Networking to Find Motivated Sellers

Hi Derling. I am by no means an "expert" at this time, but it is my understanding that it is "illegal" to offer money to a short sale client.

Your statement said: "If you offer these motivated sellers some moving money, I am sure they will be willing to agree to a short sale to just get out of that albatross aroung their neck".

Could you explain how you intend to offer the money to the client, with it being a "legal" transaction? Even IF you offer the money to them prior to initializing the short sale, isn't it still illegal to do so?

dianehilliard great comment and point. I may not have phrased it in the best manner, so here is more on what I meant by that statement.

In some cases you will find some state laws that outline what can be done with short sales or not done with them. In this case, offering the seller cash could be a problem.

What if it was not cash, what if you determined the moving date with them and brought a truck over to help them move....that is not cash. What if you create a separate bill of sale to buy appliances, dog runs, etc...that add up to a certain amount. I suggest that you do not go above $1,200.

However, in many cases, you will find that it is not a law, but a term or condition of the short selling lender to not allow CASH to be give to the seller on the HUD (closing)or mentioned in the purchase agreement. If it is noted by them, they will reject the offer.

Essentially, the only reason why it causes a problem is it could be looked at as taking money away from the bank. If you have a bill of sale with an amount stated on it and signed by all parties, separate from the purchase agreement for the property, it is a purchase of personal property. It could have been what would have normally came with the property anyway, but it protects you from these possible claims in the future and gives the seller some cash to move with. Likewise, who can put a dollar amount on helping a person move and claim it was a kick back. Sounds more like kindness to me.

I hope this helps to clarify what I meant by that statement. I apologize if it may have been misleading initially, but I hope my clarification has helped.

All in all, if you don't feel comfortable with this aspect of the approach, you dont have to do it. It is just an approach we have used before to make life a little easieer on the seller and make our offer a little bit mroe attractive.

derling,
If you offered to buy leads or give a finders fee for leads would that be considered out of the guide lines of business?

It depends on the professionals local licensing board as to whether they could recieve certain types of kick backs. They will know what they can and cannot ask for (well they should at least). In some cases it is a monetary amount limit or simply cash restriction that the local board has placed into effect for licensure or the state has placed into effect. In most cases, kick backs are looked at by the government and other governing agencies as unethical or wrong when a consumer is involved.

The fact of the matter is that many times we are helping these people do something they may not have been able to do or know to do before. Still, the law is what it is, so you could offer referrals back to them. It is an indirect way of putting money back in their pocket. However, if you say you are going to do it, you better make sure you are going to refer people to them on a regular basis that meet their business model. Otherwise, you will wear this professional out and lose the lead source.