All Forum Posts by: Steve K.

Quote from @Jonathan Warner:

Quote from @Dan H.:

1) cannot qualify for traditional financing

2) fears appraisal will come in low

3) fears buyer will back out so reduces contingency options

note for cash purchase I expect a significant discount.   Is the property priced appropriate for a purchase that does not permit financing?

Good luck

It’s listed for $220,000 and on has been on the market for 1,300 days. Is be happy to send it to you in DM if you have the time to offer any wisdom! 

1,300 days! That’s 3.5 years meaning it didn’t sell when the market was at its hottest. Sounds like an unreasonable seller and the most likely reason for them not wanting an offer with a financing contingency is the property is in too rough shape to get financing on it (structural damage, fire damage, etc.) or won’t appraise anywhere near asking price.  

There must be a lot of trading going on in the secondary mortgage markets, because so many of our loans have changed hands recently and it has been super annoying.

For example one of them has switched several times just in the past few months, from the originator to SLS to PennyMac to Lakeview (subserviced by Flagstar but then a month later switched subservicer to Mr. Cooper), and now to Newrez (if I got that right, I may have lost track honestly). One of them dinged our credit and sent a late notice before I even had time to set up ACH payments with them. I had just gotten done setting up the new ACH info with the last servicer, and had not gotten anything from the new one yet. I think they may have tried to call because I got a call with caller ID "Newrez" but when I answered, nobody there. Another time the ACH info should have transferred automatically. I got a notice saying "Don't worry, your payments will automatically be transferred to us", however my bank didn't recognize the new servicer's info and the payment didn't go through, making us late and again dinging our credit and triggering late fees. My credit is still just over 800 but I was proud of that 840 score. It's just annoying trying to keep track of payments when they keep switching companies and having to pay these fees. Not to mention scams are so prevalent these days, it's stressful vetting all these companies and making sure my financial info isn't getting into the wrong hands. I'm just annoyed. 

I wish I could go back and have all my loans with my local credit union who keeps them in-house to avoid all this. It's not so bad when you only have one property but with a portfolio of properties, it can take up a lot of time if they keep switching all. They are also not easy to deal with. It's frustrating to finally have it all sorted out then get a notice that the mortgage has been sold again and there is a new servicing company taking over and the mess starts all over. I've been talking to a lot of folks in the Philippines. On the plus side they are super friendly there and I'm learning some Tagalog, but I'd rather be doing something more remunerative with my time obviously. Plus it makes bookkeeping and doing taxes etc. more complicated and annoying/ expensive. It almost feels like they make it difficult on purpose so they get extra revenue on late fees. Maybe they are trying to annoy people with low rate mortgages on purpose to get them to refinance (conspiracy theory alert)? If somebody out there has a bunch of sub to deals, this could create big problems for them I imagine. 

If it didn't mean trading 3-5% rates for today's rates, I'd refinance and have all these loans with my local credit union who doesn't sell them. Basically just venting with this post, but if anyone has any advice that would help, I'm all ears. 

Anyone else dealing with this lately as well, or just me?

Good luck to you sir. 

Quote from @James Kerson:

@Steve K. I was talking about the listing side in my last few posts. The buyer side is a different (and more complex) animal. 

Ohio Real Estate Broker (active) here. Mostly a multifamily manager/owner, but bought and sold 15+ flips as principal. (Full disclosure: almost always I used an agent.)

Start by doing your first deal as an agent in order to get a better understanding of the business, then calculate your overhead/ operating expenses and you will quickly see what we’re all trying to tell you. Seems like you just pulled .60% out of thin air without considering any expenses that you will have. Google “overhead and operating expenses real estate brokerage” and do a little research. 

Quote from @James Kerson:

@Steve K. I anticipate consultation time (10 hours on the listing side) would be a key feature of my offering. But my agents wouldn’t be prospecting for listings. Their only roles would be consultation and transaction management, done remotely, with no or almost no in-person meetings. Commissions mostly compensate agents for their prospecting success and not for client service. The actual client service of a listing is $40-60/hour work, not $200-300/hour work. With $60 hour and 10 hours worked per listing, plus $250 for photos, the direct costs of marketing a listing (again, assuming no or almost no drivetime) would be quite low - maybe $850/listing.

This makes absolutely no sense. How would an agent help price a property on the listing side or help evaluate a property and make an offer on the buy side, without ever going to the property and consulting with the client? Almost all of the valuable consulting happens at the property, face to face. What the way be consulting on if they haven’t even been to the property? Try doing a few transactions as an agent before starting this business, you will learn quickly why it will never work. Have you ever bought or sold a property before?  

Quote from @James Kerson:

@Steve K. I think we’re talking past each other. Of course a la carte, tech-enabled DIY transaction management services exist, and have existed for a while. I’m not really proposing that. I’m proposing full-service brokerage, but slashing rates on the assumption that a brokerage can deliver 90%+ of the bundled full-service brokerage offering for 10% of the standard cost. 

The automobile existed for decades before Henry Ford produced the Model T. He was a clever man, but benefited from excellent timing. Established, mostly-German automotive technology coincided with the development of large-scale mass production techniques and a manure-pollution crisis in burgeoning U.S. cities to create massive demand for his product. I’m no Henry Ford, but I see an imminent convergence of regulatory pressure, existing tech, and the GenAI to bring all the existing tech together to make the full-service brokerage offering much cheaper and faster.

To carry the automotive analogy further, there will still be horses and still be Lamborghinis, but most residential transactions will be vastly faster, cheaper, and more standardized in 10 years than today.

The part you’re missing is that most buyers and sellers desire consultation with an expert and are willing to pay for it, because they see the value. There will always be inefficiencies in the real estate sales cycle because of that human inefficiency in making decisions. We’re not mass-producing automobiles here, so that’s an odd analogy. You’re not going to make an assembly line of real estate agents. I guess I just don’t see what is new or novel about your business idea. Of course existing brokerages are always looking for better systems, increased efficiency, and adopting new technology, but at the end of the day the job is still much the same as it was 100 years ago: customer service human to human. If your business model is different than options that already exist, I’d recommend improving on differentiating. How are you more efficient, and how on earth will you possibly make a profit charging only .60%? The math isn’t mathing. 

Quote from @James Kerson:

@Steve K. Yes, agents upload listings. But how much is the function of uploading the listing to the MLS worth? What is the cost of the photos? What is the cost of the time to draft the listing description? All of these functions are necessary; they are simply too expensive relative to their value.

My blanket response to you and Jay Hinrichs is that real estate brokers and agents add value. They just add it inefficiently and expensively. There used to be legions of stockbrokers, and then in 1975, the SEC cracked down on commission-fixing. That didn’t kill the business, but it made possible the growth of discount stock brokers, who now dominate retail trading. Many stockbrokers became “financial advisers,” and say what one might about them, the best ones are both personal financial coaches and multi-product experts (securities, annuities, insurance, etc.). 

Something similar to your example with stock brokers actually already happened in real estate, when the regulatory agencies cracked down on commission fixing. There was a big, very famous lawsuit that ended price fixing in real estate. Prior to that lawsuit, Realtors all charged the same commission. It was actually considered a violation of the Realtor code of ethics to charge anything other than the standard, "fixed" commission rate. That lawsuit was US vs. NAREB and the year might surprise you because it was 1950. 75 years of negotiating commissions later, there are more real estate agents than ever before, so clearly real estate brokering is different than stock brokering. 

 Cheap a la carte solutions already exist for everything you mentioned. You can pay a flat fee listing service a few hundred bucks to upload a listing (you'll have to answer calls, schedule showings, set up a lockbox, get a sign, vet potential buyers, avoid scammers and people trying to sell you stuff, negotiate and manage the sale yourself). You can take photos with your iPhone (they won't be nearly as good as professional photos, 3D matterport tour, drone shot, sunset shot, layout drawings, etc.). AI can write a listing description for you for free (it won't be good). You can set pricing using the "zestimate" (it may be off by $300k like it is for neighbor's house right now). In many states, approved sales contracts are available for free online (you'll have to learn how to fill them out or pay a lawyer to do it, recommended to at least have a lawyer review). You can hire a transaction coordinator to handle the paperwork (they can't legally create contracts, just chase signatures).

 Where a good (operative word) agent's expertise comes in is doing all of these things and doing them all well, and not missing anything important, and also a million other things behind the scenes that protect their clients from being ripped off or sued or just wasting their time learning all the ins and outs of real estate transactions when there are experts they can easily hire to handle it all for them. Plus most retail buyers and sellers like having an expert on their team to ask questions and make sure they aren't making beginner mistakes on what is often the biggest financial transaction of their lives. 

It's not booking travel (travel agents are actually making a comeback now I hear btw) and it's not trading stocks, or driving a taxi, or ordering food, or scanning groceries (self-scan checkouts are also being removed from stores now I hear). 

Yikes, very different experience than what I've had with the judges in my area. Where is this, Illinois? Judges seem to have a lot of time on their hands there. This should have been over in 5 minutes or less.  

Have you ever been there? There are some active Jackson locals on here, I'd connect with them and ask them about this property. 

In my (non lawyer) experience John is correct here. It’s considered an act of god if a strong wind blows down a healthy tree that nobody expected to fall, but if a dead tree has been looking like it’s about to fall for awhile and the owner has been notified of the hazard it causes, then their inaction can cause them to be negligent in addressing the hazard, and they may be found to be liable. A certified letter is good because they sign for it, acknowledging receipt, any other forms of written communication you can get to document that they were notified of the hazard probably also helps. 

However if it’s a really big hazard and they fail to take care of it quickly, I might just take care of it myself rather than taking any legal action, personally. You can say it had to be cut urgently and try to get them to reimburse you after (may not be successful but at least the danger to your tenant will be gone and you won’t be sued by the tenant). These laws are state specific so check yours.