I can see that a lot of folks are mis-informed about topics like: short sales, flips, investors, profits, fair market value, distressed value, and the myth of "highest & best". To be completely honest, before one year ago, I did not understand those topics either. This was not a market I was used to dealing with, and certainly not at this level. But in the past year, I've learned:
1. If you are a listing agent, and you receive a purchase offer for a specific listing that is active, you have a fiduciary duty to present it to your sellers, whether you like the offer or not. It is their job to take the contract to their attorney to vet it. You cannot simply reject the offer because you don't think it's right, but if unsure, take it to your real estate attorney for verification. You cannot try to think for the sellers, THAT is illegal and unethical. Present all offers to the sellers in writing and have them seek legal advice on any legal questions.
2. "Flips" are NOT illegal. Even FHA is now endorsing them by waiving the 90-day flip rule. I am learning to welcome investors with open arms. They take the lemons (distressed properties such as short sales) off the market and replace them with lemonade (traditional sales at retail value). There is a place in the industry for these folks and I am happy that it's a win-win and everyone can earn a profit. This is definitely a mind-shift for me, out of my traditional sales "box".
3. Offering a "low ball" price for a distressed property is LEGAL and ETHICAL. Neither short sales nor foreclosures deserve "fair market value" prices!!! Sad to say, but many BPO agents don't know the difference and incorrectly compare "apples with oranges" by pricing short sales at RETAIL value when they are clearly distressed properties. See my blog here: http://activerain.com/blogsview/1511129/what-is-the-difference-between-distressed-and-retail-properties-
4. What IS wrong is a HIDDEN profit that is not disclosed to parties with an interest. That is why the CT agents got in trouble with mis-representation. It was not the "flip". As we have learned: disclosure, disclosure, disclosure. Be transparent with all parties involved. There is NOTHING wrong with either a flip or a profit, as long as everyone is aware.
5. It's time we wake up and smell the coffee, this is a DIFFERENT market than 2005. We need to learn how to value short sale properties and REOs at "liquidation" value, not "highest & best". This is something new to me also, I am learning different approaches to respond to this market....
Let's learn together!
Regina P. Brown
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