Comments on: A lesson in the dangers of distressed property purchases… http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/ Seattle's Leading Resource for Real Estate Information Sun, 08 Nov 2009 01:47:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Reba Haas http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-335110 Reba Haas Mon, 16 Feb 2009 01:28:13 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-335110 Actually, John, if you read the beginning of the post thread you'll see this article was written BEFORE the law went into effect, which was June 12, 2008, and I also was referencing a deal that was in a different state. It was actually a house in Texas but my client/friend lives here and was asking my advice on whether it looked like a feasible investment for her and her husband. I told her to get away from this deal as fast as possible. Keep in mind that the Distressed Property Consultant law is fosued specifically toward homes that are in foreclosure and that have equity positions. It also was drafted to stop those cases where buyers of foreclosures were promising homeowners to save them from foreclosure and to allow them to stay in their homes. In a lot of those cases there was equity skimming and it was the intent of the law to stop this practice. In its actual implementation it got mangled by the legislature and ended up harming more people because agents and potential buyers of these homes in distress decided to walk far, far away from purchasing them. The exact thing these homeowners needed. The legislature has been inundated with comments from people on all sides of the fence on this issue and is currently drafting a revision that is expected to be released within the next couple of months and that will be put into effect immediately. We're all (at the Association of Realtors) looking forward to seeing the new verbiage passed as long as it clarifies more reasonably the duties of the individuals involved. I am in agreement with you that any RE agent or consumer be in compliance with the local and state laws that affect their area. Actually, John, if you read the beginning of the post thread you’ll see this article was written BEFORE the law went into effect, which was June 12, 2008, and I also was referencing a deal that was in a different state. It was actually a house in Texas but my client/friend lives here and was asking my advice on whether it looked like a feasible investment for her and her husband. I told her to get away from this deal as fast as possible.

Keep in mind that the Distressed Property Consultant law is fosued specifically toward homes that are in foreclosure and that have equity positions. It also was drafted to stop those cases where buyers of foreclosures were promising homeowners to save them from foreclosure and to allow them to stay in their homes. In a lot of those cases there was equity skimming and it was the intent of the law to stop this practice. In its actual implementation it got mangled by the legislature and ended up harming more people because agents and potential buyers of these homes in distress decided to walk far, far away from purchasing them. The exact thing these homeowners needed. The legislature has been inundated with comments from people on all sides of the fence on this issue and is currently drafting a revision that is expected to be released within the next couple of months and that will be put into effect immediately. We’re all (at the Association of Realtors) looking forward to seeing the new verbiage passed as long as it clarifies more reasonably the duties of the individuals involved.

I am in agreement with you that any RE agent or consumer be in compliance with the local and state laws that affect their area.

]]> By: John Merchant, JD http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-335090 John Merchant, JD Sun, 15 Feb 2009 20:25:18 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-335090 Interestting that WA's new Distresed Property Law (effective as I recall last July 1) isn't even mentioned above, even though you state that house is in foreclosure. This tough new law makes it clear that anybody knowing this and proceeding to make an offer or deal with the Owner/Seller is his FIDUCIARY, meaning Seller's agent with duties galore to that Seller....and humongous penalties to the Buyer/Offeror or his REA ignoring such law WA is one of 8 or so states to enact such DPLs in last year or so and there's a national push on by the AGs Association to enact such laws in all 50 states. So anybody interested in this distressed property or any other, in any state would be advised to do some research and see if that state has enacted a DPL and if, be in full compliance with it. Interestting that WA’s new Distresed Property Law (effective as I recall last July 1) isn’t even mentioned above, even though you state that house is in foreclosure.

This tough new law makes it clear that anybody knowing this and proceeding to make an offer or deal with the Owner/Seller is his FIDUCIARY, meaning Seller’s agent with duties galore to that Seller….and humongous penalties to the Buyer/Offeror or his REA ignoring such law

WA is one of 8 or so states to enact such DPLs in last year or so and there’s a national push on by the AGs Association to enact such laws in all 50 states.

So anybody interested in this distressed property or any other, in any state would be advised to do some research and see if that state has enacted a DPL and if, be in full compliance with it.

]]> By: Are distressed properties really a good deal? « YsGuy.com Blog http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-262687 Are distressed properties really a good deal? « YsGuy.com Blog Wed, 13 Feb 2008 20:03:43 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-262687 [...] Risks: a distressed home comes with no guarantees on the home’s appliances and systems, including: plumbing, electrical, phone lines, heating, and air conditioning. Before you ever consider closing on ANY home, be sure to have a professional home inspection performed to ensure you’ve done all you can to limit your exposure to risk! [...] [...] Risks: a distressed home comes with no guarantees on the home’s appliances and systems, including: plumbing, electrical, phone lines, heating, and air conditioning. Before you ever consider closing on ANY home, be sure to have a professional home inspection performed to ensure you’ve done all you can to limit your exposure to risk! [...]

]]> By: Uncle Jack (Jack LeVine) http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-243640 Uncle Jack (Jack LeVine) Mon, 14 Jan 2008 18:51:35 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-243640 A perfect storm of red flags. Move on quickly. A perfect storm of red flags. Move on quickly.

]]> By: Cavalcade of Risk - January 2, 2008 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-237800 Cavalcade of Risk - January 2, 2008 Wed, 02 Jan 2008 15:15:26 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-237800 [...] Kathie Goldsmith presents A lesson in the dangers of distressed property purchases… posted at Seattle’s Rain City Real Estate Guide. [...] [...] Kathie Goldsmith presents A lesson in the dangers of distressed property purchases… posted at Seattle’s Rain City Real Estate Guide. [...]

]]> By: RealEstateUndressed » Blog Archive » Magnificnt 7 - 2007 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-236709 RealEstateUndressed » Blog Archive » Magnificnt 7 - 2007 Mon, 31 Dec 2007 17:58:07 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-236709 [...] 5– A Lesson In The Dangers of Distressed Properties by Reba Haas on Rain City Guide [...] [...] 5– A Lesson In The Dangers of Distressed Properties by Reba Haas on Rain City Guide [...]

]]> By: ARDELL http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231836 ARDELL Sat, 22 Dec 2007 17:04:39 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231836 Jillayne, The mold house I "sold" was not on the market. Often if the house is in tremendous distress, it is a health hazard and not "marketable". The liability for the owner and bank of people getting hurt while viewing it, or getting sick from the mold, is too great to "list" it for sale with a lockbox on it. Since I represented the buyer and not the seller, a "REALTOR" was involved without it being a property listed in the mls. I can't answer to Reba's specific house in the post, but the similar one I sold was off market. I did what Melanie suggests in comment #6. I sent an offer with many pictures of the mold to the lienholders. They opted to sell it short vs. taking it over and putting it on market in that condition for liability reasons. Jillayne,

The mold house I “sold” was not on the market. Often if the house is in tremendous distress, it is a health hazard and not “marketable”. The liability for the owner and bank of people getting hurt while viewing it, or getting sick from the mold, is too great to “list” it for sale with a lockbox on it. Since I represented the buyer and not the seller, a “REALTOR” was involved without it being a property listed in the mls. I can’t answer to Reba’s specific house in the post, but the similar one I sold was off market.

I did what Melanie suggests in comment #6. I sent an offer with many pictures of the mold to the lienholders. They opted to sell it short vs. taking it over and putting it on market in that condition for liability reasons.

]]> By: Jillayne Schlicke http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231636 Jillayne Schlicke Sat, 22 Dec 2007 08:24:58 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231636 It would be hard for me to recommend that a first time investor buyer use the services of a real estate agent who is brand new, to help negotiate a short sale, one of the most challenging, complex type of transactions around. With so many homes on the market to fix and flip, why THIS home? I would be wondering what incentives (disclosed or undisclosed) were being offered to the agents to sell THIS particular home. Wait a minute, how could the home be "off the market" and also have Realtors involved? It would be hard for me to recommend that a first time investor buyer use the services of a real estate agent who is brand new, to help negotiate a short sale, one of the most challenging, complex type of transactions around.

With so many homes on the market to fix and flip, why THIS home?

I would be wondering what incentives (disclosed or undisclosed) were being offered to the agents to sell THIS particular home.

Wait a minute, how could the home be “off the market” and also have Realtors involved?

]]> By: Reba Haas http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231549 Reba Haas Sat, 22 Dec 2007 04:57:20 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231549 True, true. Perhaps with the new legislation of tax relief on foreclosed homes (debt forgiveness) http://www.teamreba.com/blog/?p=252 it will also get the attorney involved to advise his client (the widow) to accept a low deal. True, true. Perhaps with the new legislation of tax relief on foreclosed homes (debt forgiveness) http://www.teamreba.com/blog/?p=252 it will also get the attorney involved to advise his client (the widow) to accept a low deal.

]]> By: Melanie http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231545 Melanie Sat, 22 Dec 2007 04:48:51 +0000 http://raincityguide.com/2007/12/20/a-lesson-in-the-dangers-of-distressed-property-purchases/#comment-231545 Take pictures of the mold problems, present them to the lender, and yoru short sale offer might just get accepted at an amount less than the $400k level. That's one thing mold is good for. Take pictures of the mold problems, present them to the lender, and yoru short sale offer might just get accepted at an amount less than the $400k level. That’s one thing mold is good for.

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