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Desperation shouldn’t mean taking a loss if you don’t need to!

Recently I ran into someone who needed to sell their home quickly because they were moving for a job and needed to buy a home where they were going. I was amazed at what he was going to be willing to take on this property, and told him so.

I was so shocked that I said I would buy it on the spot, and did. But, being who I am, I told him I would rather buy it from him on owner financing and give him the difference between what he owed and what he was asking as a down payment. That way he could use it to buy his next property where he was going, as long as he was willing to carry the contract on the last portion at 5.5%, a quarter point more than he was paying. I showed him he could make a little extra money on the property this way, and he was ecstatic!

Not only did I give him the price he wanted, but he was able to sell it to me without having to pay a real estate agent commission. I told him he was under priced and he said, "I know, but I need to dump the property today, so I can get to my new job." I'm sure I could have taken an additional 5% off if I tried, but I just couldn't, in good conscience, do that as I knew I was already getting an amazing deal!

Now, for my efforts with being honest with this seller, getting a deal and saving myself lot of finance charges, it looks like it will end up being a $120,000 profit at the end of the lease option period, plus a referral within 12 hours from a friend of his who is looking to buy. When the person called he said his friend said that he should talk to me, I was one of the most honest and ethical agents he had ever met. WOW! I was speechless upon hearing this, but it was nice getting a two for one deal for just being myself!



Todd Clark (Principal Broker)
eXp Realty LLC
503-524-9494
 
Comment balloon 21 commentsTodd Clark • February 16 2008 10:48AM

Comments

Todd - I'm not certain I would have done the same thing.  I hope you don't wind up in a lawsuit over this one.  And for you to publicly advocate "saving" someone a commission is a shock.  I've been one of your faithful readers.  Frankly, I'm disappointed.  What you've written here confirms the public's suspicion that REALTORS® get all the "good deals". 
Posted by Marlene Bridges, Laguna Homes|Laguna Condos|Laguna Real Estate (Village Real Estate Services, Inc.) almost 13 years ago

Good morning Marlene,

Sorry to disappoint, but it was either list it for that and make $7,000 or buy it myself and make $120,000. I'm in this business to make money.

You see I see way to many agents not take advantage of a deal when they see it. We make money for investors all day long, I advised this person that it was a deal and had them sign paperwork that I had my lawyer draw up that he was aware that he was selling his house at a major discount.

As for saving the commission? Well, I couldn't take another $14,000 off a property that was already $90,000 below market value. I have to live with myself and sleep at night, but at the same time I have to feed my family.

Sorry to finally disappoint, but on this one, I'm going to have to stick with what I did.

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) almost 13 years ago
Although I'm in no way disappointed, if it works for you great, but I would have to slightly agree with Marlene. Only because I've heard stories of situations coming back to bite, because the sellers/buyers claim they've made an important decision under duress. But like I said, I hope everything works out OK for you. Congrats!
Posted by Eugene Jones (Weichert Realtors) almost 13 years ago

I understand the concern in terms of liability but that is what attorneys are for. It seems to me Todd did everything up front, was meticulous in disclosing the scenario plus in the end all parties knowing the trade off factors made it happened. This is a win win deal.

 

Posted by Kirk Williams (Private Venture Capital ) almost 13 years ago

So, why is Marlene freaked out about saving the commission?  It put an extra bunch of money in the sellers' pocket.

I don't see anything wrong with making a deal - as long as the seller knows he is dealing with an agent who knows more than he does in this situation.  Also, it sounds like you over-disclosed (if that is ever possible).  While the seller might have made out better than he did, he had the facts in front of him and sounds like he met his goals of getting relocated seamlessly.   

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) almost 13 years ago
I am leary of lease options but they do work and if everyone feels that they were dealt with on the up and up and in good faith sounds like both parties made out well. 
Posted by Heather the Realtor Orlando, Lake Mary, First Time Home Buyers, Bank Owned Homes (LemonTree Realty) almost 13 years ago
Todd, it sounds like the seller was happy and you should certainly be happy. That's part of this great economy were enjoying, you took the risk and hopefully will be rewarded in the long run. Plus the seller isn't making a double home payment.
Posted by * Rate A Home (Rate A Home) almost 13 years ago

Todd,

Sounds like you hit a home run!!! No pun intended!!! :^) Thanks,   Fran

Posted by Fran Gaspari, "The Title Man" - Title Insurance - PA & NJ (Patriot Land Transfer, Inc.) almost 13 years ago
Todd, Sounds like a win win to me. Good job. I too have had sellers that wanted to sell like yesterday just to be done with it. Some folks just wanyt to move on with their lives and not deal with the market. If you can help them out and get a deal at the same time then so be it.
Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) almost 13 years ago
A lot of good deals out there.  Good job for making it a win win for everyone involved!
Posted by Cody Sperber, Real Estate Investing Education (Clever Investor, LLC) almost 13 years ago

Hi Todd

I want to talk to you and begin a networking pool. I was busy when I talked to you last timme. Could you call me at 262-377-1459 and let me know what works for you?

This could be gret for both of us. I have some great material I could send you.262-377-1459

Sincerely

Tom BraatZ

Posted by Tom Braatz Waukesha County Real Estate 262-377-1459, Waukesha County Realtor Real Estate agent. SOLD! (Coldwell Banker) almost 13 years ago
Todd, I could not agree with this post more. I have seen people do some stupid things recently.
Posted by Danny Thornton, WordPress Guru (R & D Art) almost 13 years ago
Todd - This sounds like a win win situation and you were very honest, so good deal for everybody.
Posted by Candy Henthorne, Spring Texas Real Estate (Results Realty) almost 13 years ago

Todd, what a great lemonade story. A win-win for everyone involved. That is what is all about.

 

Posted by Dionne Morgan, Broker REALTOR ,GRI, e-PRO (Realty World Solano Realty) almost 13 years ago

Eugene - I gave them lots of opportunities and with them signing the stuff with that their lawyer approved, I would say I'm pretty safe. But, even if not, I'm making money monthly with the lease option.

Kirk - Thanks!

Patricia - Exactly, he could have listed it and made $15,000 less than he made selling it to me!

Heather - I bought it from him on owner financing, but the lease option will be to my new buyer. I specialize in lease options and I work with the buyers to get their credit up so they can afford the home and get a great mortgage after the two year lease is up. If you understand lease options and do with good intensions then there is nothing to be leary about!

Duane - I actually got them to their new location faster than had they listed it and sold it traditional financing. They were in their new state in less than 10 days from the day I met them.

Fran - Ha Ha (LOL)

Bryant - Thanks, that is all I was trying to do, I could have let someone else list it for the price he was asking and gotten 3% back in the form of commission, but I wasn't about to do that!

Cody - I just don't understand why agents are afraid to buy a good deal when it comes along, it is one of the perks of our career choice. Why make $7500 in commission when you can make $50,000 to $100,000 just like our investors that we search out these homes for are.

Tom
- Call anytime!

Danny - I didn't want him to sell for less, I tried to get him to sell for market value, he just wanted to move on. So, I worked it out as a win for me!

Candy - That is what I try to do for every one of my clients!

Dionne - I wish more agents would invest, it is our version of a 401K!

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) almost 13 years ago
Todd, that is fantastic. I'm sure they had to be happy to run into you. Otherwise they most likely would still be sitting on the home.
Posted by * Rate A Home (Rate A Home) almost 13 years ago

Todd;  I don't think you wrote the post for it to become a forum for the rest of us to play judge and jury but here's my two cents...Seems to me you were upfront about everything and just because you are an agent doesn't mean you can't be an investor too.  If the seller made a bad decision, then he needs to take responsibility for his actions and not look to blame someone else.  Same with a lot of homeowners who got themselves into loans knowing darn well they couldn't afford them when they adjusted.  We are a nation of always looking to make someone else pay. 

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 13 years ago

Todd-  I love your comment to Marlene. We are in this business to make money. There is no law anywhere that says you do not have the same rights as any investor to make a profit in real estate as long as you make full disclosure that you intent to profit on the deal. Here in Florida you have to disclose you are an agent and that if you think in the near future you will be selling the property for a profit that you disclose that to the seller. 

I hear this all the time, agents making money for investors and they take it in the shorts. You go for it, Todd! Good for you. Isn't that what most agents originally got into the business for? To make a profit and to become investors themselves? If real estate agents are supposed to just be public servants than I need to get out now!  

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) almost 13 years ago
You absolutely did the right thing.  You made full disclosure, and made it a win-win situation.  More agents need to realize that a very tangible benefit of our profession is the ability to find a sweat-heart deal every so often!
Posted by Bob Schenkenberger, Denver Real Estate (Colorado Realty Professionals) almost 13 years ago

Duane - Or in a cardboard box.

Donna - I can take it, but if I didn't buy it someone else would have!

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) over 11 years ago

Katerina - If you are not in this business to make money the get out! Go do something at McDonalds, then you won't have to feel guilty about making money. I just don't understand the logic of some agents.

Bob - Investors do it all the time and if they happen to call us first, why not make it a win-win for everyone.

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) over 11 years ago

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