Preforclosure Flipping?
Has anyone dealt with companies for pre foreclosures? They match owners and prospective buyers? The company contacts investors when a home has atleast 20 to 30k in equity. Of course this is all done for a fee. The investor is to pay $750 PER YEAR and 15% of the profit,up to $3k.
Any thoughts on whether this could be profitable or a scam? <IMG SRC="images/forum/smilies/icon_eek.gif"> [ Edited by MRCCAL on Date 01/07/2004 ]
almost sounds like they're collecting a commission (15% of the profits). Could be some issues here if they're not licensed real estate brokers/agents.
Well I can say they seem more like financial brokers if anything. I was told the $750 covers signs to attract owners in need.
What types of issues would concern you if they weren't agents?
My understnading is that if they don't have an equitable interest in the property, they would be required to be licensed by the state to sell real estate, and collect comissions for doing so. Simply putting buyers and sellers together without having a stake in the property is what real estate professionals do, and they're required to be licensed.
In order to have an equtable interest in the property, they have to appear in the paperchain of the title transferring from seller to buyer, either by assigning a contract that they are named in as "buyer", or actually purchasing the property, and reselling it as the owner, or holding a lien against the property. If they are just standing on the sideline, putting buyers and sellers together for a fee, they cannot demonstrate an "equitable interest" in the property, and I believe that they need to be licensed. [ Edited by jeff12002 on Date 01/07/2004 ]
Okay thanks for the advice. But in your opinion it sounds as if this could be profitable from an investor's point of view?
As long as the numbers are in line, sure.
You should do your own due dilligence and research every property for yourself. Don't accept their numbers as fact, or you could end up in a bad situation. I'd be very wary about giving up $750 before they have presented you with a worthwhile deal. If you do, you've given up a portion of their incentive to perform. A list on names and phone numbers isn't necessarily worth $750 a year, especially if the list is old and not very current either. Most of the deals have been picked through by people gathering their own information after a short while. Bird-dogs get paid when the investor purchases a property they've recommended, not before. This system seems to work well, I don't think I'd change that policy simply because they present themselves as more than that. A Bird-Dog is a Bird-Dog. A good one is worth every penny you pay them. Make these guys earn every penny you pay them too.
Thanks for the insight! I'll post the result in a few.