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Did You Write That Contract?

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VOIDSince I have a few short sale listings in the lower  low, lowest price range for the area of the city they are in, I receive quite a few calls and emails about the properties. Recently, I have started receiving offers on these homes as well.

I like receiving offers on my listings! Actually, it ranks up there as “one of my favorites” about my business. Lately though, I’ve been receiving offers on these lower end properties where it appears the client wrote the offer and the agent just forwarded it.

I’m not new to this game and know many investors like to operate in this manner. Is is right? Is it ethical? I’m not going to answer these questions, everyone has a different opinion. Let’s just say, I don’t personally write offers on homes I haven’t seen.

If you are going to allow your investors to write the offers, I have a few suggestions:

  • Make sure it is the most current contract available – or plan on sending me a new offer
  • Please send the short sale addendum as requested
  • Have your clients sign the correct page of the contract
  • Send me the signed contract on the correct property
  • Give my clients enough time to respond
  • Educate yourself and your client about short sales

I understand investors like to throw contracts at the wall and see what sticks, but this is my seller’s time. The short sale process is not going to change just because your client has cash. I owe it to my seller to submit a valid contract and when any of the details are missing (especially a signature) or the correct address, I just can’t submit your offer.

If your client wants to see what sticks, send me a valid offer. I look forward to working with you and closing the transaction for both of our clients.

Paula is team leader for The "Home to Indy" Team in Indianapolis . She is passionate about education and client care and believes an empowered client is better prepared to make good decisions for themselves. You'll find her online at Agent Genius,Twitter and sharing her insights about her local real estate market at Home To Indy.

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23 Comments

23 Comments

  1. Lani Rosales

    June 11, 2009 at 4:48 pm

    @IndyAgent- is it really this bad in the world of short sales that these agents can’t acquire a signature?!?! WOW!

  2. Danilo Bogdanovic

    June 11, 2009 at 5:14 pm

    My response to contracts like that is, “Your offer is not complete nor valid. Once I receive a complete and valid offer, I will present it to the seller.” They can go throw that crap against someone else’s wall.

  3. Derec Shuler

    June 11, 2009 at 5:32 pm

    I received one of these on a short sale a couple weeks ago and the cash investor wasn’t working with an agent. The offer wouldn’t have passed a file audit at my company which would have put me in hot water. However, though on an outdated contract and written by hand and incomplete, it did meet all the legal requirements for a contract and I presented it to my client with the comment that they could accept and I’d clean up the contract later.

    We ended up countering on an entire new contract, which I wrote and presented to the potential buyer along with all the addenda. Some time you just have to suck it up and go the extra mile though I definitely wouldn’t have been as cooperative if it had gone through another agent!

  4. Paula Henry

    June 11, 2009 at 7:54 pm

    Lani – I think they just submit what the investor sends them. It can get pretty scary.

  5. Paula Henry

    June 11, 2009 at 8:08 pm

    Danilo – Love your philosophy! Agents need to make sure the contract is at least signed. One I received last week had the buyer’s signature dated in April for a different property. It just won’t fly.

    Derec – I’m with you – I have had investors send me their contract and like you, I told them I would need to write it on our standard contract and negotiate it with the seller. I don’t mind doing so. Recently, though I keep receiving the same contracts from the same investor and when I ask for a short sale addendum, I never hear back. I have others who we go through the process of obtaining bank approval, then they walk away, because they have never seen the home.

    I prefer they at least have their agent see the home first and I do have agents who have done so.

  6. Missy Caulk

    June 11, 2009 at 8:53 pm

    hummmm….be careful of scams. How can an inverstor write a contract on board approved doc’s?
    That is scary.

  7. Paula Henry

    June 11, 2009 at 9:09 pm

    Missy – I don’t know, but they do. Scarier is that agents submit them. I have had investors send me their contracts and I tell them I must use the board approved forms.

  8. Barry Cunningham

    June 12, 2009 at 12:13 am

    This post gets the big HUH??? from me. In some of these comments, it is clear why so many short sales don’t successfully close.

    I would expect a much higher game from agents of this caliber. Sooner or later the “agentry” will realize that they may control the ignorant Seller, but they don’t control the market.

    One of the reasons that so many agents don’t hear back from prospective buyers, can be found by simply reading this post and its comments.

    When i buy property, I demand it’s on my contract (yes I use board contracts a lot of the time)…I use my closing agent, I handle short sale negotiations and I’ll let the agent know when they will get their commission wired to them

    If somebody balks…gives me any gruff..they’re done! Too many deals out there to deal with BS.

    Oh by the way…I have stated it MANY times here and elsewhere..I NEVER go to a house and see it before I buy it..ABSOLUTELY NEVER.

    Trust me I can tell a deal by the numbers and my due diligence from my computer and my inspector handles the review of the property very thoroughly.

    Here’s a hint..most savvy investors don’t have to see a property before they pull the trigger on an offer. And I’m not even talking the one sin my backyard.

    Most of us are able to get a decent numbe ron any property in the Country and as long as their is a right of inspection (mandatory) then why would I ever leave my cushy oceanview, airconditioning office?

    C’mon people..it will be 2010 soon. This thread is so 1980’s it’s not even funny! What are you going to say next, I need to put down 20%…yeah ok! Get real.

  9. Russell Shaw

    June 12, 2009 at 2:59 am

    In our state – and I believe it is true in most states – all offers must be presented, but all contracts must be in writing.

    It makes no difference if the buyer has seen the property. Anyone is free to send in (or call in verbally, for that matter) any offer on any property, in any manner they like. Now, how we present that offer to our seller is going to match the “quality of the offer”. Verbal offer = verbal presentation. Not on the standard contract, then that will be part of the counter. Shotgun low offer, then presented verbally with a strong recommendation to simply decline.

    In short, we represent our seller and do what is in their best interests. I am not interested in nor do I care about, “this is how the buyer wants it” unless that is what is best for our seller.

  10. Paula Henry

    June 12, 2009 at 7:03 am

    Barry – I’m talking about agents submitting an offer on an outdated mandatory form. There are reasons the form has changed, which benefits both the buyer and the seller.

    I require the short sale addendum, because it offers specific information about the short sale process and dates for the lending institution to reply, seperate from the contract, which states the date the seller must reply.

    I do present offers to my seller, but if you want a chance to have the offer looked at by the bank – then the package must be complete with all signatures.

    I beleive they even required signatures in 1980.

  11. Paula Henry

    June 12, 2009 at 7:16 am

    Russell – I do present all offers to my seller, however incomplete, but I can not submit it to the bank without the required documents and signatures.

    One bank told me the contract was void becasue the date had expired. then I directed her to the Short Sale Addendum, which provides the date the lender has to respond.

    My goal is to represent my sellers best interest and when all signature and documentation are correct, we have a much better chance of closing.

    I also don’t care if the buyer has seen the property; I just personally don’t write offers on properties I haven’t seen – I know what some of these homes look like:)

  12. Danilo Bogdanovic

    June 12, 2009 at 7:49 am

    Paula made a very good point about offers and banks – for a bank to consider an offer (whether a short-sale or REO), it must be in writing and it must use all of the proper forms for the jurisdiction the property is located in.

  13. Barry Cunningham

    June 12, 2009 at 8:14 am

    Paula I don’t know who it is you deal with and perhaps they don’t have a clue. So perhaps it’s a matter of bad judgment on their part. All of our offers are on board contracts, are signed, and contain OUR addendum which was prepared by our attorney which covers what needs to be addressed in a short sale.

    About 6 months ago, I had a tussle on AR wherein I said I had a 100% success rate with short sales, and everyone got into attack position in disbelief. Well it’s not 100% anymore…we lost one, so I guess we’re at 99.9%. The reason being that we know how to present the deal to a bank and how to negotiate with a bank.

    You are right there are some (many) agents without a clue. I HATE using superlatives and when I see comments like that which some here used like “for a bank to consider an offer (whether a short-sale or REO), it must be in writing and it must use all of the proper forms for the jurisdiction the property is located in” which is simply not true, or when I see things like ” I understand investors like to throw contracts at the wall and see what sticks”…it’s that kind of BS that makes my face turn red!

    My time, is quite valuable. When i see what most realtors make, I can conclusively say my time is MUCH more valuable than theirs. I don’t waste time simply throwing out offers to see what sticks. I’ll leave that for the infomercial crowd.

    When We place offers, with funding documentation attached, the banks take notice. It’s the mentality as shown herein that precludes a lot of deals from getting done.

    I’m so sick of agents posturing about looking out for the best interests of their client in a short sale transaction. It’s ludicrious. Most haven’t a clue of the foreclosure process, how it evolves, the timing of it and more Sellers end up losing their homes than selling because an incompetent agent thought they were looking out for their seller’s best interest.

    Go through your local MLS and see for yourself. See how many short sales have been listed in the last 6 months, find out how many actually closed and then see how many were lost to the process. It’s simply amazing and what I read on so many agent websites is how the bank took too long orthe buyers walked or this and that….

    The bottom line is “Real estate agents listen up, say goodbye to the term “low ball offer”. Hear me now- an offer is an offer. I don’t care if it is thirty percent under the asking price. An offer is an offer. By using the term low ball offer, we are setting ourselves and our clients up for the fact that it is not a real offer.

    Deals are not happening because agents are afraid to write offers. Deals are not happening because agents are afraid to present offers. The job of a real estate agent is to make deals happen, not prevent them.”

  14. Doug Francis

    June 12, 2009 at 9:16 am

    I have had excellent buyer clients write contracts on short sales. Professional, clean with all pages signed or initialed. Dream paperwork with pre-approvals from familiar, local banks, and decent deposit checks. You know, like they taught us back in real estate 101.

    But then to have little response, long waits, and a listing agent who I know is praying for this to work out too. And often it is an excellent, professional listing agent too who works hard to make an income… but they are left in limbo to make excuses for the slow response.

    I’m sorry to say this but I believe it needs to be said, the use of short-sales in “pending” statistics (local and national) creates a false impression of a real estate rebound. These short-sales are so unpredictable that I can understand why investors think so poorly of them.

  15. Missy Caulk

    June 12, 2009 at 8:11 pm

    Barry, I have listed and sold many short sale homes. But, I have to tell you every document that bank has said they need and want is presented in a one package deal.

    How are you getting banks to verbally talk to you etc…?

    I would really like to know as the more I have learned over the years the more precise my contracts are with a label on EACH page with sellers names (yep the middle initial too) loan number and addresss.

  16. Barry Cunningham

    June 12, 2009 at 9:05 pm

    About 5 years ago we started doing short sales (way before they became cool)…it was tough back then to short sale a property with equity but once we broke through it became easier and easier. Now fast forward to today and it’s a very easy streamlined process.

    We have a very well defined process and I am not pitching our course right now but telling you very succintly that we NEVER deviate from our course of action.

    In short, we identify a prospective deal (not hard at all) but finding an agent who has a clue makes it hard.

    When we see an unlisted property it’s simply money in the bank..slam dunk..homerun…cash in hand. We spend thousands of dollars per month marketing to unlisted and soon to be expireds…and that’s the bread and butter.

    The gravy is sifting through the wreckage on the MLS. The sweet spot, which we have taught thousands of agents…is to look for the deals where the homeowner has little or no options left. Why? Because this means the bank has little or no options left. We find agents who have sucked at the process, and we send them our offer with the publication of their homeowners sale date.

    You’d be amazed how many agents have no clue that their listing is about to be auctioned off in the next coulple of days or weeks. We submit the contract, through our agent who makes sure that all of the terms and conditions that we want is in place.

    Once accepted we take over, send to our attorney who is retained by us for the benefit of the homeowner (totally legal) who then fires off a letter of appearance on behalf of the homeowner along with a few timely motions and voila…auction is stoped and then we wait….We fire off the LOA…and wait….

    WE NEVER CONTACT THE BANK…they ALWAYS contact us. When they do we tell them we are finalizing ano offer and we’ll get back to them…and we make them wait until WE are ready to negotiate.

    We assemble our ENTIRE package, then send in the package (which trust me is more complete then you could imagine…most times is in excess of 200 pages) and when we submit, we request a bpo. Even if they have had one, we demand a new bPO…which they always grant and it’s not until after the BPO do we engage.

    There’s a lot of behind the scenes maneuvering that goes on that I don’t openly want to mention…but that’s the synopsis of what we do.

    The biggest thing that’s a bonanza to our business, which is kind of on the qt…is when we close we already know who our negotiator was. So we scour the public records for defaults with the same lender in the same area. When we close we ask if they are representing the “Jones” file on 123 Smith St. We tell them we may be interested in that deal.

    Although they shouldn’t tell us…they aleays do. So now we have the ear and contact of that negotiator and we know what they handle.

    So on our subsequent deals, they already know who we are and becasue of our style and ability (plus a VERY defined email campaign…yes we get the email) they call us and ask us what we’re working on and let us know deals they are having problems with.

    Then we call the agent and pretend we don’t know anything when we’ve already talked to the bank, and reviewed the entire court file…it’s a breeze.

    Most banks we deal with give us approvals on the phone within the second or third call now BEFORE we even present a package. I call that sweet!

    You see..we developed a system because we knew this was so profitable. Most agents have no clue about what I just wrote above and would never do it if they were told. But in a nutshell…that’s our business model.

    Easy to tell..extrmely hard to duplicate and we cherry pick the deals we want now while most agents run around trying to get the listings of houses that have no business being listed at prices they have no business being listed at all the while operating under the guise of protecting their client’s best interest.

    Give me a break…they have no clue that we all are in the liquidation business. Hopefully by your inquiry you do know this. Love to share with you…

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Opinion Editorials

Finances in my 20s: What I wish I knew then that I know now

(EDITORIAL) They say money makes the world go round. So, let’s discuss how to be smart with finances before it’s too late.

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finances

Being in my early twenties, something I’m still getting used to is the fact that I’m making my own money. This is not to be confused with the babysitting money I was making 10 years ago. Twice a month is the same routine: I get my paycheck and think, “Wooo! We goin’ out tonight!” but then I snap back to reality and think about what that money needs to be put towards. The smallest part of it going towards fun. It’s been tricky to really start learning the ins and outs of finances. So, I do what I usually do in any type of learning process? I ask for advice. I used to be fixated on asking those more advanced in age than I what they wish they knew when they were my age. Now that I’m determined to learn about finances, that question has been altered.

I reached out to a few professionals I know and trust and they gave me solid feedback to keep in mind about building my finances, about what they wish they had known in their 20s. However, I don’t think this only applies to those just starting out, and may be helpful for all of us.

“It’s important to simply know the value of money,” says human resource expert, Nicole Clark. “I think once you start earning your own money and are responsible for your housing, food, etc. you realize how valuable money is and how important it is to budget appropriately and make sure you’re watching your spending.”

Law firm executive director, Michael John, agrees with Clark’s sentiments. “I wish I had kept the value of saving in mind when I was younger,” explains John. “But, still remembering to balance savings while rewarding yourself and enjoying what your efforts produce.”

There are so many aspects of finance to keep in mind – saving, investing, budgeting, retirement plans, and so on and so forth.

In addition to suggesting to spend less than you make and to pay off your credit card in full each month, Kentucky-based attorney, Christopher Groeschen, explained the importance of a 401k.

“Every employee in America should be contributing everything they can into a 401k every year, up to the current $18,000 maximum per person,” suggests Groeschen.

“401ks present an opportunity for young investors to 1) learn about investing and 2) enter the market through a relatively low-risk vehicle (depending on your allocations),” he observes.

“An additional benefit is that 401ks also allow employees to earn FREE MONEY through employer matches,” he continues. “At the very least, every employee should contribute the amount necessary to earn the employer match (usually up to 4%) otherwise, you are giving up the opportunity to earn FREE MONEY. Earning FREE MONEY from your employer that is TAX FREE is much more important than having an extra Starbucks latte every day.”

Whether we like it or not, money is a core aspect of our daily lives. It should never be the most important thing, but we cannot deny that it is, in fact, an important thing. It’s tricky to learn, but investing in my future has become a priority.

This editorial was first published in May 2018.

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Opinion Editorials

Dopamine detox to rewire your brain from internet addiction (it’s common!)

(EDITORIAL) So, you’re addicted to the internet. Whether your drug of choice is scrolling, posting, or interacting – it’s time for a dopamine detox.

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Upside down photo of man holding iphone case saying "social media seriously harms your mental health" representing dopamine.

Ah, smartphones. The best friend we can carry around in our pockets. This small device that’s nearly glued to our hands gives us instant access to many worlds.

It’s exciting to see what’s up on Instagram, take up to six stabs at Wordle, and scroll recipes you’ll never make on Pinterest. It’s also a place where we can share the highlights of our life and, in return, get validation through likes.

With that validation comes a small rush of dopamine, something we’ve all become accustomed – and some of us addicted – to.

While I’m not addicted to posting, I would say I have an addiction to scrolling. I can’t make it through a 50-minute episode of “Dexter” without picking up my phone to check an app or two.

And there is that dopamine rush with it, where you feel like you’re the most up-to-date you’ve ever been. But what about when this becomes too much and we’re overloaded with information and feel bogged down by the constant updates?

First, we need to understand what dopamine is.

It’s a neurotransmitter that works in two spots in the brain: first, its production helps us begin movement and speech. Second, we feel it when we receive or expect a reward. It even creates a kind of “high” similar to what’s found in nicotine and cocaine.

So, if we expect these dopamine hits from social media and we don’t get those results, the dopamine crashes to the ground creating burnout.

Well, this can cause burnout. And, while tempting, the solution isn’t as easy as just deleting all of your social media and walking away clean. Additionally, “take a break” features are too easy to swipe away.

So what can you do?

Mana Ionescu at Lightspan Digital recommends a Dopamine Detox.

While breaking an addiction takes longer than a day, Ionescu recommends starting there and tailoring it to your needs.

Here is what she describes is necessary for a detox:

  1. Turn off all notifications on your phone. ALL of them. You will be looking at your phone every 10 minutes as it is. You won’t miss anything. We lose endless hours of productivity because of those pings.
  2. Tell people to call you if it’s urgent. And teach them the difference between urgent and important. So do keep call notifications on.
  3. Stop over-messaging. The more you message, the more you’ll get responses.
  4. Shed the pressure to respond right away to messages that don’t need a response right away.
  5. Take detox days. Nothing but calls, confirming meetings, and using the GPS is allowed on those days.
  6. Put your phone on sleep mode at night. You can, at least on iPhone, set permissions so that certain phone numbers can get through, in case you’re worried about mom.
  7. If you’re dating, remember that texting is for laughing, flirting, and confirming plans. Please pick up the phone and talk to that person to get to know them. I will not take you seriously if you just keep texting.
  8. And yes, we all know the game, whoever looks at their phone first over dinner picks up the bill.

This won’t be easy, but your brain will likely thank you in the long run. And, when you’re back online, hit up the comments and let us know how the detox went!

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Opinion Editorials

Strong leaders can use times of crises to improve their company’s future

(EDITORIAL) In the COVID-19 crisis, some leaders fumbled through it, while others quietly safeguarded their company’s future.

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Anthony J. Algmin is the Founder and CEO of Algmin Data Leadership, a company helping business and technology leaders transform their future with data, and author of a new book on data leadership. We asked for his insights on how strong leaders can see their teams, their companies, and their people through this global pandemic (and other crises in the future). The following are his own words:

Managers sometimes forget that the people we lead have lives outside of the office. This is true always but is amplified when a crisis occurs. We need to remember that our job is to serve their teams, to help them be as aligned and productive as possible in the short and long terms.

Crises are exactly when we need to think about what they might be going through, and realize that the partnership we have with our employees is more than a transaction. If we’ve ever asked our people to make sacrifices, like working over a weekend without extra pay, we should be thinking first about how we can support them through the tough times. When we do right by people when they really need it, they will run through walls again for our organizations when things return to normal.

Let them know it’s okay to breathe and talk about it. In a situation like COVID-19 where everything was disrupted and people are adjusting to things like working from home, it is naturally going to be difficult and frustrating.

The best advice is to encourage people to turn off the TV and stop frequently checking the news websites. As fast as news is happening, it will not make a difference in what we can control ourselves. Right now most of us know what our day will look like, and nothing that comes out in the news is going to materially change it. If we avoid the noisy inputs, we’ll be much better able to focus and get our brains to stop spinning on things we can’t control.

And this may be the only time I would advocate for more meetings. If you don’t have at least a daily standup with your team, you should. And encourage everyone to have a video-enabled setup if at all possible. We may not be able to be in the same room, but the sense of engagement with video is much greater than audio-only calls.

We also risk spiraling if we think too much about how our companies are struggling, or if our teams cannot achieve what our organizations need to be successful. It’s like the difference in sports between practice and the big game. Normal times are when leaders game plan, strategize, and work on our fundamentals. Crises are the time to focus and leave it all on the field.

That said, do not fail to observe and note what works well and where you struggle. If you had problems with data quality or inefficient processes before the crisis, you are not fixing them now. Pull out the duct tape and find a way through it. But later, when the crisis subsides, learn from the experience and get better for next time.

Find a hobby. Anything you can do to clear your head and separate work from the other considerations in your life. We may feel like the weight of the world is on our shoulders, and without a pressure release we will not be able to sustain this level of stress and remain as productive as our teams, businesses, and families need us.

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