Bobo and I did a deal yesterday with Jim, a nice fellow from Tacoma (and long-time real estate investor).

Heads up . . .

When your investigator Rene contacts him to let him know he’s been scammed (I’m guessing he’ll now been added to your list of people I’ve cheated), he’s the kind of fellow who will tell her she’s nuts.

click to play

I’d called to talk with Jim about a property he’s got in the upcoming Pierce County tax sale, and we came to an agreement right there on the phone . . .

Here’s how that call went . . .

So, later that day, he stopped by the office to complete the transaction and pick up his money.

We’d already been to the bank and had his $10,000.00 cashier’s check ready to go. And, we’d prepared a deed to convey 100% ownership of the property.

Ten minutes later, Jim was out the door with 10 grand in his pocket.

And us?

Bobo and I are the proud new owners of a unbuildable lot on the Stuck river in Sumner.

It’s a done deal.

100% done.

Bought and paid for done.

100%.

Done. Done. Done.

Did I mention, done?

property rights

I’m not an attorney, but even I know that as the owner of this property, certain rights are now mine.

Among other things, I have the right to use it, to mortgage it, and the right to profit from it.

Equally important, I also have the right (subject to zoning and what not, of course) to decide what to do with it from here on out.

That’s my call.

100%.

Mine.

What about Jim?

And Jim’s rights?

He has no rights to this property. None. Zero.

Any rights he had he sold to me.

When he accepted my check and deeded me “all interest in and to” the property, his interest forever ended and any rights or claims he had to the property became mine.

All.

100%.

Mine.

Overturning Magna Carta

But, apparently, not according to you.

Your office believes that if I let this property (MY property) go to the upcoming tax sale (one of My rights) and a profit is created there (MY profit), that money belongs not to me, but, (and I kid you not) to Jim?

Huh?

That belief is an absurdity and a position difficult for thinking people to understand.

That belief is NOT what the applicable statute says.

And that belief has no basis in law (again, not an attorney but not stupid, either) and will become the first part of your lawsuit a thinking judge tosses out.

Magical thinking

And this investigation?

It and your multi-million dollar lawsuit is based on the fundamentally flawed and constitutionally unsupportable claim that Jim and others like him, having previously sold their property rights to me, have those rights magically restored by virtue of the Washington State tax sale statutes.

And that’s nonsense.

Respectfully,

Joe Kaiser

Rachael owned a house in Kittitas County and last winter the two of us decided to partner up.

My role in the partnership?

Stopping her foreclosure.

And so, with just days remaining, I paid the taxes and brought that foreclosure to a grinding halt.

How do you suppose that made her feel?

I’m guessing pretty damn good.

What should she have done?

As an investor, I’m stunned by what I read on your web page, Be Cautious of Mortgage Foreclosure “Rescues.”

I’ve quoted you here . . .

Know that even if you lose your home, you may receive money. . . . You need to obtain independent advice on the value of your home and likelihood of receiving money from a foreclosure sale before signing any documents that might affect your rights to collect this equity.— April 10, 2006 “Ask the AG” column

Are you seriously advising someone in foreclosure to let her property go to auction and hope there’s money left on the table once the dust settles?

Say it ain’t so, Rob.

Suggesting a homeowner in foreclosure might be better off by letting her property go through the auction process is something only someone with no real world understanding of that process would suggest.

And clearly, that includes your staff.

don’t try this at home

It’s okay for investors to let properties go to sale and hope bidding activity creates overage profits.

That’s the sort of “roll of the dice” game play we can handle. We can, because when approached soundly, we have little money invested, making it a tolerable gamble.

Equally important, we likely have more than one property in the sale. In fact, if you look across the board, we may have 10 such properties in various county tax sales at any given time.

We know that in 30 or 40 percent of these sales, we’ll lose whatever we have invested because they’ll either get sold at auction for the opening bid amount or, more likely, get claimed by the county because there were no bids.

With 10 properties, the risk is manageable. Even if half result in losses, the upside is great enough for us to be confident we’ll do okay once the overall results are in.

But if you’re a homeowner thinking about letting your house go to sale and walking away with a big overage check?

You’d be nuts to consider it.

off the charts risk

A homeowner has ONE property. Letting it go to sale and hoping overage saves the day is nothing short of foolishness.

To suggest it as a viable option in addressing a foreclosure situation is more foolish, yet.

Even if the chance you’ll receive nothing happens only 30% of the time, when you have one property and no one bids at the sale, you just experienced receiving nothing 100% of the time.

Ouch.

should have let it go to sale?

Your office seems to be suggesting Rachael would have been better off crossing her fingers and letting her house go to sale.

That’s absurd.

This is the real world, where real dollars and real lives are at risk. In the real world, letting properties go to sale is the last thing a homeowner should consider.

case closed

Rachael called a couple weeks ago to thank us, having just cashed our check for $30,000.00. That was her share of the profits and the better alternative to risking it all at the Kittitas County tax foreclosure auction.

We paid the taxes last winter, and when the snow finally melted, we got the house fixed up and on the market.

That fix-up work included repairing the septic system, re-siding the rear of the house, installing a new bathroom floor, and a bunch of other things Rachael had no money to take care of herself.

Soon thereafter, a buyer made an offer, agreeing to pay almost exactly what we thought it would sell for, and last month that sale closed.

how we roll

There’s a typical foreclosure rescue for you, Rob.

That’s how we roll.

We take foreclosure off the table, take control of the situation, and then just flat out get things done.

Rachael called to say how happy she was with the way it all turned out. Your office, I imagine, will now call to let her know she’s been a victim of a foreclosure rescue scam.

Good luck with that.

To be continued . . .

Respectfully,

Joe Kaiser

Thought you might like to know . . . Bobo got the big “let’s do it” today.

That’s deal #1 in the books for the little fellow and he’s off to a very good start.

Nice!

On Monday we’ll overnight the paperwork to an out-of-state fellow and shortly thereafter Bobo Buys Real Estate, LLC, will have its very first property in hand.

verbal offer accepted

The seller is in foreclosure and looking for a quick solution to his problem. He’s accepted, at least verbally, our offer of 1/3 the assessed value.

It’s not a $200 deed kind of deal, but it’s not too bad a deal, either.

Still lots of unknowns and before sending the dough, we’ll do some checking to confirm we’re buying what we think we’re buying.

Please call

Bobo would like to hear from your office on this deal. Please have your people call his people and let’s put it to the test.

Bobo and I would like to know if your office considers buying property for 33 cents on the dollar from people in foreclosure a “scam.”

And if so, why that is.

We’d like to know if your office is going to come after Bobo and me for having done this deal, or claim we’ve taken advantage of the seller at some point down the road.

We’d also like to know if your office thinks we should have “carefully explained” all the available options to him (iinluding letting it go to sale) so he’d be able to make the very best decisions possible.

Finally, we’d like to know if your office considers Bobo a fiduciary in this matter having responsibilities that extend beyond what would normally be considered a buyer’s responsibilities.

Again, please contact our attorney ASAP and advise.

how this deal went down

And just so we’re clear . . .

Bobo didn’t agree to pay the fellow’s property taxes, or stop the foreclosure or save his credit or anything like that.

He simply agreed to write a check.

The seller agreed it was a fair price for his equity and an all around fair deal, so now we’ll move forward and just get it done.

And on Monday morning the appropriate paperwork will be FEDEX’d to the seller.

Just like that.

disclosure

And Bobo’s future plans for the property?

Bobo believes what he does or does not intend to do with the property is nobody’s business but his own and so he did not tell the seller of his intentions for the property.

He believes he is under no obligation, legal, moral or ethical, to disclose to anyone, including the Office of the Attorney General of the State of Washington, his plans.

what’s next?

I just got off the phone with Bobo and he’s asked me to go ahead and immediately list it. If we snag a buyer that nets us at least twice what we’ve paid, he’s asked me to go ahead and take it.

And if not?

I’d love to tell you, but it’s nobody’s business but Bobo’s.

Respectfully,

Joe Kaiser

I think I might have done it this time.

We bought a little house a few months ago from a guy in foreclosure, flipped it and whew boy, this check showed up today.

$59,360.32 . . . a monster profit deal in the house. Gulp.

I suppose I might as well fire up the copy machine because I’m sure your gal Rene will want to look into this one, too.

I’m an investor

Here’s a picture to help her get started.

It’s a place I bought this February in a very straightforward deal: I made a cash offer, he accepted, and we closed through escrow soon thereafter.

And the property was immediately listed with a local agent.

I snagged a buyer right away, got the thing closed (a few title problems had to be handled along the way) and this check, my profit, arrived a short time later.

I’m an investor

How much did I pay for it?

Something like $48,000, which I figured was around 50 cents on the dollar. It’s a property I wasn’t able to see much of prior to buying so had to buy cheap to make it worth the risk.

I should probably come clean and let you know I didn’t put up a dime of my own money to buy it, either (a private lender paid for the whole thing).

And, if you want to know the whole truth, I walked out of escrow (as the buyer) with a couple thousand dollars to boot.

Fix-up work?

Never touched it. The agent said it was good enough so I just sold it “as is.”

I’m an investor

If you’re keeping score, the short story looks like this . . .

• Foreclosure deal.
• Bought pretty much sight-unseen.
• Paid well below wholesale.
• Received cash at closing as buyer.
• Didn’t do a thing to fix it up.
• Flipped and closed within a few months.
• Pocked over 60 thousand dollars.

Seems like that about sums it up. If Rene needs additional information about it, please do not hesitate to let me know.

I’m an investor

Respectfully,

Joe Kaiser

Every once in awhile I end up with a ton of equity, having paid very little for the property.

Some people might even say, “Joe, you stole it.”

They don’t mean it literally, obviously.

In fact, we used to brag about our “real steal deals” at investor meetings back in the day, and it was a heck of a lot of fun trying to “one-up” each other with our latest “great deal!” story.

But do we actually steal properties?

Of course not.

What does happen, though, is every now and then things work out better than planned and we look up and hey, there’s more profit on the table than expected.

Nice!

It doesn’t happen often but when it does, it’s great stuff (especially when your last few deals didn’t quite go according to plan).

is it buildable?

Which brings us back to Phil’s deal last week. I had an opportunity to check it out yesterday and between you and me, I think I may have stolen it.

It’s actually a nicely wooded property on a river bend that’s absolutely gorgeous. In fact, I don’t think it’s wet at all.

I have no idea if it’s buildable or not (I’ll know sooner than later), but I’m delighted with what I’ve seen so far.

So what happens next?

I’m going to list it for $120k or so and see what the market tells me it’s worth. With any luck, we end up cashing a “monster profit” check sometime soon.

That would be very cool.

And I’ll be sure to post a copy of the check here on my website if that profit actually happens.

my obligations to Phil

As a real estate investor, do I have any obligations in terms of disclosure to the seller, Phil?

Would the ethical thing have been to tell him his property was worth far more than he agreed to sell it for?

Or should I have told him not to sell at all and instead educated him about the tax sale and why it might make more sense to let it go to auction?

No, no, and no.

I have NO obligation to disclose ANYTHING to Phil or any other seller. Phil, on the other hand, DOES have an obligation to disclose EVERYTHING to me.

What’s the Revised Code of Washington say about it?

In a transaction for the sale of residential property, the seller shall, unless the buyer has expressly waived the right to receive the disclosure statement, or unless the transfer is exempt under RCW 64.06.010, deliver to the buyer a completed seller disclosure statement . . .— RCW 64.06.020

What the law says

I’m the BUYER. I have no obligation, legal, moral or ethical, to disclose anything to the seller, and that IS the law.

If he’s priced it too cheaply or misses an opportunity to make more money by selling it to someone else or in some other manner, that’s too bad.

My job isn’t to inform him of it’s true value. He’s the guy who’s owned it for the last 10 years. I’m the guy who until yesterday hadn’t even seen it.

What would I know?

If he tells me it’s got little or no value and I can have it for a couple hundred bucks, I won’t be the one telling him he’s wrong.

I’ll be the one handing him the $200 check.

so, was it unfair?

Since county clerks are sending your office information on every deal I do, you’ll surely be getting a copy of my recorded deed soon.

Then someone like Renee will hound Phil (his name isn’t really Phil, btw,) and if history shows us anything, try to convince him he’s been victimized by a rogue real estate investor running amuck.

I understand your AAG’s don’t believe investing $200 to make $100k is fair. Or that doing so cannot possibly be anything but a scam.

Good luck with that.

Respectfully,

Joe Kaiser