MOTIVATED seller said... - Posted by diana

Real Estate Investing
#1

Posted by Alex Gurevich, TX on July 11, 2001 at 09:41:17:

Vic,

I agree, written in this form, it’ll be hard for a broker to win the argument about the commission. My point to the original poster was: check your paper work (listing agreement) to find out what seller obligated himself for.

This was an excerpt from our local board of realtors’ listing agreement. The listing agreement that particular seller signed could be quite different. Even the one I sited could be easilty modified by striking a part of the sentence and making it broader.

Bottom line, one must know what he signed and act accordingly.

#2

MOTIVATED seller said… - Posted by diana

Posted by diana on July 09, 2001 at 21:39:22:

I have been keeping my eye on a house for a while now. Three bedroom, 2 bath, basement, carport, decent area. Was listed with an agent at 79,000…69,000…59,000…last I heard was 49,000 before I notice the realtor sign gone. Weeds are knee high with house in definite need of care.
I found out the owners address through the city and paid them a visit to find out if that home was still for sale. They said the listing just expired. They were very eager for me to see it. Made an appointment on my lunch break tomorrow.
Before I left they made a comment that the home is in a “flood plane” and that banks want 30% down and that has scared all their buyers. There hasn’t been a flood around here since I can remember (I’m 40) The river is about 4 blocks away.
I guess my question is - what do you all think about buying property in a flood plane. Is that a property to stay away from. The owners acted as if they were ready to give it away. Would it be a good keeper to use as rental. Or maybe get it for a song and lease option it until buyer/tenant has 30% with my help into it so they could finance through bank.
Also, sellers were a little nervous about the expired listing. They said they thought if they sold now they could be sued. I told them that is only if I seen it while it was listed with the realtor and I contacted them after their listing expired. I am correct, right?
Any imput appreciated.

Diana

#3

Protection Period for brokers - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on July 10, 2001 at 16:50:16:

Regarding seller’s liability for commission. Your main refference source is the Listing Agreement itself. In my area the listing agreement has a “Protection Period” clause which says something to the extent:

“If seller sells the property within _____ days after the expiration of the listing agreement to any person whose attention was brought to the property by Broker… seller shall owe the broker a full commission according the listing agreement.”

As you see, such agreement provides for a specific period of time after the expiration of the contract. It further states “any person whose attention was brought to the property by broker”. This statement does, indeed, defines you as such a “person”, because, as I udnerstand, you learned about this property being for sale from the broker’s “for sale” sign. Therefore, technically, broker did brought your attention to that property.

So again, go to the seller’s actual listing agreement and see what it says, precisely. Then act accordingly as to not fall under that clause, if you can.

#4

Re: MOTIVATED seller said… - Posted by Lor

Posted by Lor on July 10, 2001 at 14:19:07:

Diana, Here are three things you can do today. Call your board of realtors and find out what the laws are in your state regarding expired listings. I know of a couple of states where the homeowners would still have to pay commission if the house was sold after the listing expired. Of course there is a term limit, sometimes up to 6 months. If this is the case, yes, the owners could be sued by the realtor. Secondly, find out what the yearly flood insurance would cost. I purchased an out of state rental and after the fact the insurance company insisted that I obtain flood insurance which came to about $1,900 a year. There was no way in hell this property would ever flood, but it was in a flood zone according to the national flood zone maps. And thirdly, call a property management company in your town and describe the house, location and condition and ask what they think it can be rented for. Then do the numbers! Good luck.

#5

Re: MOTIVATED seller said… - Posted by Mark(SoCal)

Posted by Mark(SoCal) on July 09, 2001 at 22:41:32:

There was an interesting article in the San Diego Union-Tribune a few days ago related to this topic: “Errors on flood maps can be plenty costly to homeowners, One refused to buy insurance and lost his home to foreclosure” http://www.uniontrib.com/news/uniontrib/thu/metro/news_7m5fema.html

According to the article, FEMA (Federal Emergency Management Agency) draws the flood plain maps (sometimes incorrectly) and in this case, the owner’s mortgage company required that he have flood insurance.

#6

Not to Worry… - Posted by Vic

Posted by Vic on July 09, 2001 at 22:30:17:

Diane,

Sounds like you’ve got a motivated seller there.

In regards to it being in a flood plane, don’t let that scare you. I’m in New Orleans, where the whole city is below sea level. Almost every single house you buy here requires flood insurance. You just have the title company do a flood elevation survey, then fax that info. to an ins. agent and ask them to give you a price for flood insurance. It may not be as bad as you think, because the premium is based on the value of the property. Do fax that info to a couple of different agents though, because some agents understand the ins & outs of flood insurance better than others. Even though flood ins. is underwritten by the gov’t and the rates are the same no matter what agent you go through, it’s just easier to deal with one that knows what they’re doing.

Also, that requirement they talk about of the lender requiring 30% down because it’s in a flood zone is nonsense. If that was the case, I can guarantee you few houses would ever be sold around here.

Also, you are correct about the listing. No commission would be due, because that agent was not the procuring cause if you were to buy that property. In other words, that agent didn’t start the chain of events that led to you buying that property, therefore no commission. You didn’t go look at it while it was listed, did you? If not, you don’t have anything to worry about.

As to whether it would be a good rental or L/O would depend on the numbers which you did not furnish, so it would be hard to give you an answer on that. Provide more info. & I’m certain some of the good folks here will provide you with some good input.

One last point, it would be very difficult to get a buyer to put down 30%. Let’s see 30% of 40K is 12K. If a buyer has that much money, chances are they will look for a higher priced house.

Good Luck,
Vic

#7

Re: MOTIVATED seller said… - Posted by BillW.

Posted by BillW. on July 09, 2001 at 22:15:11:

Diana,
If you contact the county planning and zoning, they will show you exactly where the flood plain lines are. You can also, I believe, buy federal flood insurance for these type situations(have you seen the ad on TV?), but that is a SEPARATE insurance from standard homeowners. This sounds like it has possibilities. Lock it up quickly, subject to your due diligance regarding the flood plain, THEN check it out. If it turns out real bad, and you decide it’s not for you, then pass. After 40 years with no flood, however, I’d consider taking a chance. Try to find out from the seller’s what their equity is and what is the lowest price they’ll take if you can close the deal quickly, considering the fact that you’re willing to “take a chance” on this deal.
Also, I think you are correct about the listing.
Good luck and let us know how you do.
BillW.

#8

Re: Protection Period for brokers - Posted by Vic

Posted by Vic on July 11, 2001 at 24:45:44:

Alex,

Although technically you might be correct I don’t believe that this kind of an argument could ever be won by a broker. How would you prove it?

How would a listing agent ever be able to prove that a buyer learned about a house just because that agent had a for sale sign in the yard. I mean what is an agent gonna do - sit out in front of a house and record all the license plates of cars that drive by? Even if they did sit out front of the house & record all the license plates how would they be able to prove that the passengers in that car actually even saw the sign?

And what about ads in newspaper? Just because someone happens to read the newspaper that contained the ad, does that mean that the seller now owes a commission if that person buys the house 2 mos. after listing expires?

I suppose ultra-technically they would owe a commission, but again how would you ever be able to prove something like this?

I think the only way a commission could be actually collected in a case like this would be for there to be some kind of physical proof, such as buyer looking at house, calling agent to inquire about it, etc. Otherwise there’s no way to trace how the buyer found out about it.

I think the bottom line is you need good, solid tangible proof that the agent did something that can be tracked, that directly led to the sale of the property. Absent that, I just don’t see how a commission could be collected.

Vic