May Resource Post-ARGH, I'M HIJACKING MY OWN BLOG!

Ok, this week, I’m going to rebel against myself.

Normally, I’d be putting together a resource post for you Rebellious Readers out there, choc-full of useful links, sites, and tools to help you navigate the short sale real estate world and beyond.

But I’ve been going over and over in my head a recent issue that has come to my attention, and I thought I’d spend a little time talking about it…

You’ve all heard me rail against the craziness that seems to be inherent in the real estate industry when it comes to understanding short sales.

Now, there seems to be a whole ‘nother layer being created, this time coming from the Department of Real Estate in California (CA DRE). Now, they seem to say, only licensed real estate agents are allowed to talk to people about short sales on their properties, or to banks to negotiate a short sale price. I keep hearing this from both RE brokers and agents, so I started doing some digging myself. And, of course, I found that it ain’t necessarily so. IF YOU READ REBELLIOUSLY, and most people don’t, here’s what you find…

The core of the issue seems to come from the question of who is allowed to talk to a lender to negotiate a short sale on a property, as a recent article from the DRE muddies, er, I mean “attempts to clarify”, the issue. A short excerpt follows:


A real estate broker license (or a real estate salesperson license where that person is working under the supervision of his or her broker) is required under section 10131 (d) of the California Business and Professions Code (B&P Code) where a person, in a representative capacity on behalf of another, "negotiates loans…or performs services for borrowers or lenders …in connection with loans secured directly or collaterally by liens on real property…" for or in expectation of compensation, "regardless of the form or time of payment".

In addition, under section 10131 (a) of the B&P Code, a real estate broker license (or salesperson license with appropriate supervision by the broker of record) is required of any person who, as a representative of another, "Sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicits or obtains listings of, or negotiates the purchase, sale or exchange of real property…" (http://www.dre.ca.gov/pdf_docs/Article_ShortSales03_2010.pdf accessed May 10, 2010)

I’d like to bring your rebellious attention in particular to this sentence from the above excerpt: “a person, in a representative capacity on behalf of another, "negotiates loans…or performs services for borrowers or lenders”

And that, my friends, is the rub. When I take a look at an investment property, I look at buying it FOR MYSELF, and, sometime later, SELLING IT. Nobody is “representing” me in the sense of the law, and while I may have employees engaged in some of the tasks involved in the process along with me, it’s my money and my company purchasing the property. YES, later on I will sell it, for more money than I bought it for. That’s kinda the point of being an investor.

So tell me, what is to stop me from talking to the banks to negotiate a short-sale on a property?

As I read it, as long as I’m the buyer, then nothing at all. Again, it comes down to that line that reads “…as a representative of another”. If I want to negotiate a price on something I’m spending my own money on, nothing in the code prohibits me from doing so.

I’ve got more to say about this letter in coming weeks, but I’m doing a bit more digging first. So stay tuned!

Rebelling everywhere,
Larry