An Uniformed Realtor Killed my Subject to

Yup

She's an idiot. I think you did great. The letter was very well written. Can I copy it for when this happens to me ? This is where a great real estate attorney having your back really pays off. make her and her broker look stupid. One important point though, the realtor said the lady thought you were a licensed real estate agent. I wish we knew if that was true. I know people can get confused but i wonder if she really did or if the realtor just lied to strengthen her case. So hows it going with the lady now ??? Have you conversed any further with the Realtor or Broker ????

Thanks Chad,
WALT

An explanation of your opinion would be much more helpful than a one word answer. Please take the time to explain your opinion. It will be helpful to me and others on this site. I value other people's perspectives, that's how I learn and grow. May I also encourage you to fill out your profile page so we may better know you and your background.

Feel free to use anything posted here on this site. We are a group of sharers! It is possible that the seller got confused, but I find that hard to believe. She and her son called me from a bandit sign. I told her I was an investor, not an agent. When she said she wanted to buy a new home I gave her my realtor's number. All of these things scream "Chad is not a realtor!" As far as moving forward, there are too many deals out there to pursue this one anymore. I wish the seller all the best and I wish the agent continuing education.

I understand why you're frustrated with the Realtor's reply. She came across being snarky.

But there's a reason why most Realtors will react this way when they hear that someone is selling their property subject-to the existing mortgage.

Realtors are held to a higher standard than the average joe when it comes to real estate transactions, especially when dealing with a mortgage. It's not what they know, but what they should have known, that will get them in hot water and cause them to lose their license.

Realtors should know that if a seller has a traditional bank mortgage with a due-on-sale clause, they run the risk of violating that clause by selling subject-to the existing mortgage, unless the loan is assumable. If a Realtor has knowledge of a home being sold subject-to the existing mortgage, they can't just turn a blind eye to the transaction. They have to warn the seller to seek the advice of a real estate attorney to cover their own behind, in addition to the seller's.

If the transaction were to move forward, and 1 year down the road the buyer backs out, stops making payments or otherwise creates a mortgage problem for the seller, the Realtor who helped the seller find a rental could be pulled in front of the state license board and charged with being a party to mortgage fraud. And in most states, Realtors are guilty until proven innocent.

So it may seem like she over-reacted, but subject-to transactions are taboo in the Realtor world, unless the mortgage is assumable.

Hope this helps.

"Your unprofessional, unsolicited, and unethical attempt to defraud a completely legitimate contract between two informed consenting parties has been forwarded to my attorney. He will be in contact with your broker and licensing board shortly."

Plus I'd throw in something about them "being the weakest link - goodbye!" but on a post-it note, not the actual letter...

But it's not bad for a 1st reply. Best of luck to you...

That is all pretty unfortunate. Here is what you can do in the future to prevent this from happening. Make the agent fully aware of what you are doing with your seller BEFORE you give the agent the referral. Full disclosure/open communication up front. Make it clear what you are doing and that the agent is in no way going to interfere with the transaction between you and the seller. Fully explain what you are doing. If the agent says it is illegal or unethical or whatever DON'T supply the agent with the referral! As we all know, some agents never get it!! I don't let them near the my sellers or buyers!!!

If your seller had a complete explanation and UNDERSTANDING of what was going on SHE could have told the agent he was wrong!!

I personally would not involve myself with any of the sellers needs other than doing the "subject to" with a move out date. If the seller is not ready, the seller is not ready. Obviously, your seller was not ready. She had issues and concerns that should have already been addressed up front, full disclosure. I am not an agent or a broker so I don't put myself in a position where my actions may be interpreted that way. I NEVER represent a seller or a buyer.

Finally, I am a big advocate of person to person communication. E mails just don't cut it for me. I want to hear you speak, hear the tone of your voice etc. I would call that agent and in a civil manner explain what you are doing and leave it at that. I would also point out that there is no need for you to provide him with anymore of your referrals! I would call the seller, that agent has no right to be the one that cuts off communication between you and your seller!

What your header should say is " I killed my subject to by letting an uninformed realtor get close to my seller that did not have a 100% clear understanding of our transaction"

Good luck on the next one! This one may not be dead yet!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Uniformed or UNinformed? I'm wondering why a Realtor was involved in the first place?
Perhaps the transaction was not meant to be...hopefully, the next one works out better, Chad.

Chad,

sorry to hear that your deal was ended by some uninformed agent; but as you say, you can't let the obstacles deter you from moving forwards; there are plenty of other deals out there waiting for you!

We learn from the things that don't go right, and we do it right the next time!

I am so impressed by how much you're accomplishing! Keep up the great work!!!

I understand what you're saying. By bending over backwards for my seller, it made it seem as if I was representing her best wishes, not mine. Lesson learned, but I was trying everything in my power to get the deal closed. As far as the realtor, I explained the transaction to MY realtor before he helped her find a new home to buy. The problem was that the mortgage broker said she might need to rent for a year, so I searched for rentals and gave her some suggestions. It was an agent at a rental showing that fouled the deal, not my agent. Now, I really like what you said: "If your seller had a complete explanation and UNDERSTANDING of what was going on SHE could have told the agent he was wrong!! " How do you suggest I make myself more clear? I feel like I did all I could, but I could be missing something. How do I make my solutions so iron clad that no one can destroy my deal?

Thank you!

Hey chad I have been there trust me...They can be held to what ever higher standard they claim to be held to but the one's i have seen can't fight their way out of a wet paper bag...There are some good one's out there and lucky for me, I found two of them. As far as what you said...Hats off, you held back just the right amount and don't let anyone tell you different! I just hope that the lady can sell her house without the use of an agent. NOW GO GET SOME..

you seem to have done a great job. But as Mike said, in the final analysis in was an unintentional communication error. However, if the RE agent gave false information and you conducted yourself in a forthright manner, I would also follow Alpine's advice. Only by taken action against the truly stupid and/or ignorant can we ever expect to live in a better world. Let's see how his understanding of real estate expands after you sue him for the lost opportunity of $50,000. Stand your ground.

You may have a case against the realtor for interference in the performance of a contract. However, that is contingent upon you making the proper disclosures to all parties involved. In today's pro-foreclosure victim environment, you might be faced with a question of unconscienable gain, based on the seller's misunderstanding of the deal, but that's a whole different thread. I would have taken a different tack.

"Dear realtor: I can understand your reluctance to endorse the transaction involving xxxx. As private investors, we use many techniques to close real estate deals outside of the mainstream day to day transactions realtors are accustomed to. Might I take this opportunity to schedule a time to speak with the agents at your brokerage and educate them on some of the creative and ethical methods we use to facilitate our transactions. In many instances we can salvage dead listings that can translate into increased earnings for you and your agents. I would welcome the opportunity to speak with you and your agents to establish a mutually beneficial relationship in the future."

Sure, this agent may have mucked up your deal, but it was out of stupidity. I can understand your initial reaction and reply of telling him how the cow eats the cabbage, but in the long run you will do more deals by educating the realtors and expanding your network. How many listings do you think realtors turn down because there is not enough equity to pay their commision? These alone are gold mines for lease options, wraps, and subject to deals. You want to market yourself as the go to solutions guy rather than the combative investor, no? Make lemonade out of the lemons. Just my opinion and I may be wrong.

that agent has no right to be the one that cuts off communication between you and your seller!

Agree with Bill -
Let's see how his understanding of real estate expands after you sue him for the lost opportunity of $50,000. Stand your ground.

You said exactly what needed to be said to that agent. I too have had my share of dealings with uninformed or misinformed agents that caused some sort of friction in the transactional process. If you took 1000 agents in anywhere USA, 980 would'nt have a clue how creative real estate investing works. Sorry TRSD, time is to valuable to waste on trying to educate agents. It would be better spent on finding an agent that knows the rules of this game, in my opinion.

Chad, you and I always talk. You have done a great job. DON'T USE AN AGENT to do this kind of deal. Do it yourself. You are right when you talk about the commissions. That was highest on the agent's mind. Keep up the good work.

P.S. I am still waiting for my steak dinner.

needs some repairs. I put the home under contract via subject to. I advertised the home and found someone to do a land contract with a $5,000 non refundable
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Agents ??? # 1 Never Ever send a client to an agent ! If I had nothing to offer I would have checked with my fellow investors and received a small referral fee for bringing business. If they had nothing.. I would have wished her luck. Now.. I would forget the agent and what she says to you... Shes fighting you for business and sounds like she may have won. You stated above you have the home " UNDER CONTRACT " I assume a signed Contract?

I would write the seller a letter and remind her that she executed a contract with you... and if she has no intentions of honoring, you will record the contract. I only threatened to do this once with a seller who changed their mind about selling... their agent advised them to change it back pretty fast.. I just tell them I will record the contract at the courthouse and when and if you ever go to sell your home..... you will have to come see me to release .... and it wont be cheap.

Hope that helps !

DG

Chad...
What kind of disclosure did the seller sign regarding the possibility of the loan being called due, your not assuming liability for the loan, and the loan staying in her name and on her credit report until new financing was obtained?

Hi Chad:

Sorry this happened to you. Only deal with Agents who know the creative process. Use the script that Dean has given us. Lessons learned. Your next deal is right around the corner.

Kathy Wensel - Media, PA

Hats to you! Your email was articulate. If it's Ok with you, I would love to copy & paste in the event I would need this. I know it seems that all your hard work went for nothing, but I'm sure that when you look back on this, you'll say "I learned something from that" or i met a contact from that, etc. I believe that we never do anything for nothing, especially when they don't work out. It's then that we understand at a higher level. Remember that your next deal is right around the corner. Good Luck! Mary

All I have is a standard contract that has in the additional information section that the seller is not to notify the mortgage co. about this transaction because of the due on sale clause. I would love to better my contracts. What do you use?

I'm sure we'll cross paths soon. I look forward to having a sit down with you, face to face for a change. Thanks for all the advice!

Dear Chad, I have read all of the previous post in response to your deal and the miscommunication resulting in a lost deal. Here's what I want to weigh in on, your reply. It was adequate, covering all the points of the deal, however, it sounded really angry. I do not as yet know all the creative ways to sell homes, but I'm learning. I do understand the concept of misinforming people and having a situation that was initially win/win, turn into win/lose. And I agree with one of the previous responses to reword it so that it is informative and turns back into a win/win situation. Colin Tipping, author of Radical Forgiveness says this: "when a situation makes you feel sad, mad, angry or frightened you have given away your power". I think you gave away your power in the email. I suggest in the future if this scenario repeats itself, to step back, walk around and then call or write in a manner that ends as a win/win. I have taught in the past and feel that the best way to fight ignorance is through education. Thanks for taking the time to read this. Best of luck to you in the future. Denise

Sent you a PM. If the seller was not aware of the issues I mentioned, perhaps in fact she did not understand the transaction and the realtor felt that he was truly acting in her best interest, enough so to risk being sued for interfere with the performance of a contract. You could roll the dice in a court of law and sue for $37,000 in damages and let a judge decide if the realtor interfered with your contract or the seller truly didn't understand the transaction and the realtor was acting on behalf of her best interests. That's why we have attorneys and judges. If you feel you have a strong enough case, by all means take it in front of a judge. Subject To is an acquisition strategy cloaked in a gray area fraught with pit falls if not executed properly.