Comments on: Will HAFA Supplemental Directive 09-09 eliminate short sale investor flips / quickturns

By: Andy Morris

Andy Morris — Sat, 10 Apr 2010 04:05:23 +0000

Jay selling hardware, knick knacks and groceries is different than selling real estate. Also the situation of both the banks and the borrowers themselves being foreclosed is much different than a factory selling widgets to walmart that then marks them up and sells them to consumers.

I have been on the investor side and I simply don’t do it anymore. In general it is better for all primary parties if the house gets exposed to the open market and a reasonable offer is procured. It simply is more of a win for all parties. There is no need for an “investor” to come in control the deal and play a role that works very much the same as a broker but with out being bound by any licensing guidelines and who owes no fiduciary duty to the seller.

I am sure you will vigorously disagree. That is fine with me.

By: Jay Schmidt

Jay Schmidt — Fri, 09 Apr 2010 23:31:40 +0000

Andy,

In reference to your questioning of the value that a quick-flip investor brings to the table, consider this…

Arbitrage happens in business everyday. When you go to buy a product at Wal-Mart, they actually don’t own that product until the product is actually scanned by a cashier. As soon as that product is scanned, ownership is transferred from wholesaler to Wal-Mart to end buyer.

What has Wal-Mart done to justify taking that profit? Place a product on a shelf? Basically, yes that’s the extent of it.

A quick-flip investor takes a piece of property a bank considers a toxic asset and removes it from the distressed category.

If a homeshopper sees two identical homes on the same block and one is s short sale and the other is a non-distressed property, is that shopper going to offer full price on the short sale property? Never. Buyers EXPECT a discount if they are going to deal with the uncertainties involved in the short sale process.

Short sale properties are most often sold as-is and without any warranty. Is it any wonder so many short sale buyers fall out on regular short sale transactions?

So, can a home really justifiably have two different prices on the same day? Absolutely. The investor buyer’s negotiator has increased the value of that property by taking it out of the distressed category, which makes the inherent value higher to any buyer.

By: Andy Morris

Andy Morris — Sun, 17 Jan 2010 22:58:38 +0000

I don’t deny that there are ethical investors. I have in fact met many ethical investors.

I think that most agents who let properties go to sheriff sale have either improperly priced a property or listed a property that can’t be sold at any price (i.e. inner city Cleveland and inner city Detroit).

By: Richard Sanders

Richard Sanders — Sun, 17 Jan 2010 16:23:27 +0000

I am investor in Georgia We buy both short sale and non shortsale homes paying as much as fair market value.
We do legal flips . The key is full disclosure. That is why we do our negotiations. When we submit our contract to the lender we tell them we are reselling the property for a profit and tell them how much we are making. We limit our profit to 15% which most lenders agree is a fair profit.
We demonstrate to the lender that our cash offer today is better for them than than a foreclosure and sale in 6 to 8 months.
The service we provide is the cash offer. In my county I see homes go to foreclosure every month when listed with realtors waiting for offer. Buyers in my area are not buying shortsales because of the time involved. And we have never refused to sell to a FHA buyer unless we have an offer from cash or conventional buyer. If Fha is all we have and we don’t want to hold property we step aside. The homeowner avoids foreclosure, the realtors get commissions and the lender gets out of loan. And just getting the liens removed makes getting an offer more likely.
While like in all areas of business there are greedy investors taking advantage of others please don’t lump all investors in the pot.
If we can not create a win for homeowner, realtors, lender and us we simply step out of deal.
Our experience has been that even if lenders say approval is for particuliar buyer we have never had a lender refuse a sale when we step out and submit another buyer.
If realtor is having sucess listing shortsales and finding buyers and stopping foreclosure they do not need us. But if realtor is seeing listings go to foreclosure then does it not make sense to do business with ethical investor? THEY DO EXIST!