In 1974, I took a class from Carol Dana Lewis, then from Michigan now I believed in Florida, on "Buyer Brokering." "Buyer Brokering" should not be confused with our current Buyer's Agency, The class and our practice was as a true Buyers's agent, paid by the Buyer! This drastically changed our position and our fiduciary, allowing us to truly work for the Buyer's best interest, our only obligation to the seller was to be fair (From the COE and our soul, it has since been abandon in the COE.) and honest.
It was rare to truly act as a Buyer's agent when dealing in single family properties because then as now the lenders didn't recognize payments to a Buyers Broker as part of the price of the house. But, once in a while it was worth the extra cost to the buyer, and that remains true today.
Such was the case when a client wanted a "Gentleman's Farm" basically an old farm house and out buildings on a few acres. Having located several I recommenced to my client that I should represent him the same way I did on his commercial properties. He ask won't that cost me an extra 10%? I said "Yes and NO!" My fee is 10% of what you buy, but did it cost you on your office building?" He though and said "I'd save him money." He and the wife signed my buyer’s listing form. You and your client have to know your value.
I took the Buyer and his wife to see the three best of these properties then available. The wife didn't like the houses, surprise, surprise I knew that was coming. She didn’t want a farm house, he didn’t care about old houses he wanted the farm. I knew this, but they had to realize it!
Then I took him to second most dilapidated house I'd ever shown. I had to beg the wife to get out of my car, it was that bad. Some how I got them in the house.
I took them to look out the windows being careful to keep them from stepping in the holes through the floor. Out side I got them seated on an old bench under a huge shade tree. They (she) wanted to fire me! I wanted to talk about the views. She wanted to leave. I suggested she didn't want a farm house. She agreed. He wanted the ground and the out buildings. I suggested they buy this house and have it torn down, it shouldn't take much, it was barely standing. They agreed that It would be nice but too expensive. I suggested not if the sellers paid them to buy the property.
At this point I had their undivided attention. Swearing them to secrecy I explained. The large tree that blocked the view to the west was Black Walnut. They said, So? I said $50,000.00 worth of Black Walnut!
They made a full price offer, about $28,000.00. (Prices were much lower in ‘74.) We closed in two weeks, and sold the tree the following week.
Real estate professionals know that crops are personal property, despite meeting all the requirements to be real estate. Land scraping is real estate despite meeting all the requirements to be a crop.
There is one other thing I’d like to remind you of before you go looking for homes you can part-out. If you financed the property you can not commit waste. Waste is defined as reducing the value of the property. To avoid committing waste my clients paid their mortgage off with the tree proceeds, then used the remaining cash to clear the old house off the site before getting a construction loan to build the new house.
My point is it pays to use and/or be a professional, but fidisuary is a must.
The more things change the more they stay the same. I know of many properties where the trees are more valuable that the entire property! Don't get excited, we use to live in Incline Village, NV and the fine for cutting the trees is also often more than the value of the million dollar houses.
Are you likely to find black walnut trees? Personally, I’ve only found one since, it had to do with a house I bought for $350.00 and moved 6.5 miles. But, the alert agent can from time to time find opportunities! I have, repeatedly.
It’s not often simple, but it can be. I’ve had clients buy a house just to raise the price and change the marketing.
The keys are to know your business, to recognize opportunity, to legally and contractually represent your fiduciary!
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