So I did some research and also consulted with my lawyer regarding the legality of compensating a seller post-short-sale.  On the internet I found an article on the Kick Ass Short Sales website.  After reading it, this made a lot of sense.  However, I still sought out the advice of my lawyer and this was his email response.

A Bill of Sale raises a red flag (in terms of fraud) but is not, by itself, a fraudulent act.  For example, if the Sellers have a working washer/dryer and sell it for $500, there’s a legitimate argument that it was sold for its fair market value.  If there were ever a legal challenge, we would need to show that $500 was a reasonable price to pay for that year, model and condition of washer/dryer.

Fraud only exists when an intentional act was done to harm another person.  For example, in a short sale, the lender usually issues a short sale approval letter that says, among other things, that the lender should receive X dollars and the Seller must receive no more than $0.00 at closing.  If I use a Bill of Sale to purchase the washer/dryer, and pay the Seller $5,000 when the fair market value of the washer/dryer was $500, then I’ve probably committed a fraudulent act.

As an attorney, I usually suggest that if you think you’re committing fraud, there’s a good chance you shouldn’t be doing what you’re doing.  That said, there are many, many instances where a Bill of Sale is a very useful – and legal – tool to purchase personal property.

After this email response, we had a follow-up chat and I asked about my specific situation.  The Department of Health and Family Services was the only lien holder to discount their note.  This sole discount allowed for the other liens to be paid in full.  However, the DHFS did indeed specify the amount that they’re to be paid at closing, BUT did not specifically state that the seller is to be paid $0.00 at closing.  I asked, since that wasn’t specified in my correspondence with the DHFS, if that means the door is open to compensate the seller.  My lawyer replied that it does.  However, with any “gray-area” there are inherent risks.  He approximated, in this situation, the risk to be minimal.  But there’s still a risk, none the less.  The risk being that the DHFS, upon learning of seller-compensation, could come after me and argue that the seller compensation restriction was implied.

Here is the latest email correspondence with the DHFS:

Sale price $9,000.00 less $3,590.00 for mortgage, $275.00 City of Champaign nuisance lien, $315.07 Urbana & Champaign Sanitary lien.  H&FS will release it’s lien for $4,819.93.

Please send payment of $4,819,93 to Technical Recovery P.O. Box 19174 Springfield, IL 62794.  A release of lien will be prepared and file when payment is received.

See, nothing says that the seller must receive $0.00 at closing.  But all of this may be neither here nor there.  I was scheduled to meet with the sellers yesterday (the original scheduled date of closing) and try and renegotiate something that would allow them to walk away with at least a little something from the deal.  Not 9K, but something.  But…they canceled on me.  So that was it for me.  It’s time to play rough!  I’ll let yall know what happens once the gun-smoke dissipates.

- Peace Out

Sign-Up for access to the JustinMcClelland.com exclusive content

Liens, Real Estate, Short Sale DHFS, Fraud, Lawyer, Lien, Mortgage

Another week has passed and I spent about 15 hours working on my offer-making machine.  Good news; I’ve got it done and it’s ready to kick-out offers (on expired MLS listings).  Bad news; the Option-Contract that I was planning to enclose as part of my offer is garbage.

Originally, I was thinking of just mailing a short letter with a complete standard MLS contract.  Then I had a change of heart and felt the Keep-It-Simple-Stupid principle would be best.  So, I’m opting to send a short letter with an option-contract, perhaps the simplified approach will be better.  I had found this very simple Option-Contract on a forum about two weeks ago and I made some tweaks to it to fit my preferences.  I setup the mail-merge with it and my cover letter, I was feeling like the best thing that ever happened to real estate.  The best that ever did it.  So my gut told me just to shoot over the option-contract to my lawyer just to cover my bases…and I’m glad I did.  I received an email response that was about 5 paragraphs long, the cliff-notes basically explaining that the document was trash.  So…I’ll be stalled on the 40 offers until I get my shiny new option contract back from my lawyer.

The beautiful thing is that I have about 500 expireds to choose from.  I could just pace the offers at 40 each week or maybe just push out more per week to make up for lost time.  This has been a weekly goal for about a month now.

Once I have my new option-contract, perhaps I’ll post in detail of how I created this automated system I now have.  Surely at least one person may learn from it or get an idea for something better.

P.S.
I’m going to step-up my fitness regimen a bit.  I was looking at a measurement that I made back in January of 2009, and back then I had a weight of 210 lbs and percent body fat of 19%.  I then measured myself again about a week ago and now have a weight of 200 lbs and a percent body fat of 17.2%.  Not much of a change.  However, I haven’t really been pushing that hard with workouts.  It’s kind of hard to do so when you’re not specifically training for something.  Very hard.  I can’t wait until I have time for triathlons and such.

- Peace Out

Sign-Up for access to the JustinMcClelland.com exclusive content

Liens, Real Estate, Short Sale DHFS, Fraud, Lawyer, Lien, Mortgage

All this week I have been on furlough from my 9-5.  It’s been quite the preview of how a week will be like once I go full-time in real estate.  I’ve been taking advantage by setting various appointments and running a lot of errands that I would usually have to fight hard to squeeze in around my 9-5.

Yesterday, I met with my lawyer and went over a heap of issues.  Since, I’ve been working towards getting this latest wholesale deal closed, I’ve discovered new things that I needed to run by him.  The first thing we discussed was the Assignment Contract that I was using.  We revamped it so that it is now customized exactly how I want it.  Most importantly, the Assignment Contract demands my assignment fee be wired to my bank account within 2 hours of closing and I’ll eventually grant my lawyer Power of Attorney for closings.  This way, I can be in my drawers at the crib watching Judge Mathis, eating Cheetos, while drinking a quarter water instead of having to get in my car and drive to the closing to sign a few docs and receive my check only to have to go all the way to the bank to deposit it.  I know…I know…this sounds like a small task to collect pay, but efficiency is the name of the game.  Time is your greatest asset, why spend it wasting time doing something that can be automated?  Plus, I don’t plan on living in Champaign for too much longer.  I’m putting my virtual-business measures in place, little by little.

We also went over the standard Real Estate contract for Champaign County.  I had a good understanding of it before meeting with him.  Now, I have a GREAT understanding.  And, he crafted an addendum for me so that my contract is customized for me too.  The addendum makes the standard contract, which is already written in a buyer’s favor, a contract that is hugely written in a buyer’s favor.  The best part about it is that the contract, with new addendum, is now filled with “non-essential contingencies” (who says you can’t learn from Carlton Sheets).  So if the seller has no problem with some of my items in the contract addendum, great!  But if the seller has a problem with some of the items in the contract addendum, I will have no problem striking through some lines and sacrificing some things that are non-essential anyway.  This should play in my favor when it comes down to negotiating…Psychology 101.

On the short-sale front, I have a meeting set-up tomorrow to meet with the homeowner and complete all of the paper work needed to send to the bank.  John Michailidis and I, had a lengthy chat today and we went over the details of the contract and other docs.  So now, I have a complete understanding of everything and shouldn’t have a problem conveying all of the meanings in the docs to the homeowner.

On the REO front, I went by and visited the top REO agent in town.  Not one of the top agents, ‘the’ top agent.  This agent moves beaucoup properties annually.  Back in June, I had emailed her and introduced myself and what my investment objectives were.  I didn’t receive a response until about a month later and that was from one of her subordinate agents.  So, that let me know that this lady probably receives a ton of email daily and stays very busy.  In effort to differentiate myself from the pack (of other investors), I made an impromptu visit to her office.  To be completely honest, I was nervous as ****.  This lady has a reputation for being the man-eating type, so it was do-or-die.  I practiced in my head how the meeting would go repeatedly for preparation.  Then shot up a quick prayer.  I walked in and asked for her, I introduced myself and told her I just wanted to a moment of her time.  We sat down and chatted for a few minutes.  I told her what I was all about (wholesaling properties).  I asked about one property in particular that had just came back on the market from being pending for 4 months (unusual), she filled me in on the details of that property.  I also asked what her biggest pet-peeve was about the other Real Estate Investors in town.  She told me that they don’t listen to her, they often times make offers to the bank that have no chance of acceptance.  The end-result is senseless busy work for her as she has to input and submit all of those offers to the bank (I bet those offers really go to her paper shredder…LOL).  I think she was surprised that I asked her about her pet-peeves (in a good way).  I told her that I was serious about doing business with her and plan on being one of her biggest customers.  Hopefully, I was able to successfully convey how serious I am and now at least she’ll be able to put a face with my name.

That’s all for now.

- Peace Out

Sign-Up for access to the JustinMcClelland.com exclusive content

Liens, Real Estate, Short Sale DHFS, Fraud, Lawyer, Lien, Mortgage

I’m falling into bad habits again. It seems like every time I go to make a blog post another week has past.  That’s bad for both you and me.  More so for me as a lot of things take place during any given week that I’d love to read and reflect on in my blog (business diary).  I think I just need to stop obligating myself to 400+ word posts every time.  Then, I may not be reluctant to blog when time is sparse. Anyway, here is the cliff notes of what has been going on since last Sunday:

- Lawyer finally got back in touch with me, says it will take $5K for him to compose a legal model for me to follow regarding buyer/seller side birddogs.  I’m going to consider this after I get some more capital established.

- I got the local broker squared away with his website. Hopefully, he’ll think of me when he wants to upgrade it.

- I submitted a bid to develop the new City of Champaign website.  That damn bid application took alot of time, I didn’t expect it to. If I get that bid, I will be a very happy camper.

- Fired my local assistant that I had working on my envelopes and picked up what she had completed. I had to get rid of her not due to performance but due to her undependable nature.

- Found two new assistants.  One that’s local and one non-local.

- Contributed my first guest-blog post to the BiggerPockets.com blog.  I was inspired by Steph’s activity as a guest blogger on that site.  And then I happened to receive a subscriber email stating that they were looking for more guest-bloggers and that they needed someone to blog about the usage of Technology and Real Estate.  I thought to myself, “I can do that”.  I emailed Joshua Dorkin about it, sent him a sample (Yellow Letter tutorial), he liked it, had a few phone convo’s with him, and now I am to post there every Thursday.  I think nothing but good can come from this opportunity.  I just hope I don’t fall victim to the 4 hour writer’s block that I did during the first post.

- Starting to make money as an affiliate of Mozenda, so that’s encouraging.  I spent a lot of time last weekend getting some how-to videos posted to YouTube and I also have starting to target the Data Mining niche of Twitter Users via my additional Twitter Account.  Still have some ground to cover here with the marketing of this product.

- Took on a project to create a video for the Youth Illini Hockey program

- Took another project to create a marketing video for a homeowner in Mahomet, Illinois (10 mi from Champaign).  He’s getting a video and other internet exposure to sell his house, car, and some furniture.  By the way, this guy who is selling his house is my new role model.  He started a construction company about 5 years ago and now is doing extremely well.  He has properties in Illinois and Florida, a sports-car collection, etc…talk about inspiration.  Very soon, I’ll have some toys too.

- Justin

Sign-Up for access to the JustinMcClelland.com exclusive content

Liens, Real Estate, Short Sale DHFS, Fraud, Lawyer, Lien, Mortgage

It’s another Sunday and I’m a bit frustrated.  I have an assistant that is avoiding my calls and a lawyer who is under-delivering.

My new local assistant who was given the task of hand-addressing and stuffing my envelopes let me know on Saturday that she needed more time.  This isn’t the issue.  The issue is that she now is avoiding my text messages and phone calls.  I’m a bit worried about this situation because she has over $200 worth of my stationary.  However, the beauty of her being local is that I have her home address.  So she can’t completely just dissapear on me.  Now that I think of it, I should’ve held some type of performance-guarantee deposit.  Which would’ve basically been a $200 deposit collected and refunded in addition to payment once the project was completed.  However, even if I was an assistant I wouldn’t go for that policy.  Hmm, I’d love to hear some ideas in the comments about this.  *Update* As I type, I just received a return text from her.  This is a plus, but she’s not completely off the shit list yet.

My lawyer that I was once so ecstatic about, is starting to let me down.  It was clearly stated during our initial consultation, that I was choosing a ‘new’ lawyer due to the lack of responsiveness of the one prior.  He explained that he realized that was an issue amongst many attorneys and that he was different.  I’m beginning to believe that in Champaign, maybe I’ll just have to lower my expectations a bit, possibly I’m dealing with the best-of-the-worst?  I’m not asking for my attorney to respond to my emails within 5 minutes and always be available via phone, or anything like that.  I just need someone who will deliver upon their promises.  A huge pet-peeve of mine is when a ‘professional’ states that they’re going to do something and they don’t follow-through.  Don’t tell me you’re going to do something just because you think it sounds good or that it’s something that I want to hear.  Here is what I’m talking about:

8-20-09
Justin, I’m out of the office until next week.  I’ll get back to you then.
- Lawyer

8-19-09
Update please.  Also, I have yet to receive an invoice from you.  I believe it’s been over a month since our initial consultation.
- Justin

This was an email that was sent to my lawyer and the reply.  And I haven’t heard shit since.  I guess on the bright side, I still haven’t been billed for that consultation and following email correspondences.  So at this point it’s like interest-free financing; that’s my optimism working.

Oh well, on a brighter note, my internet marketing operation is coming along.  I’ve setup a 2nd account on twitter, just to target the demographic that could make use of the Mozenda software.  I also have some automation in place with that account.  In a nutshell, I have implemented Yahoo Pipes, RSS feeds, and HootSuite to automatically @Tweet people who match my demographic criteria.  Maybe I’ll do a tutorial on this later, hmm.  Also, I spent damn-near all of today making videos about the Mozenda software and posting them to YouTube.  This should drive more people to my affiliate link.

Well, that’s it for now, I’m about to head to the gym.

- Justin

Sign-Up for access to the JustinMcClelland.com exclusive content

Liens, Real Estate, Short Sale DHFS, Fraud, Lawyer, Lien, Mortgage