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.
@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.
I realize I don't determine what is illegal, I'm not a judge or jury, I'm not an attorney either, you can probably tell. However, there are three (maybe more) federal and state finance/banking regulators who are charged in identifying apparent violations of law. I don't always write as I should, as I have said many times this or that is illegal and I should say such activity may be or is an apparent violation of law, regulation or ruling.
Yes, the thread is absolutely monitored I'm sure of it.
I think we are on the same page, you beat me in making my last post. My comment wasn't to convicted sex offenders as they probably aren't in the park, LOL,
Totally agree as to the nanny state and sand box.
Suffering and learning was the old school way, I see the internet as a means to guide newcomers to avoid the old school ways involving costly mistakes. It isn't necessary any longer for people to only learn by trail and error. Now, if they fail to take a prudent approach when warned in some area, then the old school way will be the alternative.
No, I've been on here for years, there isn't a minimum level of competency, if there were a test to join the site it wouldn't be as popular I'm sure. We have had inquiries concerning topics from minors, high school students and we just can't tell what level of knowledge or maturity or competency a poster may have.
I can certainly understand your position as an attorney being fully exposed to everything the mind can conceive, you are well equipped to filter things for yourself, most beginners are not that well equipped by education, experience or even as to social expectations in business.
I'm rather bias to my approach and attitude, I'm one of those who corrects bad information or apparent violations of law, to a greater degree than most. Someone makes a one sentence remark and it often takes a paragraph or more to point out why that remark should be scrutinized closely or not followed. It's work, just keeping up. I know, I should get another life.....LOL
If you can suggest a better way to ensure those starting off get better advice and are not mislead or worse, scammed, I'm all ears. I know it's a futile attempt, but many of us try.
In regards to the realtor, it doesn't make sense if you are solely basing it on that particular commission. However, realtors benefit in the form of referrals and future business from that buyer.
Can't help myself, sorry.
Arnie, you and I are, how should I say this, old school where our word was our bond, I'm sure you've done deals on a handshake just as I have, doing a very short contract to give the closing agent a guide to prepare the documents. Not today!
IMO, most of the requirements, inspections, and the additional 12 pages of a contract for a residential purchase through a Realtor are about limiting liability of Realtors and third parties related to a transaction. If you read the disclaimers of any home inspector, it would be hard to hold him responsible for any defect other than a 6' x 6' hole in the living room floor. Folks are sue happy, for some, they are pros at it.
Most of the growth of our standard purchase agreement has been based on issues arising from claims made, court cases, Realtors or closers making mistakes as to what they should have known.
Dealing in good faith arriving at a price and then discovering defects during an inspection period, then negotiating due to those defects is totally fine. You don't know what you don't know and time for discovery is prudent and fair. This thread is, or was, LOL, about manipulating the process and coercing a seller......not fine.
Brandon, thanks, I'm with you. Your number 2 may require others to work more.
Yes, other sites in RE and other worlds have more stringent rules, emphasis on some areas may be a little over done compared to other sites and light on other aspects but it is a tough balancing act. :)
oh, they're all in on it, the realtors, the home inspectors, the contractors, the lenders... They all want to wet their beaks.
It's a big industry now.
@Bill Gulley I think you prove the rule, so to speak. Your comments are well articulated and come from a place of knowledge and experience. I benefit from your comments. I would like to hear what you have to say when topics like this come up.
In the market place of ideas, sunlight really is the best disinfectant. Individuals should be willing and prepared to defend their practices. You ask for a better way. BP is the better way because you and others like you are willing to take the time to address this and other topics.
Thank you Paul, I was hoping for an easier way, yet that is contradicting what I preach as there are no easy ways, it takes work and effort to do things right. I got caught in my own criticisms of those seeking the easy way out. LOL
Good solution. As others pointed out after my initial post, it is actually helpful to expose others to such tactics. You are not going to teach the unethical anything they couldn't conceive on their own, but the sincere and naive might get taken in by such tactics unwittingly.
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.
Major undiscovered flaws are the purpose of home inspections.
The problem with the blog post is the poster is encourage getting bids on known discrepancies and re-negotiating the price. It really sounds like the intent is to nickle and dime the seller to death, after a price has been agreed upon.
I think it would be perfectly acceptable to get these bids in the process of negotiations, but once you agree to a price it should be based on all the knowledge that you have at that point. Not I would pay X for the property in perfect condition and I will just reduce the price with the inspection results.
After reading the blog post and the comments, I wanted to add in a different reason why I won't be following some of his advice.
I simply don't want to spend that much energy and time on it that's required using this approach. And it's the energy that's really at play here.
Your brain consumes a lot of energy. When you are in this back-and-forth, constantly trying to negotiate, constantly at odds with someone mindset, it consumes even more energy. And you get worn down.
So now I'm worn down when a call comes in, or someone else wants to talk about a JV. And I'm not on the top of my game as a result. I make mistakes. I don't take action.
My alternative is to give the seller a reasonable offer based on my expected repairs. And I give them what I think my expected repairs are going to be so they know how I arrived at my figures. It's likely substantially lower than their asking price. And most of the time, they won't accept.
But then I stay in touch with them. I send them a survey card the next day asking how we did and if we didn't agree on a contract, what was the reason. I call or write a few days later asking how things are going. And a week after that. And a week after that.
These follow-up activities take almost no energy. And they build a strong rapport with potential sellers.
Coming back to the original blog...
Let's say you are the seller. You asked $100K and the Connor accepted at $95K.
I came out, too. But I only offered $75K. Part of my offer included my reasoning for the offer.
The seller will take Connor's bid almost always. But then the "negotiating" begins. All the time, I'm in the background, staying connected, seeing how things are going, perhaps even offering opinions to the seller.
I can't say who will win out in the end. But my approach takes a lot less energy. And I can sleep at night. And I'm not afraid of running into the seller at the store six months from now because I did right by them and I did right by myself.