Would It be GREEDY... UNETHICAL??? - Posted by Amy (In Dallas)

Posted by Ed Copp (OH) on September 29, 2003 at 20:54:55:

There could be a lot to that, indeed.

Real estate investors often do good work, and they also often screw up. A substantial amount of REI folks, especially beginners end up at a sheriff’s sale to watch the property that they bought sell again. Oops. Often the original owner is still on the hook too. The investor skates by having his name listed as someone who may have an interest in the property.

If all of us who have seen a lot of this could compare stories, it is certain that we could have a very large forum.

Would It be GREEDY… UNETHICAL??? - Posted by Amy (In Dallas)

Posted by Amy (In Dallas) on September 26, 2003 at 17:43:31:

I have been a member of creonline.com for almost 5 years, more or less. I have purchased a few of the real estate courses from this site, but put off getting really serious until I was laid off my job earlier this year. (I kind of see this as a blessing in disguise.)

Now that I have my free time, I’m finishing my study of the courses. My questions are, would it be unprofessional (greedy/unethical) of me to “boot-out” the agent and correspond with the seller’s on my own?

My feelings tell me that it probably would be very much so… I just wish that I could keep the seller and I from giving up that commission. Please tell me what you think?

And…

Is there any place online where I can get the (standard / most used by you guys), contracts and forms for free?

Would a real estate license help, or hurt my investor career? I’m thinking of taking the class.

Finally, I believe the area I live in is a gold mine but, the area is also considered very low income and the residents are mostly retired, widowed, or deceased leaving an abandoned property. Some are boarded, most need major rehab. It is not a very popular area, but I can see potential, and I was thinking of this as a major farming ground.

Do you think its a good idea to invest in your own back/front yard, even if it is not the most popular area in town?

Thank you all in advance for your input, and have a very properous weekend. :slight_smile:

Yeah Amy… - Posted by John P.

Posted by John P. on September 30, 2003 at 14:23:46:

>>“If you have to make money by tricking people, you are not much of a BUSINESSMAN.”<<

lol

I know those were excerpts, but I could’nt resist.
I agree Bill has good advice.

Be Careful On Here… - Posted by John P.

Posted by John P. on September 30, 2003 at 14:17:11:

how you frame your questions. I guess you learned a hard lesson:
You can get the crap verbally kicked out of you on here. Don’t let it discourage you though, theres a lot of good and knowledgable people on here, some of them will even get offended occasionally :slight_smile: Just get out and shop, thats where you’ll gain your knowledge and experience the most.

P.S.
Even if you occationally make typo’s (except accept. ) You can still be sucessfull, heck, alot of rich people can’t even read.

I do consistently remember something I once read, I think it was Les Brown, "Don’t try to deny another man from making a living, or something to that effect… ( Don’t get greedy and try to make all the money yourself, let another man feed his family as well, you’ll get alot farther, alot faster if you follow this advice) If you have to depend on sneakin someone elses profits, walk away, there are plenty of deals with more than enough room to make money.

good luck! -John

Re: Would It be GREEDY/UNETHICAL–NO!! - Posted by Linda Simms

Posted by Linda Simms on September 27, 2003 at 06:52:47:

Five Years! You have been thinking about investing in real estate for five years? You must have the disease of “Paralysis of Analysis”? It would appear to me that if you havn’t done it before now it is unlikely that you will. To start investing in R.E. when you have no other income, is not the best situation. To conspire with the owner to not honor the relator’s contract is unethical and possibly illegal. However, as Ed Copp, a realtor, said that does not keep you from dealing direct with the owner. It is the seller’s responsibility to deal with his realtor. Whatever you offer the seller direct he will still have to use part of it to pay the realtor as long as his contract is in force. When the contract runs out, or if the seller can make some other acceptable deal with the realtor, that is his prerogative. At any rate you need to really decide not about whether or not to go around a realtor, but whether you really want to invest at all? I recommend you read Ron Starr’s post for beginners or John Boy’s post on the same subject, preferably both if you havn’s already and get down to the basics and actually do it! This may sound like a negative answer to you, but it is ment to be tough love and straight talk.

Here is how to “boot out” the agent! - Posted by Jim FL

Posted by Jim FL on September 26, 2003 at 20:00:22:

Amy,
The subject line was more to get a rise out of good ol Ed Copp, sorry.

I agree, to “boot out” an agent is a bad idea, and not ethical.
However, many times agents, brokers, etc get in the way.
There very well might be something we can do to help out a number of sellers, but due to the advice, guidance or input from agents and brokers, they don’t deal with us.
I just watched a local home goto foreclosure where the seller called me one year ago.
I would have bought, but it was listed, and the agent advised the seller to “keep the listing active”.
I’m not sure if there was room in the deal for me and the agent, because when I hear a property is listed, when a seller calls me, I tell them, “we don’t buy listed property.”

Rather than tell a seller after you have gathered info, and determined it is a deal, and cutting the agent out, just do as I suggest.
When sellers call, you don’t buy listed property.
I tell them this, and if they want to know more, basically, I tell them how I buy houses.
"One of two ways, either all cash, for a SEVERE discount, or on terms, meaning we take over your payments."
If they feel this is an option, when they are no longer listed, they are invited to call back.
Motivated sellers have often cancelled listing agreements, then sold to me.
All on their own, as it should be.

That is how I “boot out” the agent, before they have a role in my deal.

If a property is brought to my attention thru an agent or brokers efforts, or they play a role in the deal, then yes, they get paid.
Not very often does this happen, since most of deals come from my own marketing though.

So, as Ed said, don’t “Boot out” the agent if they are already involved, it would not be right.

Good luck, sorry this was kind of long, allergy meds are working wonders…

Jim FL

Re: You have NO power - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on September 26, 2003 at 18:40:24:

to as you call it “boot out” the agent, unless you have a contract with the agent.

It seems that you want our permission to circumvent the real estate agent. If you have read this site for five years then you already know the answer.

Can you advise the seller about the contract that they have with the agent? Sure. It is called the practice of law that is if you intend to make a profit from the advice. So if you are a lawyer, then the anser is go for it. If you are not a lawyer, then you would most likely be seen as interfering with the contract between the seller, and the agent for your own gain. Unethical, I would say at least that.

Now bear in mind that there is nothing at all wrong with dealing directly with the seller. This is often done. The seller has the obligation to pay the commission and can negotiate with the agent.

“BOOT OUT” the agent indeed. I contend that you already knew the answer. Yes it is unethical and perhaps motivated by greed. Please do the industry a favor and do not get a license.

Re: Would It be GREEDY/UNETHICAL–NO!! - Posted by Heather -Tx

Posted by Heather -Tx on September 27, 2003 at 14:52:31:

Thinking about investing for 5 years before moving on it, doesn’t neccesarily mean that he/she never will. My husband and myself read up on investing for 4 years before we got out there and DID it. Yes it was Analysis Paralysis, and we didn’t have the time with full time jobs to delve into it like we wanted. Job loss was, in our case… a blessing. It’s been 11 months since that day corp America became the past for us… and hopefully stays that way. Even though we haven’t been as much a success as we want to be, 2 rehabs and signing up a third this week. (If the sellers attorney approves of the transaction) It sure beats the 9 to 5 slave driving J O B =)

I feel like we got in when we were ready, at the right time for us… had we jumped in way back then, I think we would not have been prepared. Reading and studying for four years off and on isn’t needed, but being at the right place and time in your life to be comfortable to make yourself into something totally different, and changing the way you think… that was a must for me. We are taught all our lives to think inside the box, for some… it takes awhile to reverse all that brainwashing :slight_smile:

Heather Zaal

Re: You miss an opportunity - Posted by edcopp

Posted by edcopp on September 27, 2003 at 10:55:54:

when you tell the property owner that you do not buy listed houses. It would be quite appropriate for you to negotiate with the seller, and then have the seller negotiate with the broker for a severly reduced commission. I have seen on occasion transactions take place for $100 commission, after severe reductions. You would miss that one if, in the beginning you refused to look at it.

In my real estate office, I have a general policy about pre foreclosure property, that is to list the property for a minimum of one year. This stops the folks that are attempting to wait me out.

You mention that motivated sellers sometimes cancel the listing. This is nearly impossible to do, unless the agent is new or poorly informed (there is an abundance of this type agent). Usually the cancellation takes place when the agent sees no way that the property can be sold (poorly informed). New agents will be a source for this kind of listing, IF you decide to look at listed property.

Re: You have NO power - Posted by Novice… Amy (In Dallas)

Posted by Novice… Amy (In Dallas) on September 26, 2003 at 20:09:58:

First of all, you sound like you may BE a real estate agent (or maybe not), and if I offended you, or any agent, I sincerely apologize. Please except my apologies. I was not intentionally asking to offend any one. Just to know the “can’s and cannot’s” of finally getting started. Please reconsider and not beat me up when we meet (at a meeting, or seminar, or something). I assure you I am embarrassed enough.

Second, I have been a member for five years (give or take) as I stated, but I did not state that I had been online for five years. Again, I was laid off from my job and just started to read the courses. This site is packed so with information, I wouldn’t even know where to start to get the information I am sure I am going to need.

Lastly, if I took your advice and did not take the class, then I would miss out on the best of the best of criticism, and hard knocks, from you. Thank you for the memory of my very first “hard” and embarrassing lesson.

Amy(In Dallas)

Re: You miss an opportunity - Posted by Marcos

Posted by Marcos on September 29, 2003 at 08:40:57:

I think it’s highly unethical that you insist on listing preforeclosure properties for a year. And I believe that you could be at risk in the very near future.

Let’s be real honest here, I have no love lost for real estate agents. I feel like it leaves me with no power to my property. Someone else controls my property and I am the one at risk. Given an excellent real estate agent, that’s not too much of an issue, but the business axiom still exists. No one cares as much about your business as you do.

The problem as I see it, is these homeowners are at risk. An ethical person would attempt to assist these homeowners in every way EVEN IF THAT MEANS FOREGOING THEIR COMMISSION. Insisting on a year long contract means the homeowner gives you the broker all the power to their property, where you have no risk. While they are risking a foreclosure, deficiency judgements, etc. No risk to the broker, all the risk to the homeowner. If you believed in what you were selling, you should believe that you can do the best job for your client in a reasonable time period 120-180 days.

I believe it unethical and wrong. And am disappointed that you would even admit that on the board. I would assume that there have been people that have lost their houses that otherwise could have found a solution in order for you to maintain all the control of the house all the way to the sale.

Explain to me one business reason that would justify you holding the homeowner hostage for a year. For example Hanks example. $1k to owner, reinstate and sell the property. That’s a win for the owner and doesn’t leave a lot of room for the agent. If you can’t find a buyer for that property in a stated period of time, what would be wrong with the homeowner taking that deal instead of just letting it go to sale? Give it your best shot as a broker, and then if you can’t make a deal within the specified time frame, let the homeowner have an opportunity to do something, anything to salvage their credit, their financial future.

Shame on you Ed! Shame on you!

Marcos

Re: You miss an opportunity - Posted by JohnBoy

Posted by JohnBoy on September 27, 2003 at 18:08:20:

“In my real estate office, I have a general policy about pre foreclosure property, that is to list the property for a minimum of one year. This stops the folks that are attempting to wait me out.”

How many make it the entire year before being foreclosed on?

Why do you need to get a year just in case some buyer you had nothing to do with might choose to wait out the listing? Why not just do your job and get it sold within the typical 90-180 days and get paid? Wouldn’t that be easier and more ethical rather than tying up someone’s property in preforeclosure for a year just so you can get paid for something you had nothing to do with?

Do you actually find that many idiots to list for a year when they are facing foreclosure leaving you with their only option to get out should some other solution come along while you’re unable to bring them a buyer on your own? Amazing!

Of course, if you did your job and bring the seller a buyer for which they are agreeing to pay you to do, you wouldn’t have to worry about someone else waiting you out to go around you. You will have sold the property before that could ever happen and the party waiting you out would lose everytime! Yes?

Re: I will not except - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on September 27, 2003 at 10:34:21:

your apology, but I will accept it. Except means to exclude, or not accept. 'Nuff about word usage, see websters dictionary.

My basic point is that your proposal to “boot out” the agent is illegal in all 50 states. The listing is a contract and it is illegal to interfere with the contract of another. Never mind the fact that it is done every day, it is still illegal. So you will be the one who needs to make the decision as to how you run your business.

As for me: I do have a little experience in the business. ED COPP REALTY, was established in 1970 (gosh, in a different century). I am and was the founding broker. So please excuse me if I come across a bit blunt. I have heard the question hundreds of times. It is like a child asking if I can steal, if I do not get caught? Unfortunately a serious percentage of our population really does not know the answer to that question. It is also unfortunate that a few of them teach real estate investing courses.

Re: You have NO power - Posted by Bill H

Posted by Bill H on September 26, 2003 at 20:52:07:

Amy:

Do not start off on the wrong foot. Here are some of excerpts that I copied from Forbes Magazine years ago. Look them over and see if you do not agree.

Do the right thing. Right and wrong are powerful concepts. A handshake with a person who tries to do the right thing is more comforting than tons of legal documents signed by the bad guy. If you have to make money by tricking people, you are not much of a businessman.

Leave something on the table. The best business deal isn’t one that maximizes your advantages or profits. It is the one in which you maximize your chance that the next time you run into the other person you be glad to see each other.

Stick to your principles. Hire people who want to live by them, teach them thoroughly and insist on total commitment. There is no room for diversity of principles.

Principles are not for sale. Be prepared to walk away from a deal, any deal, rather than violate your principles to win it.

The twist, of course, is that business organized around
principles are often more successful and make more money than those organized around the idea that greed is good.

Nice guys often finish first.

Just some food for thought as you embark on a career in the most competitive and rewarding industry that I know of.

Good Luck,

Bill H

Re: You Are wrong - Posted by Ed Copp

Posted by Ed Copp on September 29, 2003 at 18:03:22:

to question my ethics. You do not even know me. It is my intention to protect my sellers as best I can.

The number one offender here is wannabe real estate investors, who think they know everything. They usually know very little, almost always they have little or no money, or totally greed motivated and are willing to take the equity of the seller for just showing up. They usually call this doing the seller a favor. Most often they could not qualify to finance a popsicle, so they are willing to take the property subject to the existing laon, and then seldom make any payments; or offer an option for $10. Hot deal. I am willing to protect my sellers from this garbage. If this shoe fits, feel free to wear it, Marcos. Shame on you.

I offer a service to my sellers. I do suggest a one year listing from time to time partially to buffer the seller form the antics described above, and partly to give the seller time to renegotiate thier loan or refinance. You see it is not my property. If they can salvage the deal I am happy for them. I will help them do that. If you think this is unethecal you are sadly mistaken.

The listing is a contract. It takes two to make a contract myself, the broker and the seller. If the seller objects to my suggested longer term listing then most of the time they just do not sign the listing proposal. You see we must negotiate this.

The more I sell the sellers property for the more I get paid. This is done on a percentage basis. So why would I want to stand by and see the seller give the house away to someone who has little experience, most likely about the same amount of money, and offers no protection for the seller.

As I have mentioned before I must present all offers to the seller. So If you think your “I’ll just take it” type of offer will really fly, then get up the nerve to make the offer straight up to the broker. Incidentally I have a list of literally hundreds of people who will take it if they are giving it away. Some will even pay the commission for the seller. Generally I advise against this, because there usually is some other way to salvage some of the equity for the seller. An ethical persuit, in my opinion. This is my business. This is what I do. I solve problems, and clean up messes that I did not have the pleasure of making.

Often I work for a reduced commission, and in some cases I have given up my commission alltogether. Be assured I will still write and present the contract for my seller when this needs to happen (which is seldom). I will not just release a listing just so some joker can “show up” and strip the deal of the equity, and it is my opinion that this procedure is ethical sorry that you do not agree.

Have there been cases where the property went to foreclosure while I had it listed? The answer is yes, a surprisingly small number. All of them involved cases where someone did not make the payments that they had agreed to make. There again enjoying a freedom from house payments that I did not get to enjoy.

So, Marcos it is your thinking that is flawed here. If you want to buy a property that is listed, even for a year just make an offer to the BROKER, who is working hard to protect the best interests of his seller. If you can’t compete with that then stay home, but do not challenge my ethics, at least until you learn what you are talking about.

Re: You miss an opportunity - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on September 27, 2003 at 18:52:45:

Another point that I failed to mention is that almost always, if you can wait a listing out; it was not worth waiting for.

How many go the entire year? A lot more than one might immagine. It is commonplace in my area for a property to be six payments behind and the bank just starting to think about the possibility of foreclosure. It is real common to have an error of some kind in the foreclosure paperwork, this will cause a delay.

The most common statement made by property owners who are six or more months behind in payments, is “I ain’t gonna give it away”. It is common for them to hold on to the myth that the property is worth a lot more than it really is, right up to the day of the sale.

Often I do bring buyer and seller together promptly. This would leave wannabe buyers like Jim out of the picture. There are some who can not stand to see the broker make a commission, even if it means that they deprive themselves of a bargain. So be it.

90 day listing as opposed to a one year listing, there is no ethics problem. It is in the best interest of the seller to be the most practical, so if it is going to take the bank six monts to get started and another three or four months for the seller to see the light then a possible sale may come in the tenth month or so. Just attempting to protect my clients assets.

You seem to think that I will be paid if I do not produce a buyer. This is not the case. If the property goes to sheriff’s sale and sells I do not get paid. It makes no difference if this takes one day or one year.

Lots of people are willing to list for one year, just in case thier miricle happens. Never mind that the sale is 60 days away. Never mind the fact that they have a 125% mortgage, and never mind the fact that the property was somehow appraised, in the past; for 125% or more of it’s value. A one year listing is prudent sometimes, considering the obsticles.

I am not thier only option, should another solution “come along”. I am however in a position to be paid for my effort, and my intention is just that. Amazing? You bet.

Your last paragraph describes what happens most of the time. It is generally a fruitless venture to attempt to “wait me out”. If however you have a valid offer it is prudent to negotiate.

Now we did not even talk about the IRS, lawyers, ex-wives, estranged wives, and leins. Considering the problems that may come to pass from time to time, a one year listing is prudent, and ethical. Of course there are always options. The seller can always just list for 30 days, and have the newbie agent “add on the commission”. This will happen to another brokers agent, and in another brokers office. This will be an easy listing to wait out.

Re: I will not except - Posted by Tim- chi.

Posted by Tim- chi. on September 27, 2003 at 12:28:51:

Ed Copp,

Isn’t your statement “I am and was the founding broker” redundant?

Regarding your smug and petty response to Amy’s question perhaps if you removed that giant chip off your shoulder you would have seen that her question lacked any malice and instead revealed a novice (despite her claim that she’s been studying for five years).

Did you really read what she said and how she said it? I doubt it- you’re obvioulsy more interested in scoring points. Where I come from it’s called being a bully.

Tim Foley

Good post! (nt) - Posted by Ben (NJ)

Posted by Ben (NJ) on September 27, 2003 at 03:10:35:

nt

Re: You Are wrong - Posted by Marcos

Posted by Marcos on September 29, 2003 at 19:00:48:

I have issue with this statement…

“In my real estate office, I have a general policy about pre foreclosure property, that is to list the property for a minimum of one year.”

Which is pretty radically different from:

“I do suggest a one year listing from time to time partially to buffer the seller form the antics described above”

That’s what I have an issue with Ed. I think that’s holding the property owner hostage while they are at risk. Ed I truly believe that you are an ethical agent, I know that you work in your clients best interests. However to insist that any deal must come through you doesn’t work for me. We’re not talking about a home or a piece of property for the most part. We’re talking about someone’s life, that’s falling apart, that’s not working. And I don’t get to define what’s a win for that person, and neither should you. They choose. Sometimes it’s not about the money, sometimes it’s about creating a solution that works for them, and truly solves their problem.

My issue is the year. My issue isn’t with your ability as a realtor. My issue isn’t with your ability to solve problems. I’m sure you’re very qualified in doing that. My issue is the fact that this is a very delicate situation. A situation that is quite literally life changing for many families. And your insistence on keeping the owner hostage is at issue. Generally if you haven’t found a solution in 180 days, how is 180 more going to help? Perhaps even another broker with a investor as a client might be able to list it and create a win for the homeowner. I don’t know if they even will find another solution that works for them. My issue is the fact that you don’t even want to give them the option. Yet you want to put the blame on the homeowner.

“All of them involved cases where someone did not make the payments that they had agreed to make. There again enjoying a freedom from house payments that I did not get to enjoy.”

However it doesn’t take into account that many foreclosures deal with humans, families, mothers, fathers, sons and daughters. Sickness, death, divorce, heartache, pain, loss and suffering.

Sometimes I as an investor am enabled to help these people out. But, you know I am willing to walk from the deal if it isn’t a win for all involved. And I DON’T DECIDE WHAT IS A WIN FOR THEM. They decide. I don’t force them to do a deal with me and with no one else.

For the record, I don’t believe in getting around realtors. I think there’s been way too much posting around here about how to get around the realtor. I think many times realtors do protect people who don’t know any better. And I don’t believe in cutting them out of the picture. Too many deals, not enough time.

My issue is your insistence on only allowing a year long contract for a preforeclosure property. I feel it is wrong. I feel it is unethical. And I still feel that in my depths. And I suppose nothing anyone could ever say would convince me otherwise.

Marcos

Re: You Are wrong - Posted by Tony

Posted by Tony on September 29, 2003 at 18:20:15:

Blah, blah, blah, blah! What a crock of crappola! The only thing that you’re interested in protecting is your commission!