All Forum Posts by: Brian P.

FSBO's Want to save the commission. That is wrong thought number one. Every deal has a built in commission amount whether it is declared or not. It is a matter of who gets it, the seller, the buyer, or an agent or a combination thereof. The first thing a FSBO needs to understand is they are not going to save a commission, the need to know they are going to earn a commission.

Back in about 1964 the California real estate department had a very thorough study done and it was a rare that a fsbo saved any money at all. Their best chance to save money was to do what most brokers do when they sell their own property, put it on the MLS and co-op and you do this through a flat fee broker that puts it on the mls for a couple hundred and offer the selling agent the normal percent they get at least. Put on your fsbo sign, broker co-op, and leave off the by owner and agent will be more willing to show. Even buyers are less likely to automatically knock off 6%. It is the old half a loaf theory is much better then no loaf at all.

Yes many normal fsbo's do sell but the studies have shown through the years they saved peanuts if anything for the effort. What they net is the key. This happens even on listed property, a seller will get a 1% cut or more off the agents normal rate (loser agent willing to give up a third or more of his income right off the bat, I'm sure this agent will get me top dollar), but the general result is they lose twice as much or more in the final sales price they get. Yes the brokerage fee is lower on the closing statement but the net to the seller is much lower too. False economy.

Things really didn't change much over the years, the do it yourself sellers went through a lot of time, money and effort and what they saved barely made it worth while. The number one mistake was most overpriced their property and created a big resistance factor at the start. In my area we didn't call them fsbos we called them 10 percenters because it was uncanny that most of them came on the market 10% overpriced.

When a fsbo says he wants to save 6% he would normally have to pay, I laugh. I ask why do you think you are paying 6%?  Who is giving you the money to pay the 6%, why the buyer of course. So don't get greedy, give the buyer some of the commission he is really paying anyway, you save some money and the buyer saves some money, you both win.

If you have an interest in the property you can stop the foreclosure by bringing the loan current period even if it is only on behalf of the deceased. Now if your title is not exempt under the law from the due on sale clause the lender will need to restart the foreclosure with the due on sale violation as the basis of the foreclosure but I doubt that will happen.

Glad to see you feel that way. Getting the deal under control is one issue, Cleaning out someones financial closet is another. I've seen investors strut around like peacocks because they hit a grand slam and cleared someones piggy bank of every single penny and future pennies during the worst period in the sellers life, and left them with nothing. 

Unlike most investors, I kept track of some, not every one, of these sellers and if I had been very lucky in a deal I shared that excess bonanza with a deserving seller. Some times there was no bonanza but sometimes I could help them get restarted if they had the character to stand up and "hunker down" 

There are a few times I surprised a seller showing up at escrow by saying M/M seller, things didn't go as I expected and I want to change the sales price from x to y. First the look of panic, then the realization they were getting a higher price. My parents would have beaten me to death if I had taken advantage of someone who deserved better and needed help. They didn't want any of their kids to one of those greedy banker types, or other swindler types in the old movies. 

When my father died and we were at the funeral, person after person stepped up to declare how he had helped them during a crises. He never once said anything to any of us of these acts. The only thing he ever said was a good deed has it's own reward when we did a good deed. I don't know if my mother even knew, but after 55 years of marriage I'm sure she did, but she had died four years earlier so we couldn't ask.

I guess the Ohio real estate commission is staffed by idiots. Apparently they don't have the ability to look up the word option and if they did they didn't understand the explanation. What they have done is eliminate options and have definitely erased hundreds of years of usage and purpose. When an option is not exercised and expires both sides have gotten what they agreed to at that point. Yes the outcome is not what was hoped for, but nothing is absolute or you wouldn't be using an option, it is a big if, not a guarantee.  

Complaints from sellers that didn't close, boohoo. they still have the property and they took a chance, these are the same people who if they lost a quarter in a slot machine would insist the casino give it back because the didn't win. I don't know what it is now days but did you know that at one time over 50% of executed contracts by real estate agents did not close. In Ohio they would insist the agent be required to close if they didn't get a closing buyer. If the Ohio real estate commission had more then a collective 60 IQ they could have simply required a disclosure that explained options be attached to and made part of any option contract (pertaining to real estate) and the possible outcomes and consequences. The Ohio optionor would be fully informed but the Ohio cry baby optionor would still likely insist they should be awarded a jackpot though the slot machine said no winner. They forget the optionee is a loser here too, if they want to make a buck they spend time, money and effort and end up with no point on the board. 

O.K. Ohio real estate commission lets get started on that legislation that requires the buyers agent to buy the property if the buyer backs out. This law couldn't have been tested in the courts yet, so unless the Ohio judges are as brain dead as the real estate commissioners it is pure BS. Let's make it even better and even more on point, listing agents must buy the property at the list price if it doesn't sell, after all a listing is a form of an option of sorts. 

Maybe this ruling doesn't bother the agent community in Ohio because it is directed at those horrible real estate investors who are stealing business away from them and if that is how limited their knowledge is, and how their brains work, then they are future candidates for a real estate commissioners job.

Dennis

Cathy gave you some good ideas. When your starting out we think in terms of distressed properties and that is what we are told to look for, and that is a good place to start but the real money is in distressed owners. Of course one is a clue that may lead to the other.

Figure out what people might be in distress and then look where they might show up. A well know source is foreclosures, you first thought will be I can't do those, there is a ton of competition, and investors with money. True but it is still very possible for a newbie to break into this market with just a few bucks and the right approach and knowledge. I am not suggesting you start there but it is just to let you know that almost any source is not off limits with action and knowledge. 

I don't know your particular area, I do know once my company wanted to promote me to Pittsburgh when I was a young executive, but my wife and I wanted to stay in the San Francisco area so I quit because I didn't want to live in PA, well that and a few other reasons. But whatever area you chose, follow Cathy's advice and drive around looking for opportunities, and while your at it, write down the numbers of any properties for sale or for rent besides looking for vacant or run down properties. Call the listing agent of the for sales and get the info. Ask the agent if he did a CMA and tell him you know most sellers want to list at a wish price, but tell the agent you were planning to start investing in the area if you can find the right deals but first you want to learn the territory and what things are actually selling for and how strong the market is at the present time..

I know you didn't get the advice you wanted to hear. But the advice you received was good. Don't dump the idea yet. Find out if it is even zoned to do what you want to do, if it isn't what is the chance of getting a variance. I have other things you would have to do first but until you find out if it is even possible to build what you want to build you don't have to worry about the other details.

If you want a car just for transportation that is one thing, if you want a special car because you love cars that is another thing. If your an investor and the kind of investor where your car means nothing but is basically a work vehicle that is something else. I bought my first car at twelve for $10 and sold it for $25 when my parents wouldn't let me keep it. But from then on I was hooked on cars.

Now days I just need something to get to the store and the medical offices. So my wife and I still have the 2003 Corolla we bought new when our luxury car that was only two years old blew up in front the the Toyota dealer on our way to a doctors appointment. It is all we need at the present an it just hit 24,000 miles on the odometer. 

The reason I got into real estate investing a week after my 16th birthday was so I could buy one of the new things called a corvette. Funny thing was when I got the money I didn't buy one, I kept the stock exterior 49 chevy convertible with the secret fully hopped up new 55 Buick V-8 under the hood, Lasalle transmisstion, and Olds rear end. That was one hot car. Loved it, courted my wife in it, The day I sold it to get a family car was a sad day for me.

Had some great cars but found out in the market place I was dealing in when I got my brokers license that image was crucial and thus began the getting a new car every two years, and keeping the last one for two years as a second car. Waste of money, no, it was way  more than offset by the business I didn't lose when dealing with snobs.

Then I found a way to make money with cars. One of my clients was a car dealer and a broker, and he liked going to the dealer auctions himself to pick up inventory for his used car business. he needed more cars then his dealership got in trade-ins. One day he asked me to join him so he could discuss a real estate deal at the same time. When I saw what some cars where going for I said to myself even I could resale those for a profit. So I had him bid on a Mercedes for me and we got it. That was the beginning of buying a car at auction, driving it in my business with a for sale sign and my car needs began another profit center instead of an expense.

I would say your current cash flow game is a good one and I would do my best to keep buying and paying off properties as often as possible. No reason you can't have a couple of million in free and clear properties down the road unless something drastic happens.

To avoid that something drastic be sure to vote and vote right, the general voter has proven themselves to be idiots and are the greatest danger to our futures. And to add to that problem is the voter that would have voted right but didn't vote.

Never, never interfere with the flow of income, one thing you will give your tenants the wrong message, and due to the laws of nature it is likely to come back and bite you in the rear. This applies to things other then rent also.

 Don't lower your income, consider increasing your expenses, Those kind of years I would buy a new car, computer, something used in business for all cash and a tax deduction with the blessing of the IRS. Don't know the current tax law but I'm sure there is something there.

I used to have one C corp for the benefits it provided and it was possible to buy other C corps with large losses and lower the tax bill a lot. The side benefit was I could sell off their real estate down the road and whatever else and then dissolve them, saved on taxes and made a buck down the road.

Tax avoidance is good, tax evasion is what got Capone put in jail. 

Amber

The only reason someone probably comes by and cuts the yard is to avoid fines. Is it an heir or do they hire someone, maybe an immediate neighbor knows. Who ever does it or orders it done is probably the person you need to talk to to get the ball rolling. You do need to check the current ownership. You can't control the property until all owners are on board. 

Step one, is your brothers plan a feasible one? Too many plans and hopes are built on poor foundations. My first question would be what is the market for this lot, anybody doing fill in home building in the area, and what would they pay for a lot. When they demolished the house did they do it completely or did they leave the foundation and hookups in place.The reason is a builder can often avoid the high impact fees if they are able to build on a existing foundation and hookups which in my market place where I did some of these deals in was almost $30,000. 

The owners are probably tired of paying taxes and if they haven't done anything in 2 years I doubt they will actually do anything in the next two years. You can probably get control over the property with straight options for a buck with each owner, but you would need to check with someone on the law in Texas due to their flaky law on lease options, I don't know if it applies to straight options.