Posted by Ryan Monti on December 05, 1998 at 21:23:37:
Folks,
This is an excellent example of two different approaches to the same problem yielding successful results. To the seasoned investor this is normal, however the beginner may find this bizarre and likely confusing.
There are many paths that can lead to success. Stop looking for the only route, and take your step.
CS Contracts killing deals- HELP! - Posted by Jen (NE)
Posted by Jen (NE) on November 29, 1998 at 15:11:19:
I am in the CS program and I love his sales contracts because it is ‘buyer’ oriented. MY PROBELM: The couple of agents I have talked to won’t present my contract - it’s a deal killer. They only want to use the approved Omaha Board of Realtor contract (which actually seems to be written to protect the broker!). This ‘approved contract’ doesn’t have anything about subordination/substitution of collateral, first right of refusal on seller’s mortgage (if he sells), escrow money to buyer, condition of property (seller fix or discount), time is of the essense, and all the other neat clauses the CS contract has, etc…
If I add these items to their approved contract via the addendum, it takes a lot of time, it creates a large addendum, and the sellers/agents balk because I’ve added so many things eventhough they are not necessarily contingencies because it’s not the ‘norm’ and they shy away.
I don’t mind negotiating a few of these away to keep the deal but I must be doing something wrong.
I want to make these deals happen but I also want to protect myself. Has anyone else had this problem? What did you do to overcome it?
Buyers’ Broker - Posted by Mr Donald
Posted by Mr Donald on December 01, 1998 at 17:34:45:
Use a Buyers’ Broker - an agent who works on your behalf for their split of the Seller’s commission.
If you can’t find one, then simply add a stipulation that you be present when the offer is presented to the Seller.
Re: CS Contracts killing deals- HELP! - Posted by Chris(KY)
Posted by Chris(KY) on December 01, 1998 at 14:30:18:
What everyone needs to remember is that all WRITTEN offers persented to a Realtor MUST be presented to the seller. Thats the Law. It makes no differance whose form you use.
It’s not the contract, it’s the Realtor… - Posted by John Ross
Posted by John Ross on December 01, 1998 at 09:02:07:
The problem is not so much with the contract as it is the Realtor mentality. The Sheets contract is designed to be modified to fit each individual situation. Not every clause is required in every contract. You might also want to add any local requirements as an addendum.
Personally, I won’t use the local Board contract out of principle. It is not the Realtor’s offer, it is my offer. I have had Realtors balk at presenting an offer before also but I don’t let them bully me. I also agree with Carleton Sheets when he says that you should not let the Realtor present the offer, you should do it yourself.
My worst case involving a Realtor happened when he didn’t want to present the offer to the seller after we arrived at the seller’s home. (What timing, huh.) Anyway, I told the Realtor that he could come in and keep his mouth shut or he could go home, knowing full well that if he left he would try to sabotage the deal behind ny back. I explained the offer to the seller, had it accepted, and bought the property. I also mentioned to the seller that the Realtor would not present the offer and the seller was not happy. I don’t think that the Realtor ever did get paid on that one.
Being that aggressive may not be your style, that’s OK. You can use the Board contract, but you will definitely want to add some things to it.
The point is that you can do it successfully either way.I do things independently because it suits my personality.
Good Luck,
JR
Another bit of wisdom, most Realtors (90%) are worthless to you as an investor. You would be better off hiring a trained monkey.
THANKS EVERYONE - Posted by Jen (NE)
Posted by Jen (NE) on November 30, 1998 at 07:24:50:
You’re right! I should have known better. Thanks for all the advice and putting me on the right track.
Re: CS Contracts killing deals- HELP! - Posted by JPiper
Posted by JPiper on November 30, 1998 at 02:37:16:
I have to agree with Joe Kaiser?s comments below.
It?s entirely possible that the Realtors don?t like your contract because it is not in the seller?s best interest. Further, the Realtor contract undoubtedly contains language required by the State concerning the Realtors agency disclosure, or perhaps language bringing the contract into alignment with Federal law concerning lead-based paint disclosure. Having said this, Realtors are legally required to submit your offer. So this is a battle you can win. But if you win the battle, you?ll lose the war.
So here?s your choice. Continue to struggle with a contract that is lopsided in favor of the buyer?..or join the consensus and use the Realtor contract, as I have for many years. You can modify the Realtor contract in ways that will fully protect you. But let?s not kid each other?..a subordination clause, or a substitution clause aren?t there to protect you. Chances are you may not even have done a deal where they might have been beneficial to you, and if you did, chances are you weren?t aware of some of the OTHER requirements that some states have for such clauses. But certainly, these types of clauses aren?t necessary in every offer, and simply junk up the offer with added verbiage that does little more than scare people.
You can modify the basic Realtor contract with some simple clauses. Things concerning inspections as an example, or perhaps concerning your liability under the contract. Perhaps something giving you the right to enter the property to inspect, show tenants, etc. These are simple modifications that are easily incorporated into most contracts, and that don?t scare the pants off of Realtors. Frankly, most Realtors have probably never really sat down to read and fully understand their contract. But they do know what it looks like?.and I give them exactly what they?re used to looking at, with a few simple modifications made through the use of an addendum.
Really this business is not about some type of slick contract. It?s about locating motivated sellers. The thing you need to be concerned about is locating deals that are truly good deals. And when you do this, you?ll be happy to have the deal without all the clauses that you are currently attempting to use.
JPiper
You bet they are! - Posted by Joe Kaiser
Posted by Joe Kaiser on November 29, 1998 at 23:22:56:
You’ve fallen into the seminar trap where you try to buy property with “smoke and mirrors” and things like “subordination” and “substitution of collateral” hit the page where they have absolutely no reason to be.
These clauses are junk, people, and the sooner you move beyond the seminar mentality where you earn profits with the above mentioned “smoke and mirrors” and instead focus on doing real deals with motivated sellers on “normal” paperwork, the sooner you’ll actually make things happen.
I was the worst offender, so believe me, I understand the mentality. But getting unsophisticated sellers to sign documents no attorney would let them within ten feet of is neither honest nor in the long run, worth the effort. The money is good, but you really ought to earn it with the big print and not snatch it out from under them with the finer print.
The sooner you forget about trickly clauses, the sooner you can start making money.
Joe Kaiser
Re: CS Contracts killing deals- HELP! - Posted by Rob FL
Posted by Rob FL on November 29, 1998 at 18:14:35:
I got my broker’s license to avoid this type of problem (at least that is one of the reasons).
Probably the best thing to do is to screen the agents. Don’t even use an agent unless that agent owns some investment property of his own or has done many many deals with investors. I would say that 80-90% of all realtors have no creativity other than “maybe the seller would hold a second mortgage”. You need to find one of those 10-20% like Soapymac or JPiper who actually invest in real estate.
As for the contract itself, I have found that the best route is to use the local board of realtors contract (because it contains a lot of the local laws and disclosures, Sheets does not for the mostpart) and I take the favorable language from the Sheets contract and make that into an addendum attached to the contract. This addendum is entitled “Standard Addendum” and is in Microsoft Word format. I keep all forms on computer disks. Makes it very simple to fill in the blanks. Most realtors are used to addendums, so they don’t really mind. FSBO’s never even notice it.
my .02
good luck
Re: CS Contracts killing deals- HELP! - Posted by Alex
Posted by Alex on November 29, 1998 at 17:35:31:
Get another broker!!! Don’t waste your time on agents who say no, or you can’t do this… When you look for an agent, screen them!! YOU ARE THE BOSS, YOU ARE THE INVESTOR so act like it. Don’t let these brokers bully you around. What you want are only seasoned agents who have a history of working with Investors. The agent should have a reasonable comprehensive understanding of the criteria and guidelines that investors use when purchasing residential properties for investment and resale purposes. Because what you want is to establish business relationships with these agents so in the future they can perhaps supply you with vital market information. Which can be helpful to your future real estate investment deals. You want to make sure you have good brokers who will speed to your response to a many good investment opportunities as possible. Time is money. Remember that. You don’t have time to argue with these agents because you will loose these deals. I have never had a broker refuse any one of my contracts & so should you. If you deal with seasoned agents who fit this criteria then I assure you they will work with you. Don’t give up, this is just the very beginning… Happy House Hunting!
Re: CS Contracts killing deals- HELP! - Posted by Stacy (AZ)
Posted by Stacy (AZ) on December 01, 1998 at 16:52:53:
Chris, that’s the law, agreed. But reality is often different. If you force a realtor to present an offer they are not comfortable with, they’ll not present it in the best light. Also, if you go around threatening to report them to the board, you could get a bad name and have difficulty finding realtors to work with in the future…it’s a tight community.
Often the best route is the one of least resistance. Ask if the realtor would mind if you presented the contract to the seller, or find another realtor who understands investing.
Stacy
Re: It’s not the contract, it’s the Realtor… - Posted by Matthew Chan
Posted by Matthew Chan on December 07, 1998 at 22:18:47:
Great story! Loved it! I don’t like it when someone is supposed to represent you and doesn’t. I would have done the same thing out of principle.
Re: It’s not the contract, it’s the Realtor… - Posted by Tonya Brown
Posted by Tonya Brown on December 03, 1998 at 12:51:54:
Bravo! Keep it up
Re: You bet they are! - Posted by al-kaline
Posted by al-kaline on December 02, 1998 at 14:02:51:
I looked up the term “substition of collateral” in my Real Estate Dictonary and found a picture of Terry Vaugn.
Re: You bet they are! - Posted by James
Posted by James on December 02, 1998 at 13:13:48:
Not True. Any Contract is what the partys agree to do.As long as someone is upfront and not hidding anything, then its a good contract.
Re: CS Contracts killing deals- HELP! - Posted by Jen (NE)
Posted by Jen (NE) on December 07, 1998 at 12:39:15:
I think I finally found a good agent. I started an addendum when I couldn’t use the Sheets contracts. Can you email me a copy of your Addendum so that I can see if I’m being reasonable and including the necessary items. I realize that not all clauses are needed for all deals. Thanks for all your help…
Re: CS Contracts killing deals- HELP! - Posted by darla
Posted by darla on November 29, 1998 at 19:34:34:
Well great it finaly sounds like there are some real successful investors out there!
Re: You bet they are! - Posted by Joe Kaiser
Posted by Joe Kaiser on December 02, 1998 at 14:08:20:
James,
Obviously, any contract is what the parties agree to do. The problem you’re not considering is that in the “real world” those contacts are looked upon with suspicion and immediately put the agent, the seller, the seller’s attorney, the title company, the escrow company, etc., on the defensive.
That doesn’t help much when you’re trying to put a deal together and asking them to trust you. Trust me, it’s a absolute loser the moment the attorney explains to his clients, the sellers, what all those terms really mean.
Non standard contracts are more trouble than they’re worth, and you can easily accomplish whatever it is you’re trying to do with a well crafted addendum to the standard docs. That’s where you make things happen.
Joe
Not True… - Posted by Tom Brown
Posted by Tom Brown on December 02, 1998 at 16:44:27:
I have purchased or controlled over 230 properties in about 10 years and have never used the Board contract with the possible exception of about a couple of dozen times. It is always more trouble than it is worth.
Re: Not True… - Posted by Dave
Posted by Dave on December 11, 1998 at 07:54:21:
Tom,
Your two previous posts are so inane. First, I am convinced that you have NOT done 230 deals. I believe this, due to your ignorant statement that an agreement between two people makes a valid contract. Have you ever heard of “fair balance”, capacity, “unfair advantage”, not to mention a plethora of state statutes that are not considered when these “guru” criminals draft their make-shift, abortions that some call contracts. Real players protect their assets with VALID contracts, structuring fair deals so they will not be dragged through court. You sir, could not have purchased over 230 properties without learning this lesson. Unless … you bought these properties from your slack-jawed cousins, which in all likelihood represent the entire population of your county. Next time, try to post a more believable “story”.