Who's to Blame When the House Flip Flops
Clearwater Florida - As we look at all the foreclosures that exist today, especially locally here in Florida, many are the result of unsuccessful home investors and would be flipper's whose business plan flopped - it's easy to see how many got caught with their pants down!
So when I read Matt Heaton's article today, Should Realtors be blamed for the sub-prime crisis? (A rebuttal) it got me thinking about a situation that happened to us in late 2006 - I'd like to share it with you and have you give me your opinion..Would you have done the same thing - or not? Give me your opinion.
If One House is Good - Two Houses Must be Great - Right?
Last year we had an "new real estate investor" who went to a weekend How to Flip for Fast Profits Class - we all know the kind of seminars I'm talking about. He contacted us and asked us to help him buy a fixer upper home at a bargain price - which we help people do it all the time. We worked with him and he narrowed it down to 2 homes that both appeared to meet his buying criteria - now this is where the problem arises.
When we ask him which house he wanted to put an offer on he shocked us and says 'I'm gonna buy them both" - What??? Now we knew for the first home he had a line of credit that was very attractive and gave him great terms however when he got excited about the 2nd home he went out and lined up a less attractive loan to be able to purchase it.
We immediately warned him to wait on buying the second home and we shared our concerns (for him) that he'd never remodeled and resold a home for a profit before. We advised him to buy one house now, get it done and then to do his next one... but he was totally h3ll bent on buying two homes right away.
I'm not your Mother or your Business Coach I'm your REALTOR
So now Jack and I sat down with each other and discussed our genuine concern for him and his ability to be successful. We questioned what we should do - because we do care about the people we serve more than doing a transaction. We discussed how we had been working with him for 6+ months to find these homes. We had fulfilled our job as his buyers agents and now because we cared so much about his ability to be successful we questioned whether we should finish the transactions or walk away.
So what did we decide? Ultimately we decided that
- We had done what he had hired us to do as his Real Estate Agent;
- He had gotten 2 legit loans on his own and he WAS determined to buy these 2 homes from someone.
- We are not his mother or his business coach - we are real estate agents and we did our job 110% and felt we should get paid if he was committed to buying these homes.
We still hated that he was going through with his "risky" plan. Ultimately he did buy two homes and renovated them. Then sold one home early in 2007 and he has been unsuccessful in selling the other and may lose it to foreclosure- it has not been a profitable experience for him and has definitely impacted his good credit he started with.
- What would you have done if he's been your client?
- Do you think that makes us part of the mortgage crisis?
Submitted by Cyndee Haydon
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