About to be stiffed by Wannabe Investor - Posted by NJDave

Posted by Laure on May 08, 2000 at 23:44:04:

tough call. I believe I would attatch your contract to the property via an attorney. Present your contract to his closing agent or attorney as an additional expense. Don’t know if that would work. It would play in Peoria… of course, I know most of them here by now. I assume you are not in the same area as the “Newbie”.

Good luck.

Laure :slight_smile:

About to be stiffed by Wannabe Investor - Posted by NJDave

Posted by NJDave on May 08, 2000 at 11:02:15:

A newbie/wannabe Investor went into contract ($125,000) to purchase a foreclosed, but not yet REO single family dwelling via an acquisition strategy outlined on these REI boards. The method was not suitable for this particular acquisition, and I suggested that the Investor engage my short sale administrative services and seek a short sale.

It was agreed and we entered into a Contract For Services. I was to be paid my Fee in installments, the final installment due upon foreclosing lienholder’s written approval for the short sale.

It was agreed and understood that as I pursued a short sale approval from the foreclosing lienholders, the Wannabe Investor would attempt to market and flip the subject property via an assignment of approved short sale contract, or via a simultaneous closing.

Aware that the Newbie’s real estate experience and acumen were limited, I assumed the role of a 'coach’
and agreed to ‘walk the Investor Wannabe’ thru the complex and time consuming deal.

Long story short, about 10 days ago the Wannabe Investor was provided written short sale approval from the foreclosing mortgagee(s). The Sale price that was accepted by all parties was roughly $40,000 less than the original contract price of $120,000. The simultaneos closing (The Flip) has been scheduled for later this month.

At this point in time, I am due the balance of my fee for having completed my contractual responsibilities.

Now that the Service has been rendered, my Client has refused to pay as contractually agreed and instead has offered to pay me from proceeds of the simultaneous closing to a third party.

I think that I have two choices: (1) Allow the deal to close and hope that I’m paid from proceeds, or (2) I am inclined to skuttle the deal. One call from me to the foreclosing mortgagee and the short sale approval letter will be rescinded, the deal dead.

Any suggestions?

No stiffing! - Posted by Monique

Posted by Monique on May 11, 2000 at 10:36:19:

NJ Dave,

Sorry to see one of our comrades not live up to his commitment to you.

I’m interested in learning more about your “short sale administrative services” – and I promise to made good on your fee! Do you have a website that describes what you do? If not, email me directly on messerb@thinkingcapital.com

Thanks!
Monique

Re: About to be stiffed by Wannabe Investor - Posted by Tom (GA)

Posted by Tom (GA) on May 10, 2000 at 08:33:19:

While I do agree that your fees have been earned and are due,if you scuttle the deal, you could also be setting yourself up for a counterclaim against the lost profit to the investor.

I have seen this happen to agents on several occasions.
The agent scuttles a deal for some reason and the agent is the one who loses in court.

stiffed? - Posted by MilNC

Posted by MilNC on May 08, 2000 at 20:39:06:

And you managed to get an appraisal at 1/2 of market value?

Also, perhaps you have a misunderstanding with the investor.
You refer to “acquisition strategy outlined on these REI boards”. Much of that information is based on the strategy of all money being paid out of proceeds at closing.

Apparently you have already been paid most of an installment?
And you want to try to kill the deal?
I’m unclear as to why you would do this.

Always learning,
Ann

Re: About to be stiffed by Wannabe Investor - Posted by Ed Garcia

Posted by Ed Garcia on May 08, 2000 at 12:33:46:

Dave:

Normally I would say kill the deal. Once someone has proven to be dishonorable, and
change a deal with out my approval, that’s it. I can no longer trust or depend on what they
say, or are going to do.

However, in this case, Dave, you’ve educated the newbie. If you cancel the deal, he now
knows how to go to the lender and rework it. The lender will not protect you. They will do
the same deal with him as they would have with you.

If you as you put it, scuttle the deal. You have now given him the justification to circumvent you.
I would stay with him and explain that because of the delay. You would like to have a Demand put
into the escrow, or if you’re not an escrow state, put into title or with the attorney, for the amount
that he owes you.

If you have your agreement in writing, you can small claims him, if he tries to burn you.
What ever you do, you should work with him at this stage. I know that you know better than to let this
happen to you again.

Good Luck Dave,

Ed Garcia

Re: About to be stiffed by Wannabe Investor - Posted by Robert(CA)

Posted by Robert(CA) on May 08, 2000 at 12:17:56:

I am not in your shoes, but it seems to me that having a little talk with the investor might straighten him out. Just let him know that the short sale only worked because you vouched for him. If doesn’t pay then it could all fall apart. You also could explain to him how important a reputation is in the REI business.

Is the problem that he doesn’t have the money to pay the fee? Maybe negotiate double or triple your fee if he pays you at closing.

Re: About to be stiffed by Wannabe Investor - Posted by Terry (Dallas)

Posted by Terry (Dallas) on May 08, 2000 at 11:09:47:

“I think that I have two choices: (1) Allow the deal to close and hope that I’m paid from proceeds, or (2) I am inclined to skuttle the deal. One call from me to the foreclosing mortgagee and the short sale approval letter will be rescinded, the deal dead.”

Are you in a position to secure your fee that is due to you? If so and you scuttle the deal you may be cutting off your nose to spite your face.
I am in no way condoning this practice and you clearly would not want to do business with this investor again but is it worth your pay day? It may be if the deal is slim for you. Then again it may not be if it a great profit for you. You have to decide if it is or not. If you are not in a position to secure payment a lesson may be in order.
Best of luck.
Terry

Re: stiffed? - Posted by Tom

Posted by Tom on May 13, 2000 at 08:05:06:

Always learning Ann? It seems that you are the only one, within this nice group of folks, who REALLY understood what went on here. I know the story from the point of view of both parties and, personally, I would think twice before I’d agree that Dave was “stiffed”. Go to realestatelink.net and you’ll see what I mean. I emailed that person and I know the full story.
Tom

Re: About to be stiffed??? - Posted by Tom

Posted by Tom on May 13, 2000 at 08:24:09:

Ed,
Because you are who you are and I, among so many here, respect you so much - I’d like to ask you to take a look at the other side of this coin.

See my post under Ann’s reply. “Stiffed” or “AlmostSTIFFED” or “ToBe-Stiffed” could have been the other person, not Dave… And certainly we all would not want the honest among us get hurt… Possibly, this post is just FYI. Not much else can be done at this point, I think.
Tom

Once a Service is rendered, it value decreases… - Posted by NJDave

Posted by NJDave on May 08, 2000 at 16:45:09:

Thanks, Ed. Fact is, I doubt that the wannabe investor could save the deal if I were to tank it. You see, the foreclosing mortgagee agreed to the short sale based upon my successful argument in support of a reduced market value. However, if they were made aware that another lender’s appraisal supported a market value about 100% greater… they would rescind their approval.

I think that I’ll just hope that I am paid, and if not, I’ll file an action based upon our written contract.

Live and learn.

Re: Should have Insisted that Fee placed with Attorney - Posted by NJDave

Posted by NJDave on May 08, 2000 at 12:00:44:

In retrospect, as a condition of Service, I should have had the Wannabe Investor place the Fee with my Attorney to be released upon certain conditions being met. In this case, the balance of the fee would have been released upon written short sale approval from foreclosing mortgagee.

But I didn’t. Next time I will.

I’ve never encountered this problem before. Usually the Client is thrilled with the resultant discounted purchase and knows that prompt payment (in any business tranction) is appreciated.

It’s my own fault for being in this situation. I’m angry with myself. I really want to skuttle the deal…