Listing with Realtors

[ctang]

Hi all,

On pg.329 Listing With Realtors. It says 8,7, or 6% depending on how fast the realtor sells. Just to Clarify that commission is based on our profit and not the sale price correct? (if based on sale price, it would take too much of our profit)..yes?

Thx,

Chung

 

[neill]

I believe the answer will be what you can work out with your own realtor....

In AB standard practice is 7% of the first 100k of sale price + 3% of the remainder, split between the listing and selling realtor. (key word being standard....)

So, most realtors will likely not look at taking 8% of a 20k profit as their commission - not enough in it for them. The figures listed might be different in the US and/or your province......

The concept of paying them a higher percentage for a higher price does make sense conceptually though.

Think about it - if you have a place listed for 300k, the difference in the last 10,000 price negotiation is 150 bucks for each lister and selling agent - at this point, they just want to get it done.

Hope this helps....

The bigger key, IMO is to find that great relationship realtor that you can have the win-win with

 

[RedlineBrett]

QUOTE (neill @ Oct 23 2009, 09:17 PM) The bigger key, IMO is to find that great relationship realtor that you can have the win-win with

Most definitely.

Again my admittedly biased advice is that your realtor can be your biggest asset when buying property privately from a motivated vendor... Providing comparable sales and reviewing your offer.. things like that. If you have a good agent that you aren`t cheaping out on all the time they will definitely help you out. But when it comes time to list or buy something on the MLS just remember their conduct when they weren`t getting paid on that deal!

 

[neill]

QUOTE (RedlineBrett @ Oct 24 2009, 01:45 PM) Most definitely.

Again my admittedly biased advice is that your realtor can be your biggest asset when buying property privately from a motivated vendor... Providing comparable sales and reviewing your offer.. things like that. If you have a good agent that you aren`t cheaping out on all the time they will definitely help you out. But when it comes time to list or buy something on the MLS just remember their conduct when they weren`t getting paid on that deal!


Well stated Brett - our team that we work with are always willing to help (d`y`all think we have sparked curiosity from a few conversations in the last 5 days?

), and there will always be something on the table for them when we do a deal....

PS - Carbon Black on Cinnamon eh?

See you at the store next visit!

 

[ctang]

Thanks for all`s advice, I completely agree.

Now I have a situation where a realtor found me a `bank repo` pretty house listed on the MLS.
ARV 220k
Asking 193k
Loan balance is 193k for CIBC
repairs - 5k a paint job and couple other small things
house is 5yrs old
TLS:1550 sqft, lot size 4822sqft
Bed/bath: 3/2.5

Im thinking it`s a suspect unless the 193k is a combined of 1st and 2nd, in which i may be able to discount the 2nd.

Now let`s says I offer 160k and do a wraparound and it`s accepted and I list it with a realtor for 220k to resell.

What should i be aware of here? and am i crossing any boundaries?

Thanks

Chung
Halifax, Nova Scotia
Real Estate Investor

 

[RedlineBrett]

QUOTE (neill @ Oct 24 2009, 04:10 PM) Well stated Brett - our team that we work with are always willing to help (d`y`all think we have sparked curiosity from a few conversations in the last 5 days?

), and there will always be something on the table for them when we do a deal....

PS - Carbon Black on Cinnamon eh?

See you at the store next visit!

Yeppers OEM except for a rasp pipe and SSK. Also run 275/245 and can`t fathom why it didn`t come this way from the factory.

Unfortunately the car`s summer config is on its last hurrah this week before the 19s come off and my winters go on. The motor definitely likes the cooler weather though!

 

[neill]

QUOTE (ctang @ Oct 25 2009, 09:22 AM) Thanks for all`s advice, I completely agree.

Now I have a situation where a realtor found me a `bank repo` pretty house listed on the MLS.
ARV 220k
Asking 193k
Loan balance is 193k for CIBC
repairs - 5k a paint job and couple other small things
house is 5yrs old
TLS:1550 sqft, lot size 4822sqft
Bed/bath: 3/2.5

Im thinking it`s a suspect unless the 193k is a combined of 1st and 2nd, in which i may be able to discount the 2nd.

Now let`s says I offer 160k and do a wraparound and it`s accepted and I list it with a realtor for 220k to resell.

What should i be aware of here? and am i crossing any boundaries?

Thanks

Chung
Halifax, Nova Scotia
Real Estate Investor

Hi Chung - sorry for the semi thread hijack!

Is the property bank-owned already, or still in pre-foreclosure stage? The bank may be willing to take less than the 193k if it is theirs and has been on market for a while (DOM) with no activity, especially given the time of year....

(At 193 ask, they are already taking a haircut, since they have to pay realtor fees and legals etc out of the sale proceeds)

Don`t think you can do AFS if bank owned though......

193 doesn`t sound like enough spread, if you want my .02 - but throw them the offer that gives you what you need, and you never know......

What is your intended exit?

 

[ctang]

QUOTE (neill @ Oct 25 2009, 10:23 PM) Hi Chung - sorry for the semi thread hijack!

Is the property bank-owned already, or still in pre-foreclosure stage? The bank may be willing to take less than the 193k if it is theirs and has been on market for a while (DOM) with no activity, especially given the time of year....

(At 193 ask, they are already taking a haircut, since they have to pay realtor fees and legals etc out of the sale proceeds)

Don`t think you can do AFS if bank owned though......

193 doesn`t sound like enough spread, if you want my .02 - but throw them the offer that gives you what you need, and you never know......

What is your intended exit?

Hey Neill, that`s no problem. Appreciate your feedback.

My exit strategy depends on what I will and will not be able to do first.

The house is owned by the bank and has just been listed couple days ago.

The realtor has tried to find the total loan bal to see if it`s a combination of 1st and 2nd but the bank is keeping that info private. The realtor said since the bank has not disclosed it there`s no other way for me to find that out. Is that true?

I believe you`re correct on the AFS as it is bank owned

My exit strategy was to owner finance it as I`d would have bought it with a wrap from the vendor/seller (but now that won`t work since the seller is the bank.)

Seems like the only way I can buy from the bank is to make a low ball offer and pay cash ( which means i will need to get a mortgage thus defeating the purpose of Quickturns..)


Any suggestions? ....other than Move On?

 

[neill]

QUOTE (ctang @ Oct 25 2009, 07:28 PM) Hey Neill, that`s no problem. Appreciate your feedback.

My exit strategy depends on what I will and will not be able to do first.

The house is owned by the bank and has just been listed couple days ago.

The realtor has tried to find the total loan bal to see if it`s a combination of 1st and 2nd but the bank is keeping that info private. The realtor said since the bank has not disclosed it there`s no other way for me to find that out. Is that true?

I believe you`re correct on the AFS as it is bank owned

My exit strategy was to owner finance it as I`d would have bought it with a wrap from the vendor/seller (but now that won`t work since the seller is the bank.)

Seems like the only way I can buy from the bank is to make a low ball offer and pay cash ( which means i will need to get a mortgage thus defeating the purpose of Quickturns..)


Any suggestions? ....other than Move On?

If you want to get an idea of mortgage amount, you could pull title on the place - usually it will show the amount of the original mortgage (although if you are a REIN member, you may have taken a tip that says some banks will register on title the full appraisal amount for a re-advanceable mortgage, so that if you go for an increase later it will not require a title amendment....)...

Quite frankly though, the amount of the default should not be the deciding factor in presenting your offer, IMO (and we are newbies with the Ron LeGrand stuff, so I would be curious as to what the folks with more experience would say). Out here in Calgary, there are some mortgage fraud foreclosures where the banks asking price is over 100k less than their original advance (!) They know that they have to sell at what the place is worth, and the rest will be a write-off, so govern your offer accordingly on what your needs and wants are, not theirs....

And yes Ron preaches in/out no money/credit - if you had to put it into your inventory as buy/hold, or private mortgage quick turn, would that be a big deal? You could also try for a longer closing period and once you have control of the property (aka an accepted offer), you are within your rights to see if you can get the quick cash sale (Handyman special - cheap cash ad). Again, I think there was talk about banks being hesitant about you assigning your interest to another buyer, so you might want to check to see if a simultaneous closing is even possible where you are....

Lots of options, but you are correct in that it all begins with having a spread.

Hope that helps

Neill

 

[TonyMandrique]

QUOTE (ctang @ Oct 23 2009, 09:04 PM) Hi all,

On pg.329 Listing With Realtors. It says 8,7, or 6% depending on how fast the realtor sells. Just to Clarify that commission is based on our profit and not the sale price correct? (if based on sale price, it would take too much of our profit)..yes?

Thx,

Chung

This thread got my attention. I tried to locate the `Listing with Realtors` in this Forums but could not find it. Could you please guide me where to look for it? Much appreciated.

Tony

 

[neill]

QUOTE (TonyMandrique @ Oct 26 2009, 07:09 AM) This thread got my attention. I tried to locate the `Listing with Realtors` in this Forums but could not find it. Could you please guide me where to look for it? Much appreciated.

Tony


Hi Tony - Chung is on p 329 of the working copy binder that Ron gave out in Edmonton, not the other copy that had the cd`s in it....

Hope this helps

 

[ctang]

QUOTE (neill @ Oct 25 2009, 11:39 PM) If you want to get an idea of mortgage amount, you could pull title on the place - usually it will show the amount of the original mortgage (although if you are a REIN member, you may have taken a tip that says some banks will register on title the full appraisal amount for a re-advanceable mortgage, so that if you go for an increase later it will not require a title amendment....)...

Hi Neill, I took your suggestion and I found the mortgage`s original balance. Thank You.

As for your REIN tip, could you clarify as I`m not following 100%.

Thanks
Chung

 

[JohnSoucie]

QUOTE (neill @ Oct 25 2009, 10:39 PM) Quite frankly though, the amount of the default should not be the deciding factor in presenting your offer, IMO
Yep.....I just read about this a day ago and I think what Ron says is you should never let the loan balance on a bank owned property affect your offer whatsoever. It`s their problem to solve, you will have to pay cash to do the deal, so there is nothing creative for you to do except figure out ARV and MAO. Their lack of interest in playing your low ball offer game should in no way suck you into offering anywhere close to MAO....or higher. Make your offer and don`t look back....or negotiate.

For those who know mortgage companies, is this becoming the time of year(end of calendar year) where they are actively trying to get bad debt off their books? Is there any time of year, or is it based on the holding period of each specific (non-performing) asset. As in...after they have it on the books for x days, do they have to actively attempt to liquidate it.

 

[neill]

QUOTE (ctang @ Oct 27 2009, 08:57 AM) Hi Neill, I took your suggestion and I found the mortgage`s original balance. Thank You.

As for your REIN tip, could you clarify as I`m not following 100%.

Thanks
Chung

Hi Chung - when we did re-finance on existing properties to pull out equity and buy our ATV`s, ski-boat, (sorry, that was friends of friends - we bought more buy and hold properties ), instead of having the 80% of appraisal amount that we borrowed registered on title, we requested and were granted 100% of appraised value to be registered on title (instead of the 80% LTV amount). If we ever go back to pull out more equity based on a higher appraisal, the title does not have to be amended at that point.

So:
200k townhome condo appraisal by bank = 160k mtg/heloc at 80% LTV
Most banks would register as 160k on title

Registered as 200k on title allows for property value increase up to
200k / 80% or $250k new appraisal amount and now mtg/heloc the 200k with no title amend.



Hope that helps
N

 

[TonyMandrique]

QUOTE (neill @ Oct 26 2009, 08:27 AM) Hi Tony - Chung is on p 329 of the working copy binder that Ron gave out in Edmonton, not the other copy that had the cd`s in it....

Hope this helps

Thanks.

 

[ctang]

QUOTE (JohnSoucie @ Oct 27 2009, 06:48 PM) Yep.....I just read about this a day ago and I think what Ron says is you should never let the loan balance on a bank owned property affect your offer whatsoever. It`s their problem to solve, you will have to pay cash to do the deal, so there is nothing creative for you to do except figure out ARV and MAO. Their lack of interest in playing your low ball offer game should in no way suck you into offering anywhere close to MAO....or higher. Make your offer and don`t look back....or negotiate.

For those who know mortgage companies, is this becoming the time of year(end of calendar year) where they are actively trying to get bad debt off their books? Is there any time of year, or is it based on the holding period of each specific (non-performing) asset. As in...after they have it on the books for x days, do they have to actively attempt to liquidate it.

Hi John, I agree with you there. The house I`m looking at though is considered a Pretty House and not an Ugly so finding out the loan balance would make sense here would it not? since I may buy it with Seller Financing or Options. (minus the fact that the seller is the Bank here and not your typical owner so buying with Pretty house strategies won`t work here as banks just want to get it off their books outright).


Your question about when the banks are trying to get bad debt off their books is a great one. Thoughts anyone?

 

[ctang]

QUOTE (neill @ Oct 28 2009, 01:28 AM) Hi Chung - when we did re-finance on existing properties to pull out equity and buy our ATV`s, ski-boat, (sorry, that was friends of friends - we bought more buy and hold properties ), instead of having the 80% of appraisal amount that we borrowed registered on title, we requested and were granted 100% of appraised value to be registered on title (instead of the 80% LTV amount). If we ever go back to pull out more equity based on a higher appraisal, the title does not have to be amended at that point.

So:
200k townhome condo appraisal by bank = 160k mtg/heloc at 80% LTV
Most banks would register as 160k on title

Registered as 200k on title allows for property value increase up to
200k / 80% or $250k new appraisal amount and now mtg/heloc the 200k with no title amend.



Hope that helps
N
Hi Neill,
Sounds simple and really sweet..so are there certain documents I need or do I need to be using the pulled out equity for a certain purpose in order for my request to be granted? or does my getting granted lie within my banker/ mortgage broker?

Great Tip, Thank You!

 

[JohnSoucie]

QUOTE (ctang @ Oct 28 2009, 11:54 AM) Hi John, I agree with you there. The house I`m looking at though is considered a Pretty House and not an Ugly so finding out the loan balance would make sense here would it not? since I may buy it with Seller Financing or Options. (minus the fact that the seller is the Bank here and not your typical owner so buying with Pretty house strategies won`t work here as banks just want to get it off their books outright).


Your question about when the banks are trying to get bad debt off their books is a great one. Thoughts anyone?

Well I`m a rookie like everyone else!! But thinking out loud here.....isn`t the bank going to ask for an all-cash offer only, even if it is a pretty house? Isn`t "seller financing" and options off the table completely when a bank is involved.....pretty or ugly?

Isn`t seller financing from a bank owned property called a mortgage!? Is there any compelling reason for them to get into options whatsoever?

Sorry no answers....just more questions!

John Soucie

 

[neill]

QUOTE (ctang @ Oct 28 2009, 10:12 AM) Hi Neill,
Sounds simple and really sweet..so are there certain documents I need or do I need to be using the pulled out equity for a certain purpose in order for my request to be granted? or does my getting granted lie within my banker/ mortgage broker?

Great Tip, Thank You!


Essentially, equity pull-out process starts with a conversation with your bank/mtg broker. They will have you fill out a credit app or update your existing, then order an appraisal of the subject property. The appraisal will determine what they will set at your limit for either heloc or mortgage. (typically max 80% LTV (loan to value)). Typically the banks don`t really care what you are using the new funds for - they are secured by your property

Search "Smith Manuever" on the broader REIN space forum or google it, and also talk to you acct to make sure that if you are using the funds for investment (RE or otherwise) that you maximize the available tax deductions. Interest paid for investment (ie. mortgage interest if you can show the funds were used for investing or a LOC, etc) is tax deductible. Interest paid for non-investment (personal mortgage, personal debt etc) is not. Smith man. can help you potentially make even your private residence interest deductible - again, do your research and TALK TO YOUR ACCOUNTANT

Hope that helps

 

[ctang]

QUOTE (neill @ Oct 29 2009, 10:15 AM) Essentially, equity pull-out process starts with a conversation with your bank/mtg broker. They will have you fill out a credit app or update your existing, then order an appraisal of the subject property. The appraisal will determine what they will set at your limit for either heloc or mortgage. (typically max 80% LTV (loan to value)). Typically the banks don`t really care what you are using the new funds for - they are secured by your property

Search "Smith Manuever" on the broader REIN space forum or google it, and also talk to you acct to make sure that if you are using the funds for investment (RE or otherwise) that you maximize the available tax deductions. Interest paid for investment (ie. mortgage interest if you can show the funds were used for investing or a LOC, etc) is tax deductible. Interest paid for non-investment (personal mortgage, personal debt etc) is not. Smith man. can help you potentially make even your private residence interest deductible - again, do your research and TALK TO YOUR ACCOUNTANT

Hope that helps

Thank you Neill for giving your time to explain this, you were a lot of help.

Chung