All Forum Posts by: Al D.

@Kush Khandelwal Just sent you a PM.

@Kush Khandelwal First of all, I am not a lawyer…

Is your contract similar to this?

https://www.ncrealtors.org/wp-content/uploads/markup0719-800T.pdf

If so, here is some good news:

1.(i) “…In the event of breach of this Contract by Buyer, then without limiting any other remedies available to Seller for such breach, the Earnest Money Deposit shall be applied to such damages as Seller may be legally entitled to recover for such breach, and the balance of the Earnest Money Deposit, if any, shall be refunded to Buyer upon Buyer’s request…”

Assuming that the builder/seller gets to sell the property for the additional $28k, I’d expect any “holding costs” to be under that amount - but I don’t know their facts. In other words, the way the above quoted part reads to me, I don’t see how they can have a legal claim to your money. But you may have to wait until the sale is complete to be able to press them on this clause.

(Again, assuming that your contract is the same form as in the link I provided): 1.(j) of your contract should have the name of the Escrow Agent (their broker?) I would contact that agent and let them know that the sale has fallen through, and that you have contacted the seller to get your deposit back, but the seller has refused to release it. (Under typical circumstances, I’d have my own agent do this. But you don’t have one, and RWN is not your agent in this transaction.)

(On the above point, to answer your rhetorical question for their purpose: RWN connects buyers looking for inventory with sellers who have inventory. This is valuable to have in today’s market conditions. They also provide some guidance through the buying process, which - depending on one’s level of experience - could be priceless. Unfortunately, they may also provide a level of comfort for having “vetted” affiliates. When I was first buying OOS, I made the mistake of relying on that. RWN helped to resolve my issue, to an extent - the numerous pulled hairs was still on me, for a number of months after. Someone else would have given up in my place, but I am used to dealing with a-holes for a living. I haven’t bought from another affiliate since - and I’ve bought at least a dozen properties since…. Yet, they seem to have plenty of happy members, too. I genuinely hope that you will be one of them.)

Incidentally, this morning, I got an email from RWN: “…One of our Charlotte property teams has new build single family properties that are currently only 90-120 days out from completion. If you've been in the new construction market, you can appreciate the rarity as most builders are 6+ months out…” I have no idea who this affiliate is. But perhaps local market conditions have changed in the last month.

Please also see 1.(l) in the above link to make sure that there is no confusion between “Earnest Money” and “Building Deposit” in any communication between you and the seller, in the event you may have asked the builder for certain construction options. I can see “Building Deposit” being 100% non-refundable.

Paragraph 21 allows for use of email communication to deliver “notices” between the parties, so you should be good there if they agreed to amend the terms of your contract - agreed to wait for your condo sale to happen first - and you reasonably expected from that communication that the change was official. There may be a question as to with whom you were communicating. (Reasonably speaking, anyone from the seller replying to you with specific terms has the authority to do that in your eyes.)

Any stipulations in the email discussions - including any potential delays/changes you may have attempted to make, if any, after the initial email amendments they agreed to - would play a big role. (The way you describe it, you mutually agreed to changes, but the seller attempted to force you into another change ~2 weeks later that was not going to work for you. Even if the change they were attempting to make was going to put the exact original terms of the contract back in force, that should be irrelevant, as new terms had already been agreed to in the interim.) (But there may be a question as to whether some “adequate consideration” was given by you to them when you mutually agreed to the original change to make that agreement a contract in legal respect… I am way above my legal education level here.)

Have you contacted the seller’s broker? I’d do that. (On a side note: after contacting the broker for the affiliate I had my issue with years ago, the original - unlicensed - person I had already been in contact with was the only one who still ever responded. His immediate reply was to apparently laugh at me for my attempt: “Our offices are next to each other’s. You didn’t think I’d find out?” I didn’t care whether he’d find out - I wanted the licensed broker to be on the record. As should you.)

My initial communication in such cases starts with the fact that miscommunication between parties happens. I then explain the full situation, presume for them where the miscommunication may have occurred, and ask for a resolution. This way, there is a way for everyone to save face. If they want to be an a-hole, it’s their choice. I hope you are not past this point with the broker. The time for regulatory bodies is after you’ve exhausted good faith. But you can seek legal guidance at any time.

Again: my advice is not legal, but based on practice that has worked for me.

@Kush Khandelwal There are some information gaps that I can guess about, but would also like to ask some questions for clarification:

I am guessing that the date for completion of construction/closing was an estimate, but with a stipulation in favor of the builder/seller that they could push it back. I am also guessing that the original contract had no provision for you to be able to push back the closing date. (However: some states allow the parties a one-time - unilateral - extension by X number of days, but only for specific reasons. I don’t know whether NC may have this option, but this could be worth looking into - this should be in the contract.)

When you signed the February purchase contract - and during the subsequent months - did you put in any financing contingencies, such as the sale of your condo has to take place first? From what you’ve said so far, it does not sound like you did.

Did you have any contingencies, at all, in the original contract? I doubt that you can get the ownership at this stage, but this may help you to get your earnest deposit back. Some terms regarding this should be in the original contract, while additional rules may also apply by state law. (Frankly, regardless of whose side the law may favor in your situation - assuming no apparent dishonesty on your part in the process - I’d expect the seller to give you back this money in good faith, if for no other reason than for being a member of RWN, with whose many more members they’d like to do much more business in the future.)

The next question boils down to whether your July email discussions could be considered a contract. That may be up to courts. For one thing, the original contract may have referred to how any of its terms could be changed - and an email discussion may not be an allowed method both of you had agreed to/agreed to not use for that purpose. Regardless of this, if any of their email replies to you contained language similar to the following, I wouldn’t even bother consulting with an attorney:

“Nothing in this correspondence is intended to form a contract…”

And this language could be in small print.

I am sorry that you are not finding RWN helpful. Not having bought anything from an affiliate in years - and having never dealt with this one in any way - I am guessing that, like me years ago, you did not have an agent representing you/your best interests. I mean, RWN was not involved in the transaction, but only stood to make its referral fee in case you closed. Given that RWN is an “educational company,” after a couple of “lessons” years ago, I learned to get my local education from locally-licensed agents with fiduciary responsibilities to me.

Please fill in the gaps. Unfortunately, for now, I am inclined to side with the seller in terminating your contract and re-listing - they may owe money to their investors, and delays could be costly.

@Ken P. Unfortunately, I had not received additional info from anyone on BP before deciding not to buy in Texas. (Since then - in the past week - I heard a negative experience about OmniKey from a forum member by a private message. Because it is not my own experience, I cannot say anything else on this.)

My decision was ruled purely by two mathematical considerations:

1 - Not being a bettor on market appreciation, I invest for cash flow. For the time-being, DFW - and anywhere else in Texas I (personally) care to invest in - seems to have outpaced rents.

2 - Why should I, as a buyer, potentially pay as much as 1.5% on top of the purchase price in market conditions where the seller is not likely to yield on the listing price or agree to fix certain items my agent/inspector may find? (Medium DOM where I was interested was ~20 and trending lower, with sale-to-list price above 100%.)

Perhaps if I heard the agent justify the fee to me by explaining that they will negotiate a better price - and how, given today’s market conditions there - I’d see value in paying for that service. Unfortunately, this was not a potential benefit that was mentioned to me. Blue tape was mentioned, which I had no idea was “above and beyond” for a good buyers’ agent.

Having just sold a property in a secondary market within days of listing, with multiple offers, for all-cash, for way above asking - and with no contingencies - I’d (politely) laugh at any buyer with blue tape. Having just faced similar conditions as a buyer for the last 5 of 6 properties I bought since May, I had to pass on the “above and beyond” service for a premium price.

All this math may change tomorrow, of course. But it is what it is today (earlier this month.)

Now that “Woody Johnson” is no longer a member and his post has been removed, my above comment looks out of place. And the fact that the person I defended against Woody won’t answer my weeks-old PM about their OmniKey experience makes me feel extra special for my wasted time. That (my ego) aside:

Can someone who has bought through OmniKey speak to whether you may have had to pay any buyer commission to make up their expected 4% buyer agent commission?

I was about to sign a contract with them, having heard about them through RWN years ago. The contract calls for a 4% commission to them, 1.5% of which would go to RWN. Basically, if the seller pays 4% to them, nothing would have to come form the buyer. If the seller pays less than 4%, the buyer is (contractually) expected to make up the difference.

I then told them that I also heard about them on the GRE podcast - would the fee still be 4%? The answer was that their fee was always 4%, regardless of any referral fee they may pay - because they do a lot of extra work, “more than your typical buyer’s agent.”

Maybe so, but while the contract expects me to pay a higher-than-typical commission as a buyer, I do not see the buyer’s agent’s additional duties listed in the same contract, besides mentioned “industry standards and laws,” which, I believe, is standard language.

So, I decided to post here. Maybe the addition expense with this agent is worth it.

In your experience in buying through OmniKey, did you pay any commission as a buyer? Was your buying experience worth the additional money?

More specifically, the contract calls for 4% commission for any property acquired or sold under the contract. Looking ahead:

If someone can also speak to having sold a property using OmniKey: what % was your commission? Did you have any flexibility with it? Did it matter for the commission whether OmniKey represented you as well as the buyer?

Can someone who has bought through OmniKey speak to whether you may have had to pay any buyer commission to make up their expected 4% buyer agent commission?

I was about to sign a contract with them, having heard about them through RWN years ago. The contract calls for a 4% commission to them, 1.5% of which would go to RWN. Basically, if the seller pays 4% to them, nothing would have to come form the buyer. If the seller pays less than 4%, the buyer is (contractually) expected to make up the difference.

I then told them that I also heard about them on the GRE podcast - would the fee still be 4%? The answer was that their fee was always 4%, regardless of any referral fee they may pay - because they do a lot of extra work, “more than your typical buyer’s agent.”

Maybe so, but while the contract expects me to pay a higher-than-typical commission as a buyer, I do not see the buyer’s agent’s additional duties listed in the same contract, besides mentioned “industry standards and laws,” which, I believe, is standard language.

So, I decided to post here. Maybe the addition expense with this agent is worth it.

In your experience in buying through OmniKey, did you pay any commission as a buyer? Was your buying experience worth the additional money?

More specifically, the contract calls for 4% commission for any property acquired or sold under the contract. Looking ahead:

If someone can also speak to having sold a property using OmniKey: what % was your commission? Did you have any flexibility with it? Did it matter for the commission whether OmniKey represented you as well as the buyer?

@Curt Smith I have to disagree with you for the OP’ needs, as stated in her original questions:

The OP’s first question tells us that she wants to avoid paying capital gains taxes. In my rough estimate - not knowing her other income, capex, and assuming $10k in claimed depreciation over the holding period - she would pay about $40,000 between state and federal taxes in the absence of the successful exchange.

Assuming she will not be leveraging - despite her question 4’s suggestion that she wants to - her ~$220k replacement purchase would need to go down in value by about 20% to hurt her (ego - unless she may need to sell before the property value recovers.)

Since we know that she still wants to be in the investment game, why would she need to incur taxes instead of getting some cash flow on that $40k - or especially on $40k leveraged x4 - and likely for decades to come in her life, and then to be inherited through her estate beneficiaries at the future stepped-up value? (Of course, I have no idea what the laws will be then - but know what they are today.)

I agree that she may face sleepless nights - depending on her personality - but, if successful, she will only be a stronger investor as a result. My first exchange was during what I thought was still a buyers’ market, and I was looking to repeat some prior successes of getting great deals. Unfortunately, I wasted too much time living in the past, and by around day 40 settled on “bargains” in a market that was least preferred (which was still in a buyers’ market phase, unlike the others) - anxiety, lack of preparation (understanding of reality) in new markets I wanted to get into, and wishful thinking worked against me.

Lesson for the OP: start identifying the markets - and getting in touch with local agents there - before you are at the sale closing table. Make sure that you have clear goals in mind for what you are looking for, and communicate them to the agent(s). I’ve had agents who never replied, or those who promised to get me great deals despite apparently knowing that those were empty promises. (As much as I don’t like being ignored, I prefer that to empty promises that waste my time. I don’t wait too long before contacting another agent in a market I am interested in if I don’t hear back from the first agent I reached out to.) (I think there have only been two or three agents I never heard back from… I may reach out to them one of these days - “Pretty Woman”-style - to let them know what I ended up buying in their markets over the years since. “Big mistake. Huge!”… I won’t.)

I’ve had agents simply put me on an email drip for anything new that would hit the market in a given property category (like “tenant-occupied,” etc.) with no regard for any other search criteria I provided. If the properties that the agents will start providing you in response to your stated goals - after promising to meet your goals - do not meet your goals, state your goals to them again, be firm, and politely remind the agent that you’d rather not waste their time if they are not likely to meet your expectations. You are in control. You may soon realize that a given market (rather than the agent) simply cannot not meet your current goals. Your options then are to look for another market or to adjust your goals to the given reality of the time for the specific market.

This is definitely a sellers’ market in the markets I am interested in. But I was able to get a nice suburban Georgia package of duplexes in April - yielding just over 1% - after selling a CA property in March. It is still possible; though, this was likely an anomaly - luck. And I am on day 12 of my latest exchange. (Fingers crossed.) I may not be able to repeat the April purchase success, but the potential tax liability reminds me of my longer-terms goals, which means that “overpaying” for replacement property(ies) may still be a better option than paying taxes.

1. As a number of other replies have stated, it is not too late to line up your 1031x QI, but you should definitely get on that before you get to the point of signing the sale closing docs. I’ve used the same QI - incidentally, based in NYC (not that it matters what US state one is in) - for years. While their price has gone up since the first time I used them, it still starts under $500 for 1-1 exchange.

I typically give my buyers complete autonomy in choosing the title/escrow company. Once their title company contacts me, I loop in my (previously established) 1031QI in my reply email to the title person who contacted me, advising the title person that this will be a 1031x transaction and that my QI is cc’d. The QI takes over from there for anything related to making sure that all the necessary docs show that the proceeds of the sale are to go to the QI. (This does not mean that the title company will remember this - I’ve had a number of cases where this was overlooked again and again. Just verify that the QI is listed as such in your closing docs, and keep cc’ing the QI on all related replies to the title company.)

Your 45-day clock starts when you close on the sale of the relinquished property. Be mindful that if you get into a contract to buy a property still under construction, it will need to be built (so you can close on the purchase of it) well within 180 days of the closing of the sale of your relinquished property (not 45 days + 180 days.) Given current uncertainty of cost and availability of materials and labor - on top of typical weather-related delays - some builders may not meet their deadlines by a long shot.

Depending on your personality and potential “hand-holding” from a knowledgeable person you trust, the process will come with anxiety. Once you are in the 45-day ID period, you will have other requirements to consider (that you can ask to clarify at that time.) But you should come out of your first successful exchange with a higher appreciation for real estate investing. Good luck.

I filed the complaint in January. Today, TREC made their enforcement actions for the month of May public.

My complaint listed four issues. Only one appears to have been pursued: unlicensed activity - charged to the company itself (which can open under a different name tomorrow, if it should so choose - run by the same people.) My complaint alleged that the CEO was involved in unlicensed activities - not the company. Besides my initial statements in the complaint, I was never asked to provide supporting evidence, which I said I have.

Going forward, short of sifting through past months’ - years’ worth of - enforcement actions, I don’t see a way for a consumer to readily know that a given company/licensee has had a sustained complaint in TN, unless they got suspended. Otherwise, it just shows “active” license.

Pass Go and pay $1,000. And there I was concerned about messing with people’s livelihood… Barely a pinch.

@Woody Johnson I follow the keyword “OmniKey,” among many others, in this forum. So, when someone writes it, I get notified, like just happened. I have never bought from them.

I believe that this forum is great for educating newbies and not-so-newbies, like myself. But I also fear that much information these impressionable minds may get exposed to here is false and potentially scary. If I came across your comment as an aspiring investor, I’d be put off. If I were doing a background check on the target (person) of your comment, I’d be grateful for the dirt - however benign you may think it to be.

Public shaming - by an alleged lawyer (unless the 80 year old person is their client in a beauty salon or the like) - coupled with what appears to be an attempted service of process - was not what I had expected to see here in 2021. I don’t know the educational/professional background of your target, but have seen people - whom I’d refer to as victims - stress out for a lot less than what is in your comment.

Thank you for providing Exhibit A for why not to use one’s real name on this forum.

That said, “Mr. Woody Johnson,” are you a licensed lawyer in any state under this name? Perhaps you are a law student? How much do you charge for stalking your target on social media? (That is a serious question - I am looking to outsource this occasional need.)

Take it from someone who dropped out of law school (me): do not (publicly) threaten to banKrupt someone over an “if/when” event. Then mentioning that it is not about money, and sprinkling “fair and humane” into the mix…. I wasn’t taught to write “letters” like that.

I checked the address, and saw listing photos. It appears to me that the “not (d)isclosed conditions” you have taken issue with are on the exterior of the property. Think about this. I mean, think about the issues you are complaining about, and then tell the rest of us what kind of disclosures you would expect from the PM in relation to the issues. (I am honestly asking this for learning purposes.)

As I alluded, I am not a lawyer. But - since you are commenting here - I’d like to learn from you. We can start with e/Ethics.

@Alex Pelin I like the free part. And the fee for the tenant to break up payments is reasonable.

But I am not clear on how the landlord would still get paid (in full?) on the rent due date if the tenant is still in the process of making (future) payments? Do you front the money to the landlord?