Posted by AlicY on February 13, 2003 at 14:12:04:
Thanks a lot!!!
Scouts please help - Posted by AlicY
Posted by AlicY on February 13, 2003 at 13:06:52:
I have a large access to listings of bank owned properties, FSBO and properties listed below their appraisal values in Maryland, DC and Virginia. I can regularly feed the interested investors. How can I protect myself when giving out the adresses to potential investors? I was told that I have to give them the address before they can send a contract and that they will pay me only after they close the deal.
1- If I give them the adress they might go and put a contract without even telling me.
2- Even if we sign the contract (agreement)they can go and sell the address to someone else or they might buy under a name that I don’t know.
How do I protect myself?
Please help I’ve lost some deals.
Re: Scouts please help - Posted by SinTax
Posted by SinTax on February 13, 2003 at 13:16:09:
Alice, you’ve discovered one of the drawbacks of trying to be a bird-dog. Unless you are a licensed RE agent, you are not allowed to collect a finder’s fee. It’s illegal in your state, and you can be fined for practicing agency without a license. There is no way to protect yourself. Even if you signed a “birddog contract” with your buyer, it wouldn’t be enforcable, since it violates state statutes.
You say you’ve lost some deals? The answer is, if you must birddog, to deal only with those buyers who have shown good faith by paying you your fee. Otherwise you don’t have a leg to stand on.
By the way, if you’d just learn how to get these deals under contract yourself, and assign them to the end-buyer, you’d make A LOT more money than a measly birddog fee.
Re: Scouts please help - Posted by AlicY
Posted by AlicY on February 13, 2003 at 13:47:28:
SinTax,
Thanks for your response. How and where do I learn how to do this?
I’ve heard of Real estate options are these different than contracts? I don’t want to put a contract and then end up loosing the earnest money because I can’t close.
I’ve also heard of ‘OFFER TO PURCHASE CONTRACTs’ are these legal? What’s tthe difference between an offer to purchase contract and an option?
Thanks
Re: Scouts please help - Posted by SinTax
Posted by SinTax on February 13, 2003 at 14:06:24:
Options are a great way to go, in your case. You are correct, options will allow you to market the property to end-buyers without the risk of having to close, yourself, if you can’t find a buyer.
You could also play games using a purchase contract that includes a contingency clause allowing you to back-out of the deal, but an option is much cleaner.
On the down-side, if these are bank owned REOs, the bank will not allow an option. They will most likely require a purchase contract without contingencies, and not assignable. They’ll expect you to close.
Once you have a network of buyers established, and you are confident that you can sell any house you put under contract, there would be no problem in complying with the bank and placing them under purchase contract yourself. You could then double-close. This is when, at closing, the house is bought by you using the end-buyer’s purchase money, and the title transfers to you, then your buyer, all at approximately the same time.
In general, the difference between a sales contract (no matter what it’s called) and an option, is that a purchase contract commits you and your seller to performance, and an option only commits the seller (not you). You agree to buy at the agreed price, if you feel like it, but the seller MUST sell to you at the agreed price if you decide to buy.