I need to take some time out here and share a couple things on this highly unregulated and greed-stricken "gray area" of real estate investing. It is absolutely ABSURD the level of greed, unethical and manipulative behavior that seems to weave itself through this arena! Over the last several months, not only have I been wonderfully blessed to come into contact and meet people of this "caliber" (sarcasm through and through) but I continue to hear stories of the ridiculous behavior conducted by these "professionals." Please! This is going to be "Steve, venting" because it blows my mind how, with a good attorney, you can screw...yes, screw...people over who were involved in the negotiation process of closing any one particular transaction.
Disclaimer 1 - If you are an attorney, buyer, seller, IM or buyer/seller mandate and ARE above reproach in your business,
then that last comment won't apply to you. So, relax! =)
Disclaimer 2 - If you are an attorney, buyer, seller, IM or buyer/seller mandate and ARE NOT (only you know...and most likely the people you have screwed over know too, who I'm talking about) above reproach in your business, then that last comment applies SPECIFICALLY to you! So, read and heed. You are fast-approaching the proverbial "glass ceiling" of success. Cheers! =)
Moving on, I know that 99% (or maybe less unfortunately) of you out there who are involved in real estate negotiations (whether seller, buyer or an intermediary of any kind) conduct your business involvements ethically, morally and unreservedly above reproach; on that note: that's a good start, but I must say however, that this should be the case anyways so let's use that as the baseline.
I have discovered that, in this business of "Buyer / Seller Consulting" that it is ever-increasingly not about the concept that "cash is king." No! Rather, "product is King." It is interesting how many shopped LOIs and POFs are floating around out there.
I recently had 7 LOIs (totalling approximately $1 Billion) come across my desk from an "intermediary" who claimed they were his / hers. "Ok, fine." I stated. After going through the formality of NCNDs, the LOIs were reviewed by myself and sent to one of my seller sources. (notice I said, one (1) of my seller sources and not ALL of my seller sources...for this would constitute the concept of "shopping LOIs" and that is baaaaaaad for business. On both sides) The protocol for this particular seller source was as follows:
1) submit LOI 2) submit SPOF 3) seller would proof and provide "tape" within 3-5 business days. 4) buyer would have 5 days to review this exclusive "tape" and then go into contract negotiation
3 weeks went by! No regular updates from the seller mandate, no updates from the seller - other than "still waiting."
AAAAAHHHHHHH! Not only were the buyers for these 7 LOIs potential new clients, but these new clients were now looking at me "sideways." Mine, and my company's reputation was now on the line. I was seemingly caught in the proverbial "catch 22." (not to be cliche) for 2 reasons:
1) We had told them (based on what the seller had told us) that it would be 3-5 days to get a "tape" of product to review. (In this case - Southern California SFR, REOs to be "taken down" at .45 + .03) 2) We had told them that we don't shop LOIs!
So, I went to the "intermediary" and informed him / her that we need PERMISSION to move the orders from our original seller source to another seller source that could produce product.
"Sure, Steve! No problem! Let's just get them product. Afterall - we are in the business of closing deals and producing and delivering what we say we will."
Fair enough.
So, I did. What happened next was actually quite unbelievable. Long story short - of the 7 original LOIs, 1 of them had been given to this "intermediary" which, after receiving the consent to move to a new seller source, I had passed on to another "vetted" seller source.
Problem.
My 2nd seller source was the "intermediary's" seller source and the "buyer" of this LOI ($50 Million) received his / her original LOI back on his / her desk!
Wow! he / she was FURIOUS! Claimed I was shopping LOIs, that I was acting fraudulent, and that he / she would be telling all of his / her clients about this.
Now, non-withstanding the very obvious question I have about this - which is: "How am I shopping LOIs when 1) you shopped the LOI to me and 2) you had given me permission?" but the indirect question I had which was, and since I obviously did not "shop this LOI," but, "If you are 'taking your business' elsewhere, why did you come to me to begin with IF you have your own sellers already?!"
None of it added up.
Interesting situation, No? =)
The point of all of this, I guess, is that it is ever-increasingly more important to have the following STANDARD principles in place to even be able to survive in this highly lucrative, yet highly unregulated business of BULK REAL ESTATE CONSULTING:
1) Integrity 2) Communication 3) Transparency 4) Non-circumvention (even if IMs are not listed on the Genealogy Tracking forms for any one particular transaction, it is important to ENSURE that compensation WILL be made to ALL involved parties.
"OK OK Steve....We all understand that the above-mentioned principles are important." Ok, fine. profound I know. However, I continue to be surprised EVERY SINGLE DAY as to the amount of greed, lying, circumvention, and other-wise unscrupulous behavior that I come into contact with every day.
Here's all I would ask or say or comment on:
1) Are you THE buyer or buyer mandate? Yes or No? 2) Are you THE seller or seller mandate? Yes or No?
As a bulk take-down consultant, it is important to get THE buyer / buyer rep and the seller / seller rep on the phone to negotiate, get product and conduct business to close deals.
It's simple. 
Quoting from (quite arguably) THE greatest movie of the late 90's - "The Boondock Saints"
"Do not lie. Do not steal. Do not murder. These are basic principles that EVERY man of EVERY faith can embrace."
So should it be in business. And so should it be in your personal lives. Dirty laundry always come out in the wash. The rest, well, it's partnerships and business relationships that can, and will most likely, last a lifetime.
I wish you all the best and look forward to see the responses.
Comments(2)