that the seller is put under limitations by the contract before the added negotiations.
This isn't quite the same, because it involves an executed contract without contingencies, but maybe it will make the point. You buy a ticket for a cruise. Two days into the cruise, you pull into port and the captain says he wants to renegotiate. Fuel costs were raised last month and he needs more profit, so either pay an extra $500 per passenger, or get off his ship. Your choice, free will and all that. Is that a legit negotiating tactic?
@Walt Payne I would prefer the marketplace sort it out. Your comments on this post have certainly highlighted the risks and potential problems with using this strategy. I have learned by reading your comments and having this discussion. It would not occur to me to use the tactics in the way you have indicated the blogger meant. Now, I am prepared if a buyer does it to me. However, I have never asked a seller for credit after signing the contract. I am better off all around for having this discussion to include the good and bad. I am not opposed to a disclaimer after every post. That is not an area of law I am comfortable with. I don't think it is needed personally. New people are going to learn more reading these comments.
Your analogy doesn't quite work as written. If it was common in the cruise industry for passengers to hide or not disclose relevant info like they get roaring drunk every day and ruin the experience for other passengers and the captain contracted with the passenger to pull over after seeing how they act to renegotiate the contract and the passenger had the right to say no and start the cruise back up immediately under the same terms and the captain had the right to walk away while having to pay to send the passenger home or fight over that cost with the passenger if the passenger feels the captain is being unreasonable and risk losing all of their time and expenses up to that point- then the analogy works.
Inspection clauses are negotiated. They can be cancelled or restricted. This is not the law's first go round with individual's who try to game the system. Bad actors are weeded out everyday.
@Paul Choate , he leads the blog off with his intention:
In other words, he starts right off saying he doesn't intend to pay the price he told the seller he would pay. The seller is in for Round 2 of negotiations, a dirty round. There are those of us who consider a contract price as fixed - dependent upon any legitimate, *major* issues that arise in an inspection - and those who consider the contract price a moving target. I like to think, for most of us, our word is our bond. Not so for the blogger.
Then he goes on:
So here, he reiterates that he never had any intention of paying the agreed-upon price, that his real intention is to lock up a property and THEN ask for a huge reduction, and hits us with his brilliant rationale: he's got them by the you-know-whats.
He then goes on to detail how he further squeezes the seller, including having two contractors bid every single item (overkill), at which point he tells the seller that, should they tell him to shove off, they're screwed because they're going to have to disclose all bids and reports to every subsequent potential buyer (not true; they only need to disclose a major issue or what is known as a material fact, NOT hand over some schmo's summary opinion).
And after some more enlightening "info," he ends with this: "At this point they are probably so sick of negotiating with you that they would pay you just to leave them alone – which you will, just right after they give you that big ol’ credit request!"
Ignoring the innuendo of blackmail or extortion for a moment (I'll leave you alone after you give me that price reduction), I like to think that, for most of us, negotiating is not about wearing someone down until they're sick of you.
Hope that helps. A lot of us feel he crosses the line and keeps on going.
I agree that it is not a good thing for new investors/members to read an unethical blog post that appears to have a BP seal of approval.
However, what is most disturbing to me is there are experienced investors that don't understand what is wrong with those negotiating tactics!
Big picture- I love BP!
When you are starting out in real estate, you can get out on an island. None of your family or friends understand what you are doing. Everyone thinks you have lost your mind. You still have to go to work everyday. You don't have the time and resources to network and learn like you need to. So, one day in desperation, you Google something which leads you to BP. BAM! This is what I need! Not want, not like, NEED!
For me- this was after making the same mistakes for years and getting frustrated with everyone I was dealing with. Now, when I have a problem, frustration or feel like I hit a wall, I have a place with motivation, practical advice and real solutions. I am light years ahead of where I would have been.
So, @Walt Payne and @Karin Crompton I can say unequivocally, I will not use these tactics with the intent you have laid out. I don't know if it is a good or a bad thing I did not see the same things you saw in the post.
I still maintain that the same steps can be used in good faith to get the best deal possible. Knowing that something usually comes up and making up something are two different things. There is case law which addresses all of these gray areas. If you use all of these techniques with the intent to cancel the contract, you will not last very long and it will get very expensive.
I agree, after hearing your opinions, that the blog sounds a lot slimier then when I first read it. I would still rather learn from you on my own then have that content blocked from me.
You come off as a stand up guy so it truly is not my intention to beat you up over this. Anyone, in my opinion, that didn't see the issues that @Walt Payne brought up either brushed through it quickly or read it with blinders on. @Karin Crompton did a great job of detailing how the blog writter's intent was not the same as addressing legitimate material issues.
I think it is quite possible alarms didn't go off for you, and others, because the perception is there that the blog was written by an expert.
@Account Closed For some of us this is not a game. When you start throwing around legality and ethics when describing a technique you should be careful. For those of us who do real estate deals on a regular basis, it is imperative to know everything you can. You should have every tool at your disposal. I purchased a house once where a wall had slipped off the foundation and it was hidden by furniture and other items during the walk through and inspection (admittedly poorly done). The seller had obviously known about it as they had done work on it. No disclosure. I was new and went in a little too trusting. I got burned. I am a big boy so I can rub some dirt on it and move on. However, I will use a properly negotiated inspection clause to protect myself and get a better deal if it is appropriate. I have purchased 6 properties in the past year. Everyone of them had hidden surprises that the owner had to know about that were not disclosed. I paid going in knowing that. After reading this post and the comments about it, I know more about this topic and how to handle this situation in the future.
I believe that everyone is focusing on the intent and not denigrating the techniques (with the exception of the advice to the seller about future discloses). I agree with the intent discussion. I maintain that every one of these techniques can be legitimately used by an ethical investor. You can corrupt anything if you try hard enough. You can also find a fact pattern that supports just about anything. Absolutes are never right;).
@Account Closed Thank you. You are right in some ways because I did give the article too much of a pass. I will freely admit that I tend to give others the benefit of the doubt to a fault. I would have readily agreed with the other posters if it was just a discussion about the intent portion and how the advice was presented. I have the biggest problem with the censorship issue. I have learned from your posts and others and I don't want to lose that.
@Account Closed
I see merit to this comment, but I also have concern about official BP blogs that contain questionable ethics. Not so much with user blogs, though that could still mislead a new investor somewhat.
I have a suggestion that might actually make a great tool for new users. Why not create a forum area called "Real Estate and Ethics". When a blog post or forum post triggers someone's radar, they could simply start a discussion in that area and put a response stating "ethics issue, see this post" and link to it. That avoids the censorship issue, and allows others to learn about the issue instead of burying it or just accepting the idea that others need to be smart enough to know better. I can see where learning about such tactics may actually help protect someone who wasn't aware of the issues involved going in to a sale.
Edited: I agree as to the new forum topic. As to the freedom of speech and right to be misinformed, no, at least to the extent of illegal aspects.
After being around as long as I have I can spot bad doers talking out the side of their mouths, touching on unethical and swearing they are. What happens is that connections are made privately prompted by hype and then the newbie gets sucked in, If pervs hangout in a park I don't take my kids to that park, they may have the right to be there, they don't have the right to be around by kids!
First rule in real estate is location, location, location; second rule is, all real estate is local.
Local custom rules. Laws are made to guide ethical conduct, enforcement is local (generally). What is customary will be seen as ethical and in the "public good".
What is legal may not be ethical, what is unethical can often be determined to be unlawful as tortious conduct or related criminal activities.
Being mildly unethical may be accepted without applying legal scrutiny, until it is determined that activities are not in the public good.
Society enforces ethical conduct better than statues in real estate, you will be shunned, black balled, Realtors may refuse to deal with you, there is little honor among thieves who my be your last associates.
I've never met a successful person with a bad reputation. The closest exceptions may be attorneys, it's the nature of their profession to represent others in the best light regardless of the client's sinful nature and their reputation socially may be horrible, professionally could be a different matter. But, those in business are not given the leeway enjoyed by an attorney.
Seems the blogger is in the corporate world, where I hope he remains in his best interest, as his success on the public side would be questionable, so would survival.
Approaching real estate from a legal aspect keeps you out of jail, approaching it from a higher ethical standard allows you to succeed. :)
@Account Closed Thank you. You are right in some ways because I did give the article too much of a pass. I will freely admit that I tend to give others the benefit of the doubt to a fault. I would have readily agreed with the other posters if it was just a discussion about the intent portion and how the advice was presented. I have the biggest problem with the censorship issue. I have learned from your posts and others and I don't want to lose that.
I am not a fan of censorship either, but I do believe Walt made a great point regarding site sponsored blogs. There is no doubt in my mind that if questionable tactics was the norm for "BP" blog posts, it would damage the site's credibility.
@Bill Gulley I was with you until the edit. You don't get to decide what is legal. In this specific instance, this discussion turns on a matter of intent. That has to be proved based on facts. The reason you can exclude convicted sex offenders from parks is because society has decided that we do not want individuals with a high recidivism rate around our kids.
You are right that the rules ("law") are set by the participants. I assume Brandon and Josh are monitoring these comments and I don't want the bar to be set as low as some have suggested.This is not a sand box. You have to assume a minimal level of competency on the part of the participants or the entire system breaks down. I don't want a nanny state in my real estate education.
I have yet to meet a real estate investor who has not made major mistakes costing thousands of dollars. That is the price of admission. Everyone needs to recognize that. I want to know everything I can. I don't need a filter. One important lesson I have learned from being a lawyer is every side thinks they are right. 50% of the time they are wrong. Not good odds for setting absolutes.
Is posting a string of cuss words or adult language censored on this site? I believe it is, it's a family site. What's the difference in saying the forbidden words and phrases and posting other vile, reprehensible, socially unacceptable matters? Not suggesting banning bad advice, dumb comments, poorly structured ideas, just keeping the impressionable within ethical bounds. Isn't that they same thing keeping children in a clean and socially accepted environment? :)
Not calling newbies little children, but the concept of responsibilities are the same, initially protecting those who may not be able to protect themselves. Eventually they will be exposed, if they are brought up through the business correctly, prudently, they will be better served and equipped to deal with the world.
@Account Closed laid out in his discussion of reputation.
I think the only real thing we disagree on is that I don't feel a blog post that suggests unethical/borderline tactics should be available as a "BP Blog." I have absolutely no issues with it as a personal blog post.
@Account Closed I agree. I don't know the process of how a post becomes official but I would rather I get a wide range of views and then everyone gives their opinion.
I guess all I am suggesting is that when lines are drawn, we error on the side of too much. If you are not uncomfortable occasionally, then you are probably missing critical knowledge even if it is for defense.
I'll jump in here again. This is an excellent thread folks!
First, we did discuss this post a little before it went out and actually did send it back to the author to try and make it less offensive. When I read the new post, I tend to give people the benefit of the doubt, meaning I read this post as "I make sure I uncover every single issue and make sure I'm compensated for it" where obviously people here in this thread read it more like "this guy is taking advantage of the seller."
So, here is where the line is for me:
1.) Where things are illegal or BLATANTLY ethically wrong (you should lie to people, you should steal) we definitely wouldn't run it.
2.) When things are debatable - I'm all for discussion which is why we still leave the comments on below posts (even though many blog sites today are closing them.) I think people learn a TON from those discussions that would never take place if it were not for those posts and threads like this.
So, for now, we are planning to leave the post up BUT we are going to add a disclaimer at the beginning of it to let people know that it is a controversial post and they should engage in the comments and on this thread.
I really do appreciate these discussions and truly do want to make sure BP is a "city on a hill" in the real estate space which is often so dark and sleazy. However, I also want to balance that with room for discussion and opinion and sometimes it's just tough to find that line.
Hope that helps clarify at least my opinion on the matter.
So, I unknowingly was a participant in this unethical practice.
It has been years since I've been involved in an RE transaction. A few months ago I saw a 4plex that caught me eye. I made the call, set up a showing, liked what i saw, made an offer, and my realtor, not me, put in that the sale was contingent on a home inspection. I thought that was a common thing in all contracts. The home inspector found several discrepancies that I did not catch. Three were major. We had contractors in each field come in and the cures came in at 13k. It was a short sale, and an estate sale, the kids wanted nothing to do with it. The bank (BoA) moved the entire 13k on the price. My realtor said he'd never seen a bank capitulate the entire amount, and said he was stunned. Maybe he was playing me, who knows.
The only point I'm making is that years ago, the offer price was the price, take it or leave it, no contingencies. Not anymore. I think the realtors are in on this too, although lowering the price and in turn, their commission, doesn't make sense..but I guess a commish is a commish, half a loaf is better than no loaf at all...
Do realtors feel they're giving less experienced buyers a feeling of protection? Prolly, but I think nowadays the sale being contingent on a home inspection is the norm/standard.
10 years ago I sold a 4plex as is. No realtor. After I accepted the offer, my attorney called me saying the buyer wanted a home inspection. I said no, and that the contract said as is, take it or leave it. There was no home inspection and the deal went through.
@Brandon Turner works for me! I don't envy your job but I admire how you do it. Thanks for the additional info.