Need Some Advice On Notes
I have a deal where the seller has a commercial property appraised at 700K and has 200K worth of equipment in it. I can pick this all up at less than 50%.
The problem I have is that I do not have funds to do so and being a CDN in the USA has not really allowed me enough time to create an outstanding credit score but I am over 620 which is not bad from what I understand for only being here 2 years.
The seller will hold 100% of the buying price in a note if I have an avenue to sell the note for him. I have no idea how to do this.
I agreed to give him 100K more than what origanlly agreed upon since taking the note and him having to sell it but he wants it to be sold for him as a simultaneous deal where he gets his cash they get the note and I get the building and land.
Is this possible and where do I start to research on selling a note for such? What requirements will I have to meet for him to be able to sell the note? Can the rate of interest change as the note changes hands?
trying to close this deal as its my first and have the building leased for more than carrying price of the loan and the land has a LOI for a developer to partner up with and split profits and the equipment will be liquidated through an auctioneer sale. By crunching the numbers I will be ble to sever the land into lots and sell off to break even on whole deal and the machines are profit leaving a 5K a month income from the property after expenses.
Any thoughts or suggestions or input???????
Thanks from the poor Canadian just starting out in KY. :-?
All i can say is start small and dont try to hit a home run with something this big on your first deal because chances are, it might backfire.
Take it easy and do some small residential properties. This is not a get rich quick sceme and if you try to make it you will prolly be poorer even quicker
You might try posting this in the Commercial forums where it would probably get more response.
Thank you But I am new to this and read the rules as I had posted in here then noticed the rules about having it in multiple forums so I decided I should respect and abide bby the rules even though I want to move it there as well.
You think it would be deleted or removed if I keep it here and just paste it over there as well???
Thanks
It sounds like your real estate agent was wanting to collect his commission before Christmas, as much as the owner of the property wants to be out.
Any number of things could prevent this from closing within the 15 day escrow that everyone wants. 15 days is a pretty short time for everyone to process their part of the deal to make everything come together in 15 days. I doubt that you will lose the deal because you have changed your mind. If the closing is delayed until after the end of the year, you might consider offering to cover the additional mortgage payment or something like that.
Good luck,
Jeff
you have a good idea...what i would do is...
talk to my agent and find out what is holding the seller from moving into their new place...
if it is money, i would consider lending it to the seller to comsemate their concern...
i could have the money credited back to me at the closing of the house im buying...
or if seller is motivated, which they seem to be...tell them you will give them the capital they need if they will take a note out on the new house...
charge 107% of what you lent him on the note and you can sell it for cash for 93% of face value...
which would be all of your money back....i hope you followed that
BUT i must say, regardless of how long it takes, i doubt this seller will back out now...
you could give them nothing at all and just let the property close when it closes....
unless there is a contingency in the contract there is really nothing they can do about it...
jus check the options...i think you should let it go the way its going and not offer anything...
its their problem and theres nothing they will get from backing out of the sale and going somewhere else...it will only take longer...
~Andrew
Jeff,
Regardless of who contracted with the agent first, he is still contractually bound by both parties and therefore becomes "neutral." My point is he should not (legally, morrally, ethically) be persuasive when it comes to something HE is not comfortable with.
At any rate, I had good news from my broker today. He should be able to close the loan by the 23rd. I don't think 3 days is going to kill this deal.
Thanks for your feedback
[addsig]
How do you feel that the agent is contractually bound to you, and required to be neutral? Please explain this to me. I am being sincere.
When a house sells, the seller pays the commission, not the buyer. My understanding of this is that he is the listing agent, (correct me if I am wrong) as such, he works for the people that pay him. His conduct in the transaction is regulated by the agency that issues his license, and his contract (between him and the seller) to sell the property. He therefore has some responsibilities to you, and is contractually obligated (as the listing agent), and legally required by the licensing agency to present your offer and to serve as liason, a line of communication between you, and/or your agent and the seller, but make no mistake, as the listing agent, He or She works for the seller, not you.
Human nature will dictate that any neutrality will lean towards whomever is writing the check (and possibility in this scenario, a desire desire to finish Christmas shopping).
I may be all wierd on this, so if I am incorrect, please explain how it works if I am wrong.[ Edited by jeff12002 on Date 12/15/2004 ]
Jeff,
I can appreciate your stance on this, but here is the bottom line.
**********
RE-14 EXCLUSIVE BUYER REPRESENTATION AGREEMENT
This is a legally binding contract.
Buyer is represented by one agent only for time herein set forth and for the express purpose of representing the buyer in the purchase, lease, or optioning of real property. Further, buyer agrees, warrants and acknowledges that buyer has not and shall not enter into any exclusive buyer representation agreement with another broker in the state of Idaho as a broker for buyer during the ffective term of this agreement, unless otherwise agreed to in writing by buyer and above listed broker. By appointing broker as buyer's exclusive agent, buyer agrees to conduct all negotiations for property through broker, and to refer to broker all inquiries received in any form from real estate brokers, salespersons, prosspective sellers, or any other source, during the time this agreement is in effect.
CONSENT TO LIMITED DUAL REPRESENTATION AND ASSIGNED AGENCY: The undersigned buyers have received, read and understand the Agency Disclosure Brochure (prepared by the Idaho Real Estate Commission). The undersigned buyers understand that the brokerage invloved in this transaction may be providing agency representation to both the buyers/client and seller/client, a brokerage will be a limited dual agent of each client and CANNOT ADVOCATE ON BEHALF OF ONE CLIENT OVER ANOTHER, AND CANNOT LEGALLY DISCLOSE TO EITHER CLIENT CERTAIN CONFIDENTIAL CLIENT INFORMATION concerning price negotiations, terms or factors motivating the buyer/client to buy or the seller/cllient to sell without specific written permission of the client to whom the information pertains.
RE-21 REAL ESTATE PURCHASE AND SALE AGREEMENT AND RECEIPT FOR EARNEST MONEY
This is a legally binding contract.
32. REPRESENTATION CONFIRMATION:
section 1 A
The brokerage working with the BUYERS is acting as a LIMITED DUAL AGENT for the BUYERS, without an ASSIGNED AGENT.
section 1 B
The brokerage working with the SELLERS is acting as a LIMITEWD DUAL AGENT for the SELLERS, without an ASSIGNED AGENT.
**********
Hope this helps
Thanks
Aaron,
There are two types of agents, a buyers or a sellers. If he is the listing, He is a sellers agent and his contract would be with the seller not the buyer.
it just seems like a legal conflict of interest
Getgoing...
How is everyone missing this, the agent is legally bound to BOTH parties. I HAVE CONTRACTED WITH HIM TO BE A BUYERS AGENT!!! It's not that hard to figure out. Read my last post. If the agent is both a buyers and sellers agent:
"a brokerage will be a limited dual agent of each client and CANNOT ADVOCATE ON BEHALF OF ONE CLIENT OVER ANOTHER, AND CANNOT LEGALLY DISCLOSE TO EITHER CLIENT CERTAIN CONFIDENTIAL CLIENT INFORMATION concerning price negotiations, terms or factors motivating the buyer/client to buy or the seller/cllient to sell without specific written permission of the client to whom the information pertains." <----- this quote is direct from the contract signed by myself and the agent.
Am I the only one who has ever signed a buyers agreement with an agent?
Ok so it seems to me that there are two different problems here. On the one hand Aaron feels inadaquately represented by the broker. On the other hand he needs an extension to close.
Relative to the inadaquate representation I'm not sure there is a lot you can do at this point except bypass the broker. Either talk directly to the seller or have your attny call their attny. Don't use this broker again and feel free to talk up the bad service you got from him-- that is, after all, how the market place works, those who give bad service get bad reputations.
As to the extension to close (which seems to have become a minor issue at this point) I'd announce (verbally only) that I want to close after the first of the year for tax purposes, see who hollers and why. Negotitate back to some date you can live with.
All that BS about "I have other buyers waiting in the wings" is just that-- BS. Brokers always talk like that when they are trying to push you to do something. Correct answer, "Good, get one of them to close before Christmas. Bottom line your client's interest is to close this deal quickly and nobody is closer to a closing than me. You can sign a new contract with somebody else and go back to square one or you can get a two week (or one week) extension for me.
Bottom line, in any negotiation the one who cares the least (or appears to) wins.
Now then, once you have thrown your weight around a little and proved you know how to be tough then you get to play good cop. "I understand the seller wants to get into the new place before Christmas (do they really? Who would want to move during the holidays?) There are things I can do and things I cannot do. I will do anything I can to accomidate them. What can I do? Will the seller of the new house take a rental agreement for 30 days so they can move in and close then? Can I front them the downpayment on the new place so they can close and take it out as an advanced payment when we close on my deal? Work with me here . but don't tell me I have to do things I cannot do. All I can do is all I can do."
Trust me, more contracts close on extensions than close on time.
Quote:The signed agreement states "Brokerage" but also states the Agent as representative of the brokerage and the Agent is listed as dual agent etc...grneydgy,
Just one more question for clarification. Is the same agent representing both the buyer and the seller, or are different agents from the same brokerage representing each party independently?
Since your buyers agency contract is with the brokerage, I can see how the contract language you are quoting could apply in either case. [ Edited by NewKidinTown2 on Date 12/16/2004 ]
Ok,
I did not type up the entire agreement in this post, only parts of it.
The brokerage referes to the "agency." The agent represents the "agency" (the brokerage). My agent's name appears on the contract (and is signed by him) stating that he will be my representation from the brokerage.
And yes he represents both parties.
[addsig]
One thing about this in NC yes they are a dual agent but the seller pays more so who do you think they are going to side with. I never use a dual agent, well thats not really true I have a working relationship and friendship with my realtor I would buy one of his listings but thats because I have worked with him for a while. But dual agents are not good to work with.
In NC standard is this.
Selling Price: $100,000
Seller Pays: $6,000 (or 6%)
Buy Pays: $3,000 (or 3%)
Who do you think the realtor will lean towards. Now I may be off a bit on this but thats just from what I have seen
[addsig]
I'm sorry but I dont' really have any good advice to give, but I do have a question of who you went with on getting the mortgages and if it was classified as investment property? Thanks
I have a very good mortgage broker in town that I went through and would be happy to give you contact info if interested. Yes this property was absolutely considered N/O/O investment property. I wouldn't chance loan fraud.
Thanks for the response.
[addsig]
I was the 3rd post on this topic but it was deleted. Maybe I was too harse? Anyway, I'll try again.
The subject isn't about the r.e. agency created. The subject, to me, is the situation you have created.
With a week to go in the deal you decide to change loan programs. On the purchase contract you agreed to a 15 day escrow. There were multiple offers and the seller chose yours because of your commitment to close in that time frame.
The seller and the agent haven't changed the terms of the agreement, you have. Yet the focus is on them. Why is that?
You could always close with the original loan and then do a no-cost refi later to any program you want. This way you hold up your end of the bargain. As it is now, you forcing everyone else to pay for your mistake instead of taking it on yourself. You with me?
The seller may very well have an obligation that needs to be fullfilled by the end of the year. The agent is merely trying to get you to perform as WRITTEN in the sales agreement. After all, he obviously sold the seller on accepting your offer because you said you would close in 15 days.
You say that one thing you learned is that you wont be using that Realtor again. I don't think that will be a problem. In this business, your word is your reputation and I can pretty much guarantee that the Realtor wont be sending any deals your way.
I have been on the other side of these situations
enough times to know that it's all about the contract. From what I see, your the only one that has breached it.
Sorry if I come off harse, but you aren't the victim in this deal.
Actually, I read your post a couple of times.
Look, I'm really not looking for a fight here. After reading it, my thoughts were on what caused the situation. The rest of it was neither here nor there, (to me.)
You wanted creative solutions to close your deal. I threw out the idea of closing on your original loan and then turn around and do a no-cost refi after the purchase. I thought that might be the fastest and cheapest way to make your date. It's actually kind of an advanced method that maybe will help more than just you reading this.
Look, i didn't want to get into the whole agency discussion, which is where the post veered to.
There's some great lessons learned from this deal and now it's closing earlier than you had thought. That's a very happy ending!
Congrats.
Regal,
I appologize for being a little touchy on this and maybe that's because I haven't conveyed my point the way it should have been conveyed. It is a difficult thing to do without delving into each an every aspect of why I feel this realtor has shafted me.
I do appreciate your advice on the no cost re-fi and it was something that was discussed as a last ditch effort to save the deal.
My intention was not to fight or argue with you but to solidify my stance, and when questions about reputation or 'breach of contract' arise they need to be dealt with.
Also, I never addressed the finance contiingency in the contract. We could have just as easily pulled out of the deal on the finance or inspection contingencies. So we were within our legal right to change financing.
Believe me when I say I completely understand the sellers viewpoint and if they really wanted to pull out of the deal then there would have been no hard feelings.
Again, sorry if I came across defensively but the way your post read was, to me, extremely derrogatory.
Thanks for the input
[addsig]
It was explained to me that it is always good to work with an agent that represents your interest soley; hence, it becomes a conflict of interest when you have an agent that works for both the seller and the buyer.
It was explained to me that it is always good to work with an agent that represents your interest soley; hence, it becomes a conflict of interest when you have an agent that works for both the seller and the buyer.
Continue to make the right steps toward learning and investing and then share your knowledge with others!
GL
[addsig]
I plan on adding to my knowledge of real estate, and I believe in giving back , so I will be trying to help others as I learn.
Thanks every little bit of info helps.
Hi brian929,
Very nice to hear from you. You can private message me if you want to send me what you guys are looking for and the best way for me to contact you and when. I look forward to talking with you.
Christine (la2lawoman)