Home » Real Estate

How to Legally Make Money Selling Properties That You Don't Own

Jun 24, 2008
The question most heard lately is "Where have all the buyers gone?" The answer is there are fewer of them for a number of reasons. Because of the sub-prime lending crisis about 25% to 35% of this segment of the mortgage market can no longer get loans. Real estate investors have slowed their buying considerably and the amount of foreclosure property and new home building is at record levels. All of which makes for too many houses and too few buyers.

If you are to be successful in real estate investing you might consider setting up a systemization plan for finding buyers and then finding houses they can buy. In between you will have to get a contract on the house or have an "equitable interest" in the house to not have your profit be considered a "real estate commission" and be declared an unlicensed agent, subject to fines and in some states imprisonment.

In rapidly changing markets this process of finding buyers first and fitting a property to them is catching on very quickly. When you think about the process it is the opposite of the usual investing process where you find a house, put it under contract or buy it, and sell it later. The problem is you have so many other houses in competition for that buyer's dollars that you can sit with properties for months and lose your profit to carrying costs.

Your first thought might be that this is exactly what Realtors do "find a property and then find a buyer. The actual realtor's process is to "sell" the listing to a homeowner, list it on the MLS", and wait for another Realtor to bring a buyer to buy the house. The most successful Realtors "sell" the most listings, not the most houses. There is one other important advantage that an investor has over the Realtor- the amount of profit he can make. The Realtor is limited to 5% to 7% or less and this commission is split at least two ways and sometimes four ways when another agent sells the house. The investor can make any profit that he engineers into the sales price and the usual target is 10% of the sales price, with no split for his broker (boss).

To illustrate how sensitive Realtors are about what a commission is on a property, I have seen a crack-down by regulatory authorities on real estate investors who advertise a "finder's fee" for referring them a house they purchase. These amounts are usually $500 to $1,000. It appears that Realtors have been sending advertising into state agencies that offer this referral fee and the agencies have been responding with immediate action to have the referral fees removed from advertising under threat of prosecution of being an unlicensed agent. Remember this when you print your next business card or advertise on your website, you are breaking the law.

If you intend to start using this "find the buyers first" strategy, it is critical that you understand how to legally control a house by contracting or deed transfer before you start looking for buyers. Contact a local real estate attorney to confirm your contracting is legal.

In addition, and even more important is your ability to pre-screen your prospects and qualify them for a purchase, which will require your working with a mortgage broker who will stay on top of the ever-changing lending market. It will require that you help many get their credit repaired without charge to them and in some cases it will take months. The result will be similar to an email I got yesterday pleading for houses because the investor has 45 pre-approved buyers, not pre-qualified buyers, who are motivated to buy houses. This example is in one of the four most depressed housing markets in the country in March 2008.
About the Author
Discover How To Make Every Real Estate Deal Profitable with an artificially intelligent piece of software that shows you how to make money Every Time, in Any Market, and it even prints an Irresistible Offer for the seller.
Click Here To Learn More
Rating:
Please Rate:
(Average: Not rated)
Views: 106
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Accounting
    • Credit
    • Currency Trading
    • Debt Consolidation
    • Insurance
    • Investing
    • Leasing
    • Loans
    • Mortgage
    • Mutual Funds
    • Personal Finance
    • Stock Market
    • Structured Settlements
    • Taxes
    • Wealth Building
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources