WOW! Real Estate Investors better be ready. If you are like me, you remember what it was like before the end of 2007.
- Everyone could get a mortgage
- Anyone could be a real estate agent
- Loan officers were unresponsive and irresponsible
The past five years of a buyer’s market has actually been nice. Yes, it took some getting use to, but it also spoiled me. I got use to:
- Working with real estate agents that were experienced enough to survive the down turn
- Working with loan officers that had experience and focused on their files
- Everyone focusing on a transaction until it was finished
The past several “fix and flip” transactions have awakened a nervousness in me. You see, it is beginning to feel like 2006. There are many things you will have to watch out for as a real estate investor in this market. As rates remain irresponsibly low, and volume increases, “service” providers will become more and more irresponsible and incompetent. Today, I had a lender tell me the problem with my house (a fix and flip in Garland, TX) was that I had purchased it in a Corporate name. Huh? Last week, I had a real estate agent tell me I should have disclosed I had bought the house less than ninety days ago. Really? She even said it was “Illegal” for me to sell the house! I had an agent call my wife (She is a real estate agent and lists the houses we sell) a b**ch via text message earlier in the month.
I have been through this cycle before. The money in real estate is getting easy. The bubble is “blowing up”, and I am waiting for it to pop again. So, here are some tips for a real estate investor selling houses in a seller’s market:
- Remember, you are in control again! There are plenty of buyers.
- You need to start looking for conditional approvals at key dates.
- Place deadlines on the buyer.
- Close loopholes provided in the contract. One loophole in Texas is Paragraph 4(A)1.
- Manage the people in the transaction. Talk to the real estate agents, the loan officers, and the title company.
The bottom line is, interview all parties involved. If you feel like something is wrong, it probably is. Do not extend a contract when you don’t have to. There are plenty of buyers out there. Got questions? Ask me below.
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Thanks!
One loophole in Texas is Paragraph 4(A)1. What is Paragraph 4(A)1?
That paragraph allows the buyer to back out until the day of closing, if the property does not meet the lenders approval. I had a lender decline a property because I had not owned it 90 days. I educated the lender that HUD had waived seasoning, and the lender said they did not ackowledge that. 40 days under contract, buyer got out for free.
I am a Realtor and seasoned investor. I am appalled at some of the things professional Realtors tell me too (and to do). Some will act like they are contractors and inspectors instead of being Buyer Agents. They challenge inspectors and licensed contractors… I had one Realtor tell the buyer (who really wanted the property) that I had purchased the property too low so he (the buyer) should look elsewhere. Really!
Tim,
You eventually sold the house, but did you sell it under 90 days?
Reason being, I am buying a house now and looking to sell reatil for alot more with no rehab.
Anything I can do to avoid the same thing, or make the sale smoother?
Thanks in advance!
No, it took longer than 90 days. We eventually had to cave to inexperience, and re-execute a contract after the 90 day period.