Real Estate Undressed, The Book

The furnace had a leak after all.

Today’s story shows how both buyers and sellers could be hurt.

The case in point was one where the issue of the inspection we required was the gas furnace. I was the agent for the buyer. We had an inspection completed. Our inspector claimed there was a gas leak in the furnace. The seller and his agent were at the inspection. The seller was certain this was wrong. He had just had the local gas company out to inspect the furnace and it passed.

We were concerned and were not going to go by the sellers inspection, even though he insisted. After discussion with the listing agent and seeing we were standing by our inspector another expert opinion was called in. Guess what? There was a leak. The furnace was replaced. The transaction closed just fine. No harm took place.

I wonder, as determined as the seller was, would a FSBO have fought like we did? Where would the flat fee listing guy have been? I have sold several houses listed by flat fee’ers. Not one has been there to assist his seller in cases like this.

What could have been the outcome with no agents, or sort of agents? What could have happened to the sellers in the next 30 days before closing?

Think about the seriousness of what you do to save money.

There are reasons, real reasons to use a professional that will be there for you on all fronts, not just the input into the MLS front.

Larry Cragun

PS: I will tell you, the seller was very apologetic, even grateful.

Putting the Cart before the Horse: Making a Contingent Offer byRich Jacobsen on what’s the best strategy for buying your next home?

Putting the Cart before the Horse: Making a Contingent Offer byRich Jacobsen o what’s the best strategy for buying your next home? Click Here

Is it better to put your house on the market first, get it under contract with a qualified Buyer, and then find your new home?

Or, should you go out and find just the perfect house first, THEN put your house on the market?

You Should Only Buy in Neighborhoods With Good Schools – Myth

You Should Only Buy in Neighborhoods With Good SchoolsThere’s no doubt that children are an important part of the home buying decision, but occasionally, you’ll run into parents who want to buy a bigger home than they need in a fancier neighborhood than they would normally consider because junior’s educational needs.

2–Seventeen Reasons to have New Construction Homes Inspected

Seventeen Reasons to have New Construction Homes Inspected

by Kelly Koehler: Click Here

A FSBO nightmare: Scene 1 of 2.

Every transaction in this story was a FSBO:(For Sale By Owner)

The story begins 30 years ago. A Boeing Engineer and his wife, I’ll name them the Johnson’s purchased 160 acres of beautiful waterfront land. The Johnson’s subdivided the land into 20 waterfront parcels, a few non waterfront lots, a parcel for a waterfront park to serve the waterfront lots, and a very large water view parcel for their own home. They raised their family on this large piece.The waterfront lots were sold shortly after the subdivision was completed.

After living on the land for 20 years they sold the large parcel to Dave. He bought it on a contract calling for monthly payments to the Johnson’s. The Johnson’s moved to Arizona, using the monthly payments from Dave as part of their retirement.

Dave then sold 40 acres to friends from church, Ron and wife. This was on a real estate contract also.

Ron and wife sold 3 lots to people they knew, also on contract. These 3 people all started to build homes on their lots, while at the same time paying Ron and wife montly payments. All the time this was going on, Ron and wife were paying Dave per the contract they executed to buy the property and home.

This all seemed great to Ron and wife, Dave, and the 3 friends. They had prime water view property. Houses were being built, all seemed well. Even the neigbhors on the watefront lived the happy life, seeming to not be involved in what was going on across the street.

Then the hammer fell. Actually it took months to fall, but it began when one of the people building a home decided to get a construction loan to complete their house. They ordered a title report. They saw Ron owed Dave and Dave owed the Johnsons; they began to be very concerned. Ron and wife quickly paid Dave off and asked for a Deed to their property. Dave stalled. Months went by and Ron and wife were under so much pressure they hired an attorney.

These were the facts surfaced. Dave had not made payments to the Johnson’s for years. Not needing the money, the Johnson’s hadn’t thought too much about it. Dave owed the Johnson’s more than Ron and wife owed Dave. All three friends owed less than Dave owed the Johnson’s.

The 3 friends got together to sue Ron and wife. Ron and wife didn’t know what to do with Dave their friend from church.

Who is at risk here? Everyone but the Johnson’s.

Being brought up to date on things, seeing the mess, the Johnson’s decided they better foreclose on Dave. That meant Ron and wife and the three people they had sold lots to would be foreclosed, possibly losing all rights of ownership of their properties.

I still don’t believe this happened but it did.

No one used an escrow company. No one bought title insurance. No one used an agent. Everyone trusted Ron and wife and Dave. Dave was a scoundrel.

So now the problem was brought to me. It was too much for me to give advice on. I sent Ron and wife to a top real estate attorney.

The resolution was interesting. I will tell it tomorrow. In preparation I will tell you: the people who bought the waterfront land got hurt. Ron and wife didn’t lose money, but moved away. The three friends that purchased lots got hurt. Dave didn’t do anything to help. The Johnson’s came out ok.

A FSBO Nightmare: final scene

Click here to see part 1.

A true tale of 5 sold FSBO’s, For Sale By Owner.

The final resolution of this nightmare took over two years. I summarize the results.

Point: It may seem easy, selling real estate. However, there are many things that can go wrong. A serious, trained, attentive real estate professional is your assurance nightmares don’t happen to you.

This site will detail other examples as time goes on:

Now to the finish of the nightmare.

As I stated, the Johnson’s started foreclosure. Under the advice of their attorney, Ron and wife purchased the Johnson’s legal position. This took great efforts by Ron, Johnson’s weren’t receptive to the idea. It was critical to Ron and wife that they finally got it done. But that was just step one.

The foreclosure continues and now Ron and wife were being foreclosed upon by themselves. They had to do this to remove Dave from title. Of course this probably removes everybody from their ownership.

In working out the purchase of Johnson’s position Ron and wife had to come up with enough money that would bring Daves contract current. This pretty much drained their resources. They then had a requirement to pay the balance owed Johnsons within the next three years. Were Dave to make the payments he was obligated to, Ron and wife would have a break even situation for those three years. Of course Dave wasn’t into making payments.

Next is an interesting event. The attorney had Ron put a for sale sign on the waterfront lot, the one dedicated for a park for the waterfront owners. Now this was a shock to the neigbhorhood. In reviewing the document that provided donation of the property to the waterfront owners, it specified requirements to develop and maintain the lot as a park. This hadn’t been done. Ron and wife in essence, repossed the park. They were told to leave the for sale sign up for one year, which they did. Eventually, they sold the waterfront lot. The money went to pay Johnson’s. How popular do you think this made Ron and wife?

Note, Ron and wife were at the edge of a serious disaster. If they couldn’t end up giving title to the three they sold lots to, they were in deeeeep trouble and they knew it.

Ron and wife, tried to communicate the plan and status to the three buyers, but it wasn’t a pleasant journey, these few years.

So eventually they foreclosed on everyone. Scoundrel Dave, who offered no help during this process was legally off title.

When the foreclosure was completed, Ron and wife were a little short of the money’s needed to settle with Johnson’s, finally able to give the three their deeds.

Time was running out, the only proposal Ron and wife could come up with was to have each of the three pay a little more towards the purchase of the property. Two were willing, although not happy. One was so furious he refused. They had to find another buyer for that lot and partially built home, which they did.

So, in summary, The waterfront park was gone. One of the three walked from his asset, two of the three had to pay more than originally agreed, Dave walks, The Johnson’s and the attorneys got all the money that were a result. But Ron and wife kept their home and escaped without some of the terrible legal results they could have suffered.

This unlikely nightmare would not have happened had real estate agents been involved in just one of these purchases.