More bad news about SSs :(
Real Estate Investor · Gainesville, GA · Member since 2009 · 241 posts · 34 votes
http://www.dailyreportonline.com/Editorial/News/singleEdit.asp?origin=EmailRefer&l=em52306861103498323
Everyone and their puppet quotes the case in Connecticut. A buyer's agent not disclosing that he is a principle in the transaction (he is the buyer) is clearly fraudulent along with telling the banks that his offer was the highest?????
This case is so overly quoted to "prove" reselling a short sale is "illegal"
I don't know how to attach a pdf to this post, but I'll e-mail it to you James. If you would like it too, Sam....or anyone else, colleague & PM me & I'll send it to you. It's from the MI Real Estate Laws and Rules, what we agents in Michigan fondly call our "little red book". Basically, it says a broker's license is required (or engaging the services of a broker) if you engage in any of the following:
5 or more real estate sales in any 12 mo period
Holding one's self out to the public as being principally engaged in the sale of real estate
Devoting over 50% of one's working time or more than 15 hrs per week in any 6-month period to the sale of real estate.
Of course, as I said before.....if you are using a real estate agent (Realtor or non Realtor), you can do as many as you want! Good luck Sam!
Bill
Bill, did you add (or engaging the services of a broker) or is this exactly how it is worded? Could make a huge difference in how you interpret what is written.
Or is it referring to a RE salesperson (different license) who engages in 5 or more sales in a 12 month period or....Must engage the services of a broker or be licensed as a broker. You get the point!
Sam,
I sent it over to you! It does say "or engage the services of a broker". A RE salesperson working under a broker is treated the same since they can't actually practice RE without either having a broker's license or working under one.
As for the Michigan rules...I don't write them, I just have to follow them! No problem for me here!
BTW, I'm the world's worst speller and typos are easy.....I love spell check and think it would be a great feature to add to BP! This post just passed spell check with no errors! I’m either getting better or lucky!
Bill
Bill,
I still think this applies to an owner who is also engaged in the sale of real estate as principle vocation.
You stated that an agent must operate under a broker or be a broker themselves. Thus an agent (Sale of real estate is principle vocation) cannot sell property they own without being a broker or engaging the services of a broker with the only exception being a personal residence.
Conducting the business of buying and selling real estate is different than selling real estate and getting paid a commission or other valuable consideration.
Sam,
The State of Michigan says that if you engage in any of the three practices stated above....
(5 or more real estate sales in any 12 mo period
Holding one's self out to the public as being principally engaged in the sale of real estate
Devoting over 50% of one's working time or more than 15 hrs per week in any 6-month period to the sale of real estate.) that you are considered in need to be licensed. Doing any of these causes The State of Michigan to consider real estate as a principal vocation.
The next line item (2) goes further and says that once you are licensed, you must sell any property (other than personal residence) through a broker. There are other sections of the law that cover disclosure issues for a RE salesperson when selling property that they own, have an interest in or is owned by a close family member.
“Conducting the business of buying and selling real estate is different than selling real estate and getting paid a commission or other valuable consideration.†Not in the eyes of The State of Michigan!
Again, this is Michigan law and it may be different in Montana. Also, if you use a broker, you are ok. James had another idea of setting up a different LLC for each 5 sales (Sam LLC, Sam1 LLC, Sam2 LLC, etc). Sometimes it is better to ask for forgiveness than to ask permission, so you might just keep doing what you want!
Bill
If this indeed does refer to any property owner that sells more than 5 properties in any given year I would say someone pulled a fast one by burying it in the middle of admin rules.
I still hold out that "real estate sales" refers to sales while representing someone else. I am "principally involved in real estate" I am not however "principally involved in the SALE of real estate"
Remember this is dug out of the middle of a rule book for real estate brokers and salespersons.
Back to the original issue of this post: the "Short Payoff Fraud" question. I just saw this webinar recording and it explained everything very clearly by a CA real estate attorney.
(Disclaimer: you don't have to buy anything or click on any link you don't want to. :D )
http://shortsalefundamentals.com/timer/gtw/stream/view-ballard.html
To explain how a house can be priced differently for B investor vs C buyer on the same day, I like how they used the example of Kelley Blue Book for showing 3 values of the same used car: you got a trade-in price, a private seller price, and dealer's suggested retail price. Another example is value-added service of detailing a car by employee costs $45 but adds $1500 to the car's price tag. There's so much information. I will warn you in advance that it's L-O-N-G!!! Best to download the MP4 video and watch on your computer at your leisure. I hope this helps us investors clarify and persuade the doubters. I'm feeling better already. :)
Lily,
I did hijack the thread didn't I? I moved that discussion to another thread.
I think the part that people falsely believe is that real estate MUST be sold for what it is "worth" but the real issues comes down to liquidity for the bank, and assessing the risk/reward for whatever exit strategy they take to recover the money they have in the deal. The lenders view a SS, foreclosure, deed in lieu as exit strategies for a non performing loan. The risks are BK, damage to the property, time (BK adds even more time), taxes (a lender will have to pay the taxes eventually), junior liens (reduces possible exits) cost of foreclosure, etc.
Being a note holder on an upside down property where the owner is not paying is not a nice place to be. Unless your cost basis of a note in first position is 50% of present home value then it isn't so bad :)
Curiously with the challenges of getting short sales approved, gurus are now teaching about buying defaulted notes as a way of controlling properties in a short sale. I'm taking one course right now.
What can I say? I'm an info junkie.
The people I was followig in NPN buying world were saying Fannie won't sell. The idea of NPN investing is pitched hard by Dean Engle (he has a course too) but if you watch his forum it looks like people struggle with finding very many banks that will sell. Donna Bower's course teaches a method starting with a SS and then switching to a note purchase with 70% ending in SS's and 30% ending in note purchase.