Flushing Money Right Down The Toilet

By
Real Estate Agent with Keller Williams Heritage Realty

Have you ever been asked by a SELLER to pay for repairs or improvements to THIER property prior to it being listed for sale? If so, have you paid for them? If so, have you always gotten paid back, even if the property did not sell?

I ask this question because tomorrow I am meeting with an Asset Restoration company at a potential new listing. The property owner lives in North Dakota and hasn't been to Florida for seven years! During that time, the property has been occupied by the same tenant, who paid his rent up until a year ago...but, he hasn't paid it since, continued to live there and has unfortunately, TRASHED the place.

The owner, who is a very nice man with less than optimal finances, finally got tired of the tenant's freeloading and called me to sell the property.

Easier said than done.

When I first visited the property, the non-paying tenant was still living there with his VERY MEAN and VERY LARGE German Shepherd. I kindly informed him that the owner contracted with me to sell the home and he needed to vacate within 3 days or we would evict him.

Thankfully, he left.

Not so thankfully, I think he told all those without a home in the area that the place had "Rooms for Rent" (minus the rent part!) and the police were running a different "squatter" out every night.

Two weeks ago, my husband and I went to the house to place NO TRESPASSING signs on the doors only to find out that the locks had been changed and I was locked out of my own listing!

So, tomorrow I am meeting with a Locksmith/Asset Restoration company who will give me a bid to change the locks and board up the windows. I've been told it will be no less than $250, but may be up to $500 if I want them to remove all of the garbage left behind from the tenant and our most recent "guests."

I am happy to sell the property (which will be listed at $69,000...the least expensive home I've ever listed), but am not willing to pay to secure the home.

I have asked the Seller to make financial arrangements for this service, but he shared that he's had to borrow money himself just so the property wouldn't go into foreclosure...

With that being said, I know that if I agree to pay for this service, I might very well just be flushing money right down the toilet.

The property is in deplorable condition and I am not confident that it will sell, which means I could spend time (even more than I already have) and money (on top of marketing dollars) with no guarantee of a return of even my investment to get the property secure enough to list it.

If you were in my position, what would you do?

If you are a Buyer who is interested in knowing more about a Seminole County city such as Altamonte Springs, Casselberry, Fern Park, Oviedo, Lake Mary, Longwood, Sanford or Winter Springs, contact LaShawn Norden, PA, REALTOR, ALHS at (321) 377-0157 or at LaShawn@LaShawnNorden.com.

If you are a Seller who has a home to sell in Seminole County and values having a marketing specialist with Real Estate license on your side, LaShawn Norden, PA, REALTOR, ALHS is the expert for you!

LaShawn Norden is the Only Central Florida Native You'll Need!

 

Posted by

 

Direct: (321) 377-0157, LaShawn@YourHomeOurPriority.com Certified Distressed Property Expert (CDPE), Accredited Luxury Home Specialist (ALHS)  & THREE-YEAR Five Star "Best In Client Satisfaction" Award Winner! Click HERE to visit MY WEBSITE!  

Priority One Homes Team @ Keller Williams Heritage, Offices in Lake Mary, Longwood & Downtown Orlando, Florida

SEARCH MLS HERE for CENTRAL FLORIDA Resales, Foreclosures, Short Sales, New Homes, Condos, Townhomes & More.

Should you or someone you know be interested in buying or selling Real Estate in Central Florida, I'd love to earn the business! I am never too busy for referrals!

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Groups:
Realtors®
RE/MAX Active Rain Bloggers
Tags:
agentpaid repairs
asset restoration

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Anonymous
Brandon Acken @ RE/MAX Preferred Professionals

On second thought it sounds like the bank may already be involved in forclosure- changing the locks is the first thing they do

Jun 26, 2008 12:16 PM #48
Anonymous
JoAnn

Don't take the listing!  It will be a headache.  Your client will expect you to keep up the lawn care, etc.  Even mowing can run into quite a bit of $$$ after a while.  I know on one of our vacant properties, it costs $45 every two to three weeks depending on how fast the grass grows.

I agree with others.... Walk away and don't look back. 

Jun 26, 2008 12:19 PM #49
Anonymous
Michael Fitzpatrick, ABR, GRI

I did not have a chance to read the other 49 comments, so I don't know if I will be repeating anythig. In the future, never do this again. It's not worth the stress. You however now have a financial interest in this property. which means he can not sell this property unless 2 things. He pays you back or he uses you as an agent. Have him sign a form that he contracted you to do the following for his property and that you had to pay money on behalf of the property.

Jun 26, 2008 12:49 PM #50
Rainmaker
1,483,902
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

I don't think I would take that listing.  What is your relationship with the seller?  Do you owe him a favor?  It's a tough call if you feel like you are obligated to sell the home.

Jun 26, 2008 02:34 PM #51
Ambassador
627,922
Roland Woodworth
Q Realty - Clarksville, TN
Q Realty - Power In Real Estate

LaShawn... this does not sound like a WIN-WIN situation..... It could be if all goes well. What if they don't sell and then you don't get your money.  Little scary if you ask me. Good Luck

Jun 26, 2008 03:02 PM #52
Rainmaker
716,358
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Are you sure you want to be in this situation?  I have to tell you this doesn't sound good at all to me.  Sometimes you have to go with your gut. The fact that you are writing about this speaks volumes!

Jun 26, 2008 04:44 PM #53
Rainer
1,446
Paula Ganeles
RE/MAX Direct - Boynton Beach, FL

LaShawn...I hear you and have been there to some extent.  Everyone is correct to say laying out the money isn't your respsponsibility, and since the property is so trashed (though it can be cleaned up) you just have to get the owner as the only responsible party to get it under conrol. I can't believe you're doing this just for the listing alone?  But you cannot lay out money unless it is secured very well with a guarantee that you'll be repaid.  Won't the owner consider taking out a small loan just to get on with this?  It is amazing though to think how many people treat real estate investments as NON-assets...one that needs to be protected and some dollar outlay for upkeep.  Too many don't realize how important it is to their wallet that their property shows well!  Just use sound thinking and a sensible answer will come to you.  Good luck!

   

Jun 26, 2008 04:59 PM #54
Rainmaker
886,050
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

I haven't read the comments to see a consensus in the answers, but I have fronted clients money a number of times. Once, I paid a mortgage for 10 months until the listing sold. I didn't expect to do so for more than 2-3 months, but the banking crisis hit and severely affected the market there. When it did sell, I was repaid. I have yet to be "burned."

Few agents are willing to put their money where their mouth is; that separates the special among us from the crowd. So long as there are proceeds to pay you back, I view the expenditure as an investment in your business. My rule of thumb is that if there is equity and saleability, then a small loan won't harm you and can result in an extremely grateful client and more referrals.

Good luck.

Jun 26, 2008 05:09 PM #55
Rainmaker
240,913
Palm Coast Homes
100 Plus Realty LLC - Palm Coast, FL
Palm Coast/Flagler County Real Estate, The Ross/Co

Eeeks LaShawn...I have a couple of comments on this one. 

First...trust your gut on this...if you are having doubts...you will resent this property and kick yourself for getting into a situation that you knew would be bad.  Does the risk out-way the reward? Is it worth the stress and worry?  It is not your fault that this owner is in this position.  Be careful not to let your kind, generous manners allow yourself to get guilted into something you know is not good for you.  it is OK to say NO!!!

Second, if the owner does not have the money to secure his own property...he is already too far gone and no longer has a vested interest in making sure that it is properly taken care of...you may be fighting a losing battle.  Why were the locks changed,,,is he in foreclosure and the lender ordered the home be secured?

Are you getting into a short sale situation with this property?  If so,  run, run, run.  No amount of money is worth your sanity :-)

Good Luck.

 

Jun 26, 2008 10:45 PM #56
Rainer
270,660
Matthew O'Hare
Osterville, MA

loan him the money, documented of course and notarized if possible. The terms must be that he must pay you at closing or termination of listing agreement. I would even throw in the stipulation that the agreement  must be a minimum of at least 3 years! A Loan... not a handshake front.

good luck!

Jun 26, 2008 11:07 PM #57
Rainer
2,894
Toni Spott
Coldwell Banker - Bayview, WI

Cut your losses and let go.  I've been there and you can only save the world a few times until you need saving........

Jun 27, 2008 02:50 AM #58
Rainer
22,498
Antoinette Murphy
RE/MAX Atlantic - Absecon, NJ
GRI

I could see why you want to help this owner out, but putting out money in this market for this listing is very scary.  I would try to contact a restoration company that is willing to do the work (limited work)  and put a contractor's lien on the property, which will get paid when the property sells, so long as it dosen't go to foreclosure before then. I wish you luck with this one.

 

Jun 27, 2008 02:58 AM #59
Rainer
16,796
Jennifer Schaefer
Visionary Properties - Phoenix, AZ

Selling a piece of real estate is a business decision made by the home owner and yes while we are in a "relationship business" and it seems different than other sales decisions the key word is still business.

If it was me, I would seriously talk with the seller about the condition of the property, the slow market and all other contributing factors working against his homes appeal to buyers. If I didn't think it was going to sell at list price I would be honest with him about that and have him take a day to consider a more realistic number. I would back this up with the property condition of the comps that recently sold. If he wasn't willing to reduce to move the property, I would gently decline to continue with the listing. 

I've observed that sometimes agents get caught up in having a listing just to feel like they've got business going on but really, if it isn't a realistic listing, (or seller) it just turns out to be a waste of the agents time and resources. And yes I realize not all listings sell, but you've got to be the professional and give your client and yourself a fighting chance of success!

The seller should find a way to pay for his own repairs. Do not lead him to believe this is any agents responsibility. Good luck with your decision, I'm rooting for you, this is a tough one!

Jun 27, 2008 03:10 AM #60
Rainmaker
588,465
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi LaShawn,

You might draft an agreement for him to sign:  That if the property sells, you will be repaid through escrow  (probably setting a dollar limit on the amount you have to advance), and if the property doesn't sell within X days after the repairs are made, you will be entitled to record a second mortgage or lien in the amount owed, so that if it does go into foreclosure, you will have some notice of it and perhaps have the right to pay the default amount and take over ownership of the property.  If it does later sell, you would be paid through that escrow.

You would have to check, of course, with the rules in your state to make sure that this would not be a violation of some kind, but you would not be taking a mortgage to cover your regular agent duties - just the cost of repairs that you advance, so it may be okay.

It might not be the best or cheapest way to go, but you would be helping him without taking such a big risk of loss.

Jun 27, 2008 03:24 AM #61
Rainer
20,565
Jami Van Den Bogaert
RE/MAX House of Brokers - Springfield, MO

I feel bad for the guy as I have seen my own father go through a similar situation with a tenant. However, if he doesn't  even have a couple of hundred dollars or doesn't have the credit to borrow the money then you will never get paid back. He will wind up being a pain for you like the tenant was for him. If he really wants to sell he will come up with the money himself.

Jun 27, 2008 03:47 AM #62
Rainmaker
43,421
Melissa Sall
Sulek & Dutton Real Estate - Saint Clairsville, OH
Realtor ~ Belmont County ~ Ohio

We are here to HELP people but sometimes there's a fine line where that's concerned. I would not do it unless there was something legally in writing saying that you would be reimbursed at the closing or other arrangements if it doesn't sell.

Jun 27, 2008 05:15 AM #63
Rainmaker
571,718
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Take a deep breath and tell the seller to arrange for payment directly with the company or you will have to decline the listing.

Jun 27, 2008 06:44 AM #64
Rainmaker
91,655
LaShawn Norden
Keller Williams Heritage Realty - Longwood, FL
REALTOR, (321) 377-0157, Your Real Estate Advocate in Central FL

WOW! Again, I am very thankful for the responses I have received so far. I've sent the Seller the estimate of $465 for repairs this morning and haven't heard back yet...I guess the lack of response speaks volumes. Thanks again for commenting...it's been a true honor to be featured and showcased in the AR newsletter.

Jun 27, 2008 09:22 AM #65
Anonymous
Gail Johnson, RE/MAX Sonoran Hills, Phoenix, AZ

The property sounds like a good "fixer-upper".  Have you considered making the seller an offer?

Jun 30, 2008 09:21 AM #66
Rainmaker
126,363
Stavrula "Sam" Crafa, RNC,GRI, CDPE, PSA
Future Home Realty - Seminole, FL
Providing the integrity and service you deserve.

I would not pay for repairs. I 'll take just about any listing I thought someone might want. But I think I would pass on this one.

Jul 03, 2008 03:18 PM #67
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
91,655

LaShawn Norden

REALTOR, (321) 377-0157, Your Real Estate Advocate in Central FL
Ask me a question
*
*
*
*
Spam prevention

Additional Information