Anyone care to chime in?
Specialist · MA · Member since 2009 · 858 posts · 306 votes
Anyone care to chime in?
Most Popular Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesShort sale investors would not exist if there was no demand for their services, i.e. enough retail buyers were in the market. It's a free market, everyone operates in their own best interest. If there was a higher offer on the table the seller would take it instead of the investor offer.
Bill's argument against short sale investors is the old one that the consumer is too dumb to make his own decisions. Therefore, a third party must protect him i.e. goverment, specially licensed government group (real estate brokers), etc. In some individual cases this might be true. However, overall, the free market sorts it all out.
Short sale investors bring much needed liquidity to the market of owners "upside down" in their homes. They exist exactly because of the service they provide - the ability to work thru 9 months of frustrating and often fruitless negotiation with corporate buracracies that are saddled with ineptness, inverse motivations, and governmental rules and regulations that negate the usual motivation of quick dealmaking. After providing the service of working thru these frustrations, investors who successfully complete the transaction can then try to sell the property to a retail buyer who only steps into the transaction when it can be closed in a reasonable time frame. Of course, the investors capital is at risk and he is not guaranteed any profit, the investment may well end in loss.
The economy works best when everyone works in their own best interest. This is known in a capitalist society as the invisible hand. Many people can't accept this because they can't accept the premise that people working "selfishly" in their own best interest result in a greater benefit for all. However, the result of so called unselfish interest is a government owned economy, and we have all experienced how well communism has worked!
One final note. The premise of Bill's argument is that whatever an investor offers on a property is too low because the investor hopes to sell it for a profit, so the seller should hold out for the higher hoped for price. This theory assumes that the desires, motivations, financial situation of both the investor and seller are exactly the same. Obviously this is not the case. A transaction can be good for both parties at a certain price. One party does not have to lose for the other party to win. Financial condition, ability to accept risk, time alloted, expertise all play a role. The people who are outraged by profit are the ones who believe that the economy is a zero sum game, i.e. if I win you have to lose. This is obviously not the case, almost all deals only get done when both parties get what they want.
60 Replies
- Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes16y
Originally posted by Bill Gassett:
"The reason us investors get all worked up about articles like yours is that we run into agent after agent who will not work with us because of "all the fraud" rather than looking at each situation and judging an investor accordingly."
Thanks Sam at least you were willing to put pen to paper and say what the real truth of the matter is. You are probably right that public perception is not great for investors. A few fraud cases can do that and good people do get lumped together with the ones who aren't. Join the club my friend that happens in many businesses including my own.
Bill P - I just got of my white night you will have to excuse me I am a little tired from riding all day. I love reading your comments Bill. I am so disappointed I don't have you to back me up in the forum like you do for all the other Realtors who are dumb like me.
You love to talk about FALSE information Bill but you offer no examples of what is false in the article.
You also keep saying that I edited your comments which is completely false. I have let all comments go through unedited. Just look at what is on there Bill. If I was editing comments a lot of what is written would not be there.
Bill,
That should be a “White horse†you are riding and a “White hat†you are wearing while being the only one that has the seller’s best interest in mind.
When a Realtor deserves to have someone stick up for them, I do so. You don’t deserve it! Actually, I never said you were "dumb". You just refuse to listen or consider that you may not have all of the answers. As I have said, I posted on your article comments, some misleading and some false statements. The post said it was being moderated. Well I guess it got moderated right out of the site, just like Ryan’s post did. I will give you a couple of more examples. Sam has already done a good job!“The answer is real simple. One of the biggest reasons why many short sales never reach the closing table is because the seller accepts an offer that is too far under market value and the lender rejects the contract denying the short sale.†False! If the lender rejects an offer, the investor or any other buyer can respond to a counter from the lender. Most investors will continue until an agreeable price and terms are obtained. Many “retail†buyers will not, because they have been advised to place multiple offers on different short sale properties and go with the one that is accepted. This is where the seller loses and the process starts all over again.
“There are also situations where the investor buyer is the referral source to the listing agent. The listing agent may be given an incentive from the investor buyer to take on a short sale in return for receiving the re-sale listing after the investor buys the short sale home. In essence the Realtor lists the house again when the home is being “flippedâ€. For performing the transaction for the investor the Realtor is promised they will handle more of these transactions in the future. The problem with this arrangement is very simple.
Any Realtor who signs a contract with a seller to sell their home is working for that seller! It is the Realtors fiduciary responsibility to get the seller the best terms and conditions. How can a Realtor do this when there is an inherent conflict of interest? THEY CAN’T. This is a short sale scam!!†False! False on one count and misleading on another! First, Realtors livelihoods depend on referral business and there is nothing wrong, unethical or illegal about referring business to an agent that is doing business with you and performing in a competent and professional manor. To call this a “short sale scam†(using your words) is ludicrous! The second thing is misleading. Getting the seller “the best terms and conditions†in a short sale means no or as little deficiency as possible. The homeowner gets no benefit from a short sale, so a sale price of $100,000 with no deficiency on their personal residence is as good as a sale price of $125.000 with no deficiency!
“Firms such as Bank of America and others have language in their short sale approval letters that prohibit the flipping of a property and after closing they will audit transactions to identify “flips†or “flopsâ€. False! BOA does not always have this language in their approval letters. In addition, FHA has placed a moratorium on their 90 day no re-sale requirement to allow investors to flip properties.
The title of your article is also misleading. “Beware of The Short Sale Investor|Short Sale Fraud†In the whole article, there was one correct example of short sale fraud. The rest was misleading and / or false information that was intended to cast a disparaging light on legitimate short sale investing and to market your business. I have expressed disappointment at your condescending remarks to me as well as your personal attacks on others that disagreed with you.Now that you have moved to Bigger Pockets to continue this discussion away from the eyes of your readers, I hope that you will consider the input of the investors that have commented. I think I will also place this post as a comment on your article and see if it passes moderation.
Bill
- Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes16y
Oops! This page appears broken. DNS Error - Server cannot be found.
I tried to post it as a comment on your article, Bill, and got the above message. Maybe the server is down, so I will try it again in the morning.
Bill - Involved In Real Estate · Hopkinton, MA · Member since 2008 · 9 posts · 0 votes16y
Sam the fact of the matter your long spiel of why I am misinformed is all completely avoided when there is no middle man involved who is looking to make a profit.
When I accept an offer from an end buyer I don't have to worry about negotiating with the lender because I know the offer is something they will more than likely accept. Most of what you use as your counter points is avoided.
BTW - In all but 2 short sales I have sold there was a complete removal of the deficiency. In those two the settlement was pennies on the dollar.
A Realtor involved with kind of transaction has nothing to do with the person negotiating it. We can argue that all day. I could never recommend to a seller client to take an offer from someone I don't know and let them negotiate the deal. A Realtor that does that will open themselves up to lawsuits down the road. Your making the assumption that because you are good at what you do and are an honorable person that every other investor is as well.
- Specialist · MA · Member since 2009 · 858 posts · 306 votes16y
Bill, Can I ask what your major problem is with an investor doing a short sale? Is it because we are making a profit?
There is no more risk to a homeowner working with an investor vs. a realtor. Guess what?! Buyers walk. Your buyer could walk, we could walk, our end buyer could walk and what would you do in that case? You would find another buyer, and so would an investor.Let's keep in perspective you make money off a homeowner in distress when you sell their home. We are providing a service, so we shouldn't be paid?
No one would open themselves up to lawsuits so long as there is complete disclosure. An agent can help someone buy and sell the same property all day long. As far as I know there is no law stating they cant. I'd like to see it if there was.
Most of the Realtors we work with have complete access to the negotiator and CHOOSE not to involve themselves in the negotiatons (as they all have authorizations) because it frees up their time to market to more homeowners. They love that we bury ourselves in collecting paperwork.
It seems like you could be threatened that an investor is working on your turf Bill. I'm sure there are plenty of distressed homeowners in this market. I respect you taking your position Bill, however strongly I disagree with it. I still feel it's completely misleading and would love us all to come to a happy middle ground.
- Involved In Real Estate · Hopkinton, MA · Member since 2008 · 9 posts · 0 votes16y
Smitlit I could care less if you make a profit on a deal. On my listing however, when someone approaches my client that I don't know and asks to submit their offer and take over the deal I have a major problem with it. If you can't understand why then we will never come to an understanding.
When someone hires me they are asking ME to sell their home and a lawyer who is part of my team to negotiate the short sale for my client. The seller didn't hire YOU or anyone else to negotiate their short sale for them. How can I in good faith tell a seller that it is perfectly ok for you take over when I don't know you from atom???
If you don't see how this could cause a lawsuit for a Realtor down the road then you don't understand the world we live in.
I don't have a problem with you or any other investor approaching a home owner in distress that has not listed their home and helping them avoid foreclosure.
[b] I will continue to repeat myself over and over that I have a fiduciary responsibility to my client. Handing over the transaction to someone I don't know if certainly not doing that!!
- Real Estate Investor · Craigmont, ID · Member since 2009 · 564 posts · 239 votes16y
Interesting read fron agents Tony and Suzanne Marriott, on ActiveRain
I recently completed an analysis of ARMLS (Arizona Regional MLS) data for 12 months of Short Sales. I focused on Closed, Cancelled and Expired.
The purpose was to determine Short Sale list to close ratio - the premise being that to avoid foreclosure in Phoenix and other parts of the Phoenix metro area, you have one shot at it and therefore it's in your best interest to select a Short Sale Listing Broker, a Short Sale Listing Agent, a Short Sale Listing Realtor that can prove based on their track record that they know how to get Short Sales closed.
The closer their list to close ratio is to 100%, the better the chances that yours will close too!
I was astounded by some of the statistics, and I'll share them over a series of posts so as not to throw a bunch of numbers at you all at once.
Of the 1,332 real estate brokerages in ARMLS that had a track record for short sales between 8/5/2009 and 8/5/2010, only 307 of them had handled a dozen or more transactions.
The average List to Close ratio for those 307 brokerages combined was less than 1 out of 2 - 48.32%
The average List to Close ratio for the 1,025 brokerages combined that had handled 11 or fewer Short Sales was 42.27% - 6 points worse than the brokerages handling 12 or more Short Sale transactions in a 12 month period.
Lesson: If you choose a Short Sale Listing Broker at random, you have less than a 1 in 2 chance of your Short Sale closing!
http://activerain.com/blogsview/1787884/short-sale-statistics-why-take-a-chance-
The problem is that those numbers are TWICE the national average. The fact is the closing ratio is closer to 13% for my area! - 16yJoshua D.Pro MemberBiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
Guys - I'm all about the debate, as most of you know, but lets keep it cordial. Thank you.
- Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes16y
I did get my post and answer to Bill Gassett's request to let him know what was false information, on the comment section of his article. For some reason....It would not accept posts from me, but it did accept one from Jackie's computer!
From my standpoint, this debate is over. I'm not going to waste any more time repeating to Bill my points, when he will not consider them. This is not a debate anymore. I well know that I can not convince every Realtor of the benefits of using and investor. All Realtors do not need one and many are capable of doing the work themselves. Many more are not or do not chose to spend their time in negotiations. These are the Realtors that we work with. Bill seems to have a system down that works for him and his clients. All that I have a problem with, and I said it in my very first post, is that his article is full of misleading statements and false information that spreads a negative cast over all investors. I don't use the same, broad brush to paint all Realtors and Bill should not use the same broad brush to paint all investors as he did in his article.
I'm going to post on a thread where relevant input is appreciated! Signing off!!
Bill - Specialist · MA · Member since 2009 · 858 posts · 306 votes16y
Bill P.
I think every person tried to show him the light, but unfortunately his view is clearly tainted.
He wrote a article full of mistruths and blanket statements and unfortunately it's this narrowminded thinking that has Realtors and Investors constantly at odds.
It's too bad we can't bridge that gap. This blog just sent us back about 50 years. It's just not progressive thinking at all.
I thought you did a great job though Bill. There was a lot of great information provided by some excellent investors and I can say I'm so thankful that I get to learn something new every day in this industry from all the knoweledgeable realtors.
- Real Estate Investor · Portage, MI · Member since 2010 · 470 posts · 315 votes16y
Originally posted by smitnlit:
Bill P.
I think every person tried to show him the light, but unfortunately his view is clearly tainted.
He wrote a article full of mistruths and blanket statements and unfortunately it's this narrowminded thinking that has Realtors and Investors constantly at odds.
It's too bad we can't bridge that gap. This blog just sent us back about 50 years. It's just not progressive thinking at all.
I thought you did a great job though Bill. There was a lot of great information provided by some excellent investors and I can say I'm so thankful that I get to learn something new every day in this industry from all the knoweledgeable realtors.
Thanks Maryann! :D
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