All Forum Posts by: Kim Knox

Regardless, it is money well spent.  I don't worry about the cost of inspections, it is part of being a smart investor.  On flips, you could ask your inspector to just list the problems, rather than doing a full report, which may save you some money.  However, for liability, I prefer to have a full inspection report of record.  Further, for another fee, I like to pay the inspector to come back and essentially check off all of the repairs we made after the purchase, so I have an updated inspection report to share with a potential Buyer.

Brandon, I am sorry to hear this.  When and how did you discover the internet issues?  I would not be so quick to release your earnest money with a threat of a lawsuit.  In some states, if there is disputed earnest money deposited in escrow for a particular address, this can hold up the next sale.  I mention this, as it gives you some leverage for them to reconsider suing you IF it will cost them a delayed next sale AND the value of your earnest money.  The fact is, you probably paid for an inspection and an appraisal, all of these things indicate you were in earnest, although it can be argued in light of your cancellation.   

Did they agree to correct the items you indicated you wanted fixed?  My guess is, if you had the property off-market for 28 days, you were already through your inspection period?  

Standards of Practice have two rules in regards to a Listing Agent being financially invested in a listing they are representing. It has to be disclosed on the body of the contract, and it has to be indicated through the Local MLS, so this information is available to a Buyer prior to calling a listing agent. Separately, they also have to disclose a relationship they have with a Seller. For example, Listing Agent is related to the Seller. This information should actually be listed in the marketing comments of any listing, so that a potential buyer would be made aware of this prior to making first contact with a Listing Agent, this is an ethical breach. However, it is difficult to say whether this relationship played a role in your representation. Was the Listing Agent representing you, or did you have a Buyer Representative?

@Ben I. If they returned your earnest money because they could not produce an executed contract, you were never in contract....but your depositing earnest money and completing inspections indicate you felt you were in contract. Tell your Agent to not give your contact info. Let the seller pay the attorney to track you down. It would also be unusual for a title company to open escrow without an executed sales contract.

Don’t do anything until you get formal Notice if a legal action, if you were within the bounds of your contract.

They can’t make demands about repairs without your formal acceptance, generally speaking.

Making another purchase can indicate you are, in fact, a capable and vested buyer. It can also indicate you were wasting their time if you had both offers out at once.

It is my position, that if I am being sued by an ambulance chaser, that I go after them aggressively in counter suit. I would never represent myself, as I am not equipped to go head to head with an attorney.

I am not an attorney, this is not legal advice.

Hi @Joshua Fields 

In my opinion, it is good to get your license.   You may opt to use an agent regardless of having your license, on your personal portfolio(liability).  However, if you unearth some purchases that don't work for you, you might just make a referral agreement with an Agent, and collect some passive referral income.  

Agents can always find a Buyer that is looking for a good deal, so investors are a dime a dozen.  I mention this because Agents are often your competition, they likely believe in investing in Real Estate themselves.  Additionally, many Agents are more enthusiastic with their "flip" investors over the "buy and holds" for obvious reasons.  

@Ramel Sherman

I can't let you think you were really in a high risk sitch if you are dealing with a Real Estate Brokerage or a Title Company.  You can deposit earnest money with a title company's Client Trust Account, but you can also deposit with a Brokerages Client Trust Account(CTA).   Most Brokerages in my area prefer you deposit with the escrow companies title company, they don't want the extra burden.  

In both cases, a Brokerage or Escrow, they have Client Trust Accounts, specifically meant for these deposit types.  A release has to be signed by the Seller to release the funds.  An Agent is not the party who receives your earnest money, the Seller does.  Your Agent has no reason to hold your earnest money hostage.    

My guess is, the Agent just forgot to follow up to make sure the earnest money was refunded .  Any earnest money dispute would be by the Seller trying to keep your earnest money, NOT your agent.    

Earnest money refunds can be subject to paying any unpaid bills to protect any inspectors from doing the work and not getting paid from a buyer.  The Agent or the escrow officer might have needed to confirm all debts regarding the purchase had been paid.   The inspector going MIA and not confirming he/she was paid could have delayed the Agents (or Escrow Officers) return of your funds.  

In this situation, your first step is to ask your Realtor, if no results, make contact with the Realtor's Principal Broker (Boss).  The Principal Broker would find the chain of activity regarding your earnest money and determine if the Seller had disputed releasing your earnest money.  If not, have the Seller sign the release, and send you your money.      

If the Seller did try to get your earnest money funds, you would be notified by your agent that the Seller is disputing the return of your earnest money, refusing to sign a release. 

@Young S.

Hi.  A few things could have made your broker less enthusiastic about your investment opportunities, and her interest in your success.  BTW, I think it is always a good idea to question someone's motives.  I think it is smart and healthy to try your best to have perspective.  I am first a Realtor, next, an investor.  

I should first mention, having a good relationship with a Realtor does involve trust and mutual benefit, it is also great to enjoy one another.  Some things to ask yourself, as it relates to your Realtors motivation to get you "deals."   

1.  This is the biggie.  Have you backed out of deals your Broker went out of her way to get you into before?  I have experienced clients that call themselves "investors," so I invite them to consider properties, over other ready clients.  I am certain that the Buyer is the luckiest person in the universe, then they back out because they don't have the stomach for repairs.  At this point, the Seller might not be willing to accept offers from me anymore, so my other clients are out of luck because I gave an eager investor an opportunity.  Perhaps I get someone else into escrow, but perhaps my investor cost me a sale.  I will also say, I have purchased homes my buyer's terminated contracts on, because I believed they were making a monumental mistake.   This is actually how I have purchased most of my rentals, oddly enough.                  

2.  Another consideration is if you are buying to hold, or buying to flip?  If you are buying to flip, you will likely get the first call, over someone buying to flip for profit, who will then take their money to purchase another investment.  That is three potential commissions versus one.      

3.  Do you sell by owner?  If you do, the one who relies on his/her Realtor to handle all of their Real estate will get the first call.  Agents like to make investors money, but they also like to make money themselves.       

In my opinion, an investor really should hire an Investor/Realtor, as keeping an eye out for good deals is a HUGE undertaking.  Most Realtors represent retail buyers, not investors.  An established Realtor probably has have 3-5 investors that are ready to buy with cash when something is exciting.  Smart Realtors call the closers first, the decisive ones with seemingly low blood pressure.  You want a smart Realtor, even if it means you are not the first call, in the beginning.      

Many Brokers do not represent two buyers on one listing at one time.  If they do, then I would find a new Realtor STAT!  Because of this rule that would be part of their broker's company policy, they have to choose which investor offers their best chance of closing.  

With an established Realtor, you have to assume they work with other investor clients too, and in my opinion, those other investors are your biggest competition.    =)

@Bill Dengler   Hi Bill.  Asset Managers nearly always counter offer the highest and best offer.  They go through highest and best offer notifications so that the Listing Agent can make certain the Buyer's Agents are notifying their clients of the multiple offer situation, as it generally results in higher offers.  So all offers submitted can then be adjusted according to all parties highest and best offers by the specified deadline.   

My best guess.  Even though your offer was cash, there could be a loan contingency offer with a higher net.  My guess is that they gave you first shot of increasing your offer to match the loan contingency offer.  Cash enables you to close earlier if all goes smoothly, but Banks generally put a 30 day close on the final bank addendums to deal with any title issues, etc.. 

Cash is often attractive, but if it means the difference of netting $20K higher on a loan contingency, they will likely opt to respond to the loan contingency offer if you reject their counter offer.     

Some people made mention to the fact that you are waiving home inspection contingencies.  Many Asset Managers prefer you have an inspection contingency regardless, as they don't want to be viewed as trying to hide anything about a property, increasing their liability.  They have to disclaim all knowledge anyway, but denying inspections can be more easily criticized.  

@Curtis H.  Interesting dalema your friend is in.  The Statute of Frauds is the doctrine of law that pertains to real estate contracts needing to be in writing, and people take it very seriously because of the amount of money it can cost people when not done formally.   

You ever hear the saying "he/she is dumb as a fox." Sounds like the family member might qualify as a little more clever than your friend realized. 

Questions to ask your friend.  

Did the lender require he write a gift letter for the down payment funds? If the family member got an FHA loan, the lender for the mortgage would have had to track the funds for the down payment, requiring a gift letter from a family member. If conventional loan, I don't think a lender cares (so they don't track) the origin of the down payment.

Why did the family member have to pay $40K over the years of the ownership?  If it was just her credit, then why the debt for the purchase?  I am thinking it might be the 50% of the tax payment you indicated she paid. 

Where does the family member live?  If in an owner occupied home, what is the distance between the home she occupies and the home in question?  I ask because if she bought this as a second home, she could be entitled to claim the tax and interest write offs, without threat of being pursued for fraud.

What is the $$ of his monthly payment (of his mortgage, 1/2 tax payment and insurance) vs the cost of current market value rent?

If you limit by keywords in either the marketing or agents remarks, you will miss out on good properties. 

@Joseph M.

You would have to be paid a wage, which is an awesome opportunity to someone who is not licensed who is interested in becoming licensed.  They want you to get your license though because your worth is significantly lower while you are not licensed because you're not allowed to communicate with other Agents about most things they might be calling the office about, nor accessing homes, nor talking to clients in anything other than a receptionist capacity.

If they find you valuable once you start, they might ask you to show homes for them, or to do some of the work that they like the least.  Letting inspectors and appraisers in, getting bids for repairs, taking photos, filling out contracts..  Regardless, all of this aids in your growth as a professional.