All Forum Posts by: Account Closed

No, just 25 yrs of experience being involved in literally thousands of deals and watching realtors do things the wrong way or take shortcuts, loosing deal after deal for my borrowers is what has taught me what works best.

Unfortunately, down here in FL, everybody and their mother has had or has a real estate lic. and too many think or lead their clients to think they know a lot more than they really do.  The WORST are the ones selling in the 3 million and over range.

I see it and have to deal with the extra time and effort needed to work badly structured and submitted offer after offer, house after house.   

Florida is... New York, and NJ and MA, CT, IL, MI, RI, etc.  

I guaranty if you were to battle anther realtor with a borrower/ buyer who was to do as I described above, 7 out of 10 times you would lose down here in FL  with that outdated strategy of "Poor Mouthing the Offer" with ridiculous Good Faith Deposit amount in escrow.

If I were selling a 500k home, and an a buyer hit me with a 5k deposit, their offer would be out like the fat kid in 5th grade dodge ball!

Yes, and same with the property, the buyer can cloud title and tie up the transfer of title, thus tying up the sale of the property too should a seller try to take a deposit under bad faith.  

But this is why I NEVER deposit money in the Seller's Title Agent's account or listing agent's account. 

Deposit in your own Real Estate Attorney's Escrow and get an Escrow Letter to use in the negotiations.

Negotiate from a Position of Strength

The old “Poor Mouthing the Offer” which some buyer agents still recommend is an outdated & flawed strategy, especiallyin a seller’s market.

Recommending that the buyer act like they can barely afford their own offer in hopes that the seller will feel sorry for them and lower the sales price, causes buyers to lose deals!

Think about it, if a realtor recommends the "Poor Mouthing the Offer" strategy when they are the Buyer’s agent, do they suddenly forget this same strategy is being used when they are the Listing Agent and other Buyer Agents make offers on their listings using this same antiquated strategy?

Scenario: $1,000,000 List price

Buyer #1:

offers $960,000 submitted with a qualification letter for the same $960,000 with $5,000 scribbled in the deposit line of offer

Buyer #2:

offers $955,000 submitted with a qualification letter for $1,213,700 (odd number is for a reason) with a $40,000 Good Faith check or Escrow Letter

Most sellers and listing realtors would go with Offer #2, where the buyer is negotiating from a Position of Strength, backed up with a substantial Deposit showing they are a serious and capable buyer.

Anyone know of any realtors who actually make offers this way?

Well obviously the appraisal has to come in at the sales price, but you are missing the whole concept.

Of course this won't work in all situations, but on properties that a buyer's agent finds and does a CMA and the value is there, to not structure this way is a missed opportunity!

But to argue with realtors over this no brainer strategy is like arguing with them over who pays the Real Estate Commission. 

Question:  if a buyer negotiates their lowest sales price, and the buyer's agent were to back out of the deal, thus allowing the seller to lower the sales price another 3%, then who is actually paying the buyer's agent real estate commission?

Answer:  The Buyer, in the form of Forfeited Home Equity in the form of higher price for property to pay the buyer's agent

True or not?   

The Seller is not being asked to bring a separate check to closing to pay the Buyer’s Closing Costs. This is a very common, simple Paper Credit at closing. 

Keep in mind, if a seller is willing to discount the price even one dollar, then they’d just as easily be willing to give that same discount as a credit towards paying the buyer’s closing costs as they still net the same.   (NOTE: unless it's currently a rental, then, if the seller is savvy, will need to adjust for seller's CAP GAINS difference)

Meet Reserve Requirements

Loan programs require a certain amount of reserves (money in the bank after closing).With more reserves, borrowers can qualify for more loan program options

Money available to Pay Off Debt

Borrowers will have more money available to pay off debt if needed to qualify

Reach a lower LTV (Loan To Value)

Borrowers will have more money available to put down to lower the LTV to qualify for more loan program options or to meet DTI (Debt To Income) ratio requirements

Money available for Rate Reduction

Buyer will have more money available to buy down the rate if required to qualify.

Help Neighborhood Home Values

Sellers in the neighborhood can use Borrower’s higher sales price as a new comparable sale to list and their home at an even higher price, helping to increase neighborhood’s home values (i.e. Appreciation)

What else can I add to this list of benefits?

I'm not a lender, I'm what the vast majority of you should be working with, I'm a Mortgage Broker. 

...."Oh, you're not a "direct" lenderrrr?"  (cracks up all Mortgage Brokers when we hear this as we immediately know the mindset of the client)  No,  I'm not a "direct" lenderrrr who only has their few set programs.   As a Broker, I have access to many lenders and thousands of loan programs.

YES, open an LLC as it can absolutely make is easier to obtain mortgage financing on Rental / Investment properties...in many situations.

Due to the crushing effects of the Dodd Frank Act and horrendous over-regulation that crippled America's mortgage industry, many Mortgage Lenders and most Private Lenders won't touch Primary or 2nd Home financing with a 30 ft pole anymore!

The problem is, many of the Banks don't treat Investment Rental differently for fear of the OCC coming in and fining them.

However, when the property is for investment and Titled in the name of an LLC, for all intent and purposes, its considered "Commercial," even on 1 to 4 units. BUT, none of this...claiming its a rental, then trying to move into the property...BS!

Many lenders are doing periodic occupancy checks and because the property is investment / Rental, if caught committing "Occupancy Fraud" the lender can call the note due, foreclose and the owner is out like the fat kid in 5th grade dodge ball!

I don't care what anyone says, the fact is the 100% No Doc, Hybrid Option Arms with No PMI and 2% start rate was an AWESOME financing tools for responsible borrowers.

However, they were like taking a 15 yr old from a mini-bike to a Ninja motorcycle for the first time and telling them to be very careful!  What did 90% of people do?   "I'm an "experienced" investor, I've bought 4 houses, so I got this" .... Full Throttle baby!    

Post Dodd Frank Act and all the new Federal lending laws, proving ATR (Ability To Repay) is the name of the game these days. 

Stated Income ALT loan programs for Florida are filling the void.These programs are much more lenient and allow Alternative income streams to qualify such as:

• Liquid Asset calculations for income
• Business Bank Deposits
• Personal Bank Deposits
• Expected Income
• New Employment income
• 1099 Income
• Commissions & Bonuses
• Account Receivables
• Note Receivables
• Contracts for future income
• New Rental Income
• Expected Rental Income from property planning to rent
• Considerably different calculations on Tax returns

As far as the condo purchase, how much Dead Equity are you having to sink into the purchase? 

I can do 95% Condo loans on non-fannie mae approved buildings