With an overwhelming number of active listings in Miami-Dade County being short sales, it’s no wonder that people have invented creative ways to make money on these transactions. They have come up with a business model that has so many layers of profits in it that the deal should be featured on The Food Network’s “Cake Boss“.
If you are wondering how to create your own beautiful Short Sale Investor Upside-down Layer Cake, here is the recipe….
- Start with a HUGE portion of Investor Profits (they’ll want to flip this baby and they have the cash to buy, so they are going to ask for the lion’s share of the profits)
- Add a middle man who “acts” like the investor, but really is just one of the investor’s scouting agents who scours the country looking for short sales he can line up for the investor. He gets a smaller piece of the pie.
- Add a totally uninvolved licensed real estate agent the scouting agent partners up with who searches out actively listed short sales on the MLS. They then contact the listing agents, get a 25% referral agreement in place, then set them up with the scouting agent, who in turn, sets them up with the investor.
- Add the listing agent who is told that their full commission is guaranteed by the investor PLUS they will be the listing agent on the backside (ie once the short sale goes through, the investor will keep them to RESELL the same property to regular retail buyers)
Mix it all up, set the layers in place (don’t forget to turn upside down before baking) and…
wha la! The half-baked Short Sale Investor Upside-down Layer Cake is complete.
Instead of just selling to the retail buyers, the sale is diced, mixed and shaken to include profits for 1) the investor 2) the scouting agent 3) the referral agent 4) the listing agent’s second listing of the same property.
Doesn’t make sense? You are right! It doesn’t, and while investors are not inherently bad people to deal with, there are some pretty shady ones popping out of the wood work and putting short sale sellers (and retail buyers) in some pretty difficult situations. Don’t let this happen to you!
This is why it is SO important to work with experienced and ethical Short Sale Realtors. They are the ones who have seen the tricks of the less than honorable investors/scouting agents, etc. They are the ones who have rescued short sale sellers from similar situations, they are the ones who can spot the issues and head them off at the pass. Don’t list or buy with agents not extremely familiar with short sales, so you might be on the bad end of a Short Sale Investor Upside-down Layer Cake!
Call now if you have a property that needs to be sold as a short sale or are interested in buying short sales and we promise, the only cake you will be eating is a Misha’s Cupcake!
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Article by Janie
Janie is past president of CREW Miami – Commercial Real Estate Women and has been in construction, real estate and development for 20 years. She has put to good use her degree in Marketing and Business from the University of Richmond in her love of marketing real estate. Having lived in such multi-cultural cities as Washington DC and Miami as well as in Europe, there was no better home in real estate than Sotheby's International Realty for Janie to reach an international audience interested in Miami real estate.
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