OfflineHere is my situation-
Recently some friends of mine came to me and asked me if I could do them a favor and help them find a house because they were too busy to go through most of the process (They are both Jr. High Teachers). They had just gotten their home put under contract and had 45 days to find and buy another house and get into it. So I commenced looking to find them a house. I found them a bank owned home that they fell in love with, and when I asked them when they wanted me to set up for them to go look at the home they told me that they would just ask their agent that sold their house to get them in. I told them that this was what I do and they could save the commission money by not using their selling agent as a buying agent and by letting me negotiate the deal for them. They felt that they needed to be loyal to the agent because she sold their house when no one else could (they had only signed a selling contract with her so they had NO obligation to use her. So now I have done all this work and I wont get a payday because the agent is going to get the commission. So Now they want me to work with the agent and help them get through negotiations with the bank (helping them know what to offer when and when to take the deal or let it go. the only thing the agent will be doing is presenting our offer to the banks broker and receiving the answer back from them.
what I had planned on doing is putting the home under contract and then doing a double closing and getting PAID, OR just locking it up and assigning the contract and get PAID (i was not sure if I could do this because it is a Fanny Mae REO?) but now I have no Idea how I am going to get paid since im being forced to go through the Realtor to negotiate the contract for THEM. and since this was a FAVOR i know that I will not be getting a commission, especially when they are already going to be paying the Realtor's commission.
HELP ME!
*WHAT DO I DO?
*HOW CAN I WORK THIS INTO A WIN/WIN/WIN/WIN DEAL?
*HOW DO I GET PAID?
The only thing I could think of is to see if the Realtor would split the commission with me since I did all the work!
OR
I could quickly move in, get the property under contract, and then let them use the agent to buy it from me and do a double close!
WHAT DO I DO?????
HOW DO I GO ABOUT GETTING PAID????
Will either of these work?
HHHEEELLLPPP!!!!!!
Thanks Soooooooo Much,
Bryan Smith
Bryan,
Hi, I want to start by saying that I am anew investor myself. There are I'm sure thousands of more qualified people to answer you but I will tell you what I think. First, some people just like to be nice. They think they are being nice to their realtor. It doesn't bring anything to them by doing this. You could try and convince them that you can do this for them etc etc. What I would suggest is if you know your friends are going to get this house and are qualified buyers, you can negotiate with the bank for yourself (you will probably have a really hard time assigning a Fannie/Freddie/HUD). Then you can sign a seperate contract with your friends realtor. Hopefully you will be getting 15k or so difference between the two contracts. Generally the seller pays the realtor fees(commission). Which is probably another reason your friends don't see a problem using him/her. So you will have two sets of closing costs(unless you get the bank to pay yours' when you buy from them). So you have to deduct closing costs and realtor commission from what you would make on the difference in contracts to do a double close. But, if you have a good title/escrow company that will do a dry/double close you should be good. FYI, a dry double close in case you didn't know is one where the money from the second closing pays for the expenses and everything on the first closing. I'm pretty sure you can also tell or state that you are only going to pay the usual 3% to the realtor. Typically with only one realtor they would get the 6%. But EVERYTHING is negotiable. You can even offer a realtor 1%. They probably wont take it but you can do it.
I hope this helps you somewhat. If not resubmit your question.
If anyone reads this and see where I might be leading Bryan astray please let myself and Bryan know. Knowledge is what we are after. Noone wants to be doing something illegal or potentially harmful to ourselves.
Thanks
You can never fail if you keep trying.
If you do something everyday that puts you closer to your goals it will never be a wasted day.
how do i explain this to my friends with out making them Leary or making them think I'm trying to screw them? looking from the outside it would seem excessive for me to buy it then for them to buy it? what reason would I give them that would really convince them that doing it that way is in their best interest? also is'nt the agent going to be really funky about doing it that way? the agent has already been somewhat involved and I can see doing it that way if the agent was not already trying to help them.
thanks,
Bryan
there is going to be an issue with the seasoning trying to double close. Some rules Fannie Mae has regarding "flips" (90 days, cap on gains, etc.) As well if your friends are pulling conventional what I've ran across the buyers lender requiring a certain amount of seasoning on the deed (seller's name) as well as having their client being the buyer on the PA. Then determining HOW they are purchasing. If they are going after an FHA loan and then arises the concern whether the property (being a foreclosure) meets the inspection/requirements to close (condition).
(I have had the issue of a buyer pulling coventional. I was able to get around it deed seasoning requirement prevented a double close. I ended up doing an IEE. BUT there was no agent involved & was not a foreclosure. I know....not much help huh - lol).
Also Fannie typically requires 10% of pp as dp to be considered. But I do know with foreclosures, a buyer submitting as "owner occupant" has a higher likely hood of acceptance/terms.
if it is listed your friends will have to go through an agent (any) to submit. if your friends feel comfortable with their previous agent, nothing really you can do about it. I'd give them kudos for loyalty. I'd suggest trying to negotiate a referral/lead fee outside. Even though they are you're friends, it's unfair of them to ask you to work for free or to put you in an awkward position.
alot of varitable factors to determine what will work and what want. just some things to think about.