What do you think.

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On Thu, 28 Aug 2014 10:18:30 -0700 (PDT), trader_4

Well they must be doing something to get their money back, plus profit. If this isn't it, what do you t hink it is?
If they've been in business 10 years, as some one says, it seems likely someone has sold his house by now, but otoh, these things start out small. Maybe they only got 5 customers the first 5 years and they haven't sold yet. (That leaves the next 5 years.)

I too wondered about your use of "shrewd". Is this a Canadian difference? Because to me, to be shrewd, they'd have to make money without antagonizing people (at least until after they've milked all the first guy's friends.)

There were about 30 real estate companies listed for the next zip code over (I'm not putting in my own zipcode! but it didnt' matter because the ones they showed covered the whole city and all the suburbs. I guess they go by the first 3 numberss)
But I don't doubt that if I called them, all 30 would say they'r e not involved. But no one has to be involved now because my house, for example, is not for sale yet. But if I had signed up for this and want ed to sell, I'll bet they have a real estate company too scrungy to list that would take the job. Either that, or they let me sell it with another company and come after me then for the commission I should have paid them. (I didn't see it but the Albuquerque tv station report on this said that their website (and another source) said that even if people don't use the right real estate company, they still owe a percentage of the sale price.
I don't know how they do this, but they're not going to all this trouble for nothing. (Also their contract says they have 16 months to deliver the first gift card, so maybe in most cases they don't even give t he gift card. All that means is that when they collect their commission, the percentage of the sale price, they'll have to pay out the gift card amount plus interest since the cards were due. BUT I GUARANTEE IT that they will take in a l ot more money than they have to pay out, after the law suit.
I also don't know how they keep an eye on their suckers. How do they know when the house goes on the market, or when it's sold. Maybe they only do business in places where this info is easy to get. In Baltimore County and all of Maryland, all the real estate transactions are online and can be read from home, for free. Maybe someone wrote a program that checks the house sales in each county and compares each new entry in the online list with the scammer's own list of customers. I guess that wouldn't be hard to write, even for me, if standard files were used. If I knew more about writing for home computers, it would probably be no harder.
If they wait until after the sale is made, and sue then, there is no need for any real estate agent at all.
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On Friday, August 29, 2014 11:08:18 PM UTC-4, micky wrote:

They don't have to put a lien on your house or have a lawsuit for it to be a legitimate business. They say they get their money back via a referal fee from the realtor when the house is sold.

Being in business for 10 years doesn't mean they have been in *this* business for 10 years. From the link Moe provided:
"NEW YORK, Oct. 2, 2013 /PRNewswire/ -- Exceed's newly announced patent-pen ding Smart Homeowners Programsm enables homeowners to pay $0 for their favo rite major brand gift cards (American Express, Visa, Target, Home Depot, Wa lmart, Amazon.com, Macys, Best Buy or Shell). The total amount available t o each homeowner ranges from $300 to $10,000, depending upon the value of t heir home."

I agree. Especially given that the shrewd reference was pointed at the local realtors. I don't know any realtors here that would want to smear their reputation, get involved with some scam, etc. That company has some very big names in real estate, eg Century 21, Coldwell Banker on their website. Those making accusations of scams might want to consider that. I guess someone will probably say a scammer can put up anything on their website, but if this company doesn't have all those big realty firms really participating, don't you think those firms would be all over this and have it shut down immediately?

y

ode.

The only way you'd know is to call and ask. It could be interesting.
But no one has to be involved now because my house, for

If what you're suggesting, ie that the firms they show for your area are really not involved, and they are just using huge real estate franchise names fraudulently, how long do you think it would be before those franchises shut them down? I don't think you can run around saying Century 21, xxx city is one of the participating realtors, it's false and Century 21 doesn't come after you. People are postulating all kinds of bizarre, theoretical, lawsuits. If they were doing this kind of outright fraud, then you would have a *real lawsuit* by the real estate franchise. You'd also have state regulators shutting them down in no time.
Either that, or they let me sell it with

Yes, I just saw that too when I went back to Moe's post. Now that might be a problem, depending on what the percentage is. If it reflects the cost of the gift certificats, plus some reasonable imputed profit, eg maybe 2X the cost of the certificates max, then I don't think it's unreasonable. I'd say if you can't use one of their brokers because they have no broker, then you should owe nothing. If you use another broker for some other reason, then owing them some fee seems very reasonable.

They get paid a referal fee from the participating brokers.
(Also their contract says they have 16 months to deliver

No, if they don't send the gift cards, then they have defaulted on the contract and they aren't entitled to anything period. And again, if they were doing that, do you really think all those major real estate franchises would be up there on the website? Plus regulators would have them shut down in no time.
BUT I GUARANTEE IT that

Again with the lawsuits. You folks have lawsuits on the brain.

There are various online centralized sources, Zillow for example.

Again with the suing. Guy signs up. Guy gets $1000 in gift certificates. Guy goes to sell his house 7 years later, looks up the brokers in his area like you did, follows the procedure, uses one, house gets sold. Exceed gets a referal fee from the broker. Everyone lives happily every after. Why does lawsuit! lawsuit! have to be the mode of operation?
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On Fri, 29 Aug 2014 07:30:22 -0700 (PDT), trader_4

Well, it would depend on what it said in the contract. There could be liquidated damages, damages that the courut need not calculate because they are specified in the contract. I suppose there is a limit to how high those can be, in the court's opinion, based on the rules of state law and precedent, but maybe they only do business in state's where that is not a problem.

I'm pretty sure the salesman and customer would know before any papers were signed. Especially if, as in my other post, they're not actually going to give the gift cards. Then they can offer the best companies' cards.

One card each year for 5 years, unless you're in the lowest price home that's eligible then it's 100 a year for 3 years.

But it's true, like in the hamburger skit. "I'll give you so much money now for a hamburger tomorrow", or how does that saying go? Whatever it is, a lot of people will bite.
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On Friday, August 29, 2014 11:14:51 PM UTC-4, micky wrote:

Yes, I agree, it could provide for liquidated damages.

My point is that if these are great, really useful gift certificates, I find it odd that in all their sales puffery on the website they don't say or give examples of what they actually are.

IDK, it would be interesting to see how many people sign up. If I knew what exactly the cards were, for example that I was getting VISA gift cards, and I could pick the realty firm today so I know who I'm going to wind up with, I would seriously consider the deal and probably do it.
If it's I get some gift cards, TBD in the future, I get to pick from whatever realty firms they have someday in the future, which might be just one that I don't want, then forget it.
From a business model, something also doesn't smell right. This is a business that sucks up capital. The company apparently has to shell out dollars for all those gift certificates upfront. And apparently they collect a referal fee only when the house is sold, which could be 5, 15 or 50 years later. What kind of business model is that? That's why I'll bet the gift certificates aren't something like a VISA, but something they are getting deeply discounted and likely of questionable value to me. I guess it's also possible that the realty firms involved are helping pay the cost of the certificates, but I think that would be a hard sell.
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I did. It said they were licenced in a bunch of states and adding more.

they could easily create a contract, tied to the land, that is recordable against the land.
Why don't you just go ask them the question and then you'll

no, you ask. I already know how it can be done and recorded.
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I bet they are writing their contract so they get the commission, and then they will share it. So, arguably, their damages are 6% of the sales price. I am not sure that would hold up, given that they need to share the commission, but that must be the approach they are taking. Maybe they are adding a percent or two on the top, or maybe they will take a percent from the real brokers. That could be a few thou per house.

yep. Who needs a white elephant?

yep. or what commissions might be with or without this "arrangement".

if they get big and turn into a paper mill, they could persue smaller cases efficiently. And maybe they will gum up the works on the sale of a house so it will be settled through escrow "willingly" by the seller.
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On Saturday, August 30, 2014 1:07:50 AM UTC-4, Pico Rico wrote:

Ridiculous. My local Century 21 is going to agree to that? They say I get to pick the local company and they list major names like Centrury 21, Coldwell banker. Typical sale, my realty firm gets 3%. And that is for all the work they do in completing the sale. Some referal company has no case for 6%, 3%. At most they have a case for a tiny piece of that, ie whatever their referal fee that they get from realtors actually is. They aren't selling my house, Century 21 is.

Well, duh! Not sure that it wouldn't hold up? Of course it wouldn't hold up. Their damages are what their referal fee would have been, not the commission someone else would have earned and kept.
Maybe they are

In the question and answers on the website, it specifically says they are not adding anything on top of the normal real estate commission.

Actually, I take that back. I see on the website where they do show examples of great gift certificates, eg VISA, Macys, Target, Walmart, Amazon, etc. If that is what you really get, those are fine by me.

They address that in the Q/A, standard commission

Yeah, with a vivid imagination you can come up with all kinds of nightmare scenarios.
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Here is their patent application 20140188660.
http://appft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r '&f=G&lP&co1=AND&d=PG01&s1=%22real+estate%22&s2=commission&OS=%22real+estate%22+AND+commission&RS=%22real+estate%22+AND+commission
It looks like they are struggling in the patent office: this was originally filed in 2006, and they have had to file a couple continuations. That is a long time, even considering the slow pace of the patent office.
It does say the contract may be recorded.
It does say they will get a cooperating brokers fee of 1% or 2%. Not a paltry "referral fee" as suggest by others.
"A further qualification in accordance with an aspect of the present invention is to engage with real estate brokers who commit in advance to a preset sharing of commission with the party who secured the commitment of the future listing by the homeowner. For instance such a qualification may be that the party will be paid a percentage of each sell-side commission ranging from 1.5%-1.8% of each home's value."
"In accordance with another aspect of the present invention, the written agreement with Cooperating Brokers may include entitlement to a second referral fee from the Cooperating Broker to whom the party provided the homeowner for a listing if the referred property seller uses a Cooperating Broker for the concurrent purchase of a new home. "
It does say they may be paid through escrow.
It does say "Failure to cooperate will generate the filing of Lis Pendens prior to sale."
It also says they may use this as a hook to get referral fees from other related businesses:
"In addition, as the party will likely be the first in the country (other than the homeowners) to know when the homeowners are about to sell, the party will have many opportunities to reap additional rewards through repeat business and additional referral fees from various vendors for services such as: movers, title insurance, homeowners insurance, lawn care, telecommunications services, refuse removal, storage space, home repair, energy and more. "
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On Saturday, August 30, 2014 10:02:29 AM UTC-4, Pico Rico wrote:

Hat's off to you for finding that. Who would ever think they would try to pattent this thing. The patent does give a much better understanding of how the whole thing works.

If they can patent this, it will be remarkable.

Yes, I saw that too. But they only say that is an option and they also don't refer to it again in the various descriptions of the process flow. We don't know what the actual contract they are using says, because you can't see it. Which for me is another red flag. The contract should be on the website.

They can say anything they want. But I'll bet they aren't collecting it. The realty firm is collecting 3% typically, which they acknowledge in the patent application. I don't see many realty firms giving up 1/3 of their commission. Also, buried in there, they seem to be saying that it actually costs the realty firm nothing, because it comes out of the individual agents share. That would be something. Right now the firm collects 3%, the agent is getting maybe 1/2 of that, 1.5% and the company seems to think that the agent should hand over 1 to 2%? Does not compute in my world. I'd bet that what they are actually collecting on referals is a lot less.
They also say that the value of the gift cards should be less than 1% of the property value. That also doesn't compute with what they have on the website. For example, on the web they say that for a $300 - 499K house, you get $1000. That's 2 to 3.3%. Also there are curious discontinuitues, ie if the house is $500K - 999K, you get $2,000. What's up with that? I would think that would make all kinds of trouble, people arguing over whether the house is really worth 499 or 502, etc.

That's mostly a nit, not many home buyers are going to be using the same broker to sell their current home and buy a new one, but it's not unreasonable.

Yes they can do that, to collect the referral fee they are due. My main point was there were some folks in this thread suggesting that it was a "scam", they were never going to give you the gift certificates and that they were still going to come pursue you in court.

Yes, that's a new angle no one here thought of. Not unreasonable though.
I would hope that there would be agreement that while people may have various issues with the whole concept, from all that is evident at this point, it is not a "scam".
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Thanks.

I would love to read the file history.

patents are always written with lots of "may" and "if desired". They want as broad coverage as possible. Anybody doing this and NOT recording the contract or an abstract of contract would be a fool.

I am not sure it is a "red flag" to me, but I woud sure want to read the contract and its fine print very early in the process, not AFTER they have all my information, have tried to evaluate my house, etc. etc. But if I were them, I would play these cards close to my vest. Hmm, maybe that IS a "red flag"!

If their contract has 1% built in, there will be major issues. And telling a broker that it is all coming from his agent's cut means agents will find other properties to work on.
One thing to note is that commissions are negotiable. There is a lot less room for a home owner to negotiate commissions downward when there is already a cooperating broker commission in place.

Have a bit more coffee. :) that is 0.33% to 0.2%
Also there are curious

not only discontinuites, but very wide bands. My $999k house gets me the same gift cards as a $500k house? No way!

they would be fools not to write this in.

I always assumed they would give the gift cards. They have a sweet deal if they can pull it off, so why blow it by not providing the gift cards (which they receive at a discount, most likely).

I thought that was smart, too. And the homeowner is not locked in beforehand.

I probably used "scam" in the wrong sense. It seems like such a ridiculous thing for a homeowner to sign up for, particularly YEARS in advance. But outright fraud is unlikely.
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On Saturday, August 30, 2014 11:53:34 AM UTC-4, Pico Rico wrote:

I don't know that they would necessarily be fools. They outlined an extensive system of how to monitor to make sure people are complying. If they have experience of substantial compliance without recording it, they could choose not to. And they also know that if they go around putting liens on peoples homes from day one, that is likely to quickly spread around, people are going to be pissed off, not refer them to friends, etc. It's also curios that if it's an essential part of the process, they only devote one sentence to the *possibility*, while devoting a lot to all the other steps. They are just learning how this will all work themselves. If compliance is a problem, they certainly could do the lien thing.

+1
Another question is where is all the money for this coming from? This seems to me the worst business model. It's like a business where you're rapidly escalating inventory, piling it ever highr, while sales are years in the future. Reading that patent I thought I might see a section where they talk about bundling the pending referals, then using them for financial collateral or trading them. Can we patent that?

Yes, I agree with all that. But around here, it would be a lot easier for a homeowner to get $1000 in gift certificates than to get a broker to cut the commission. Funny thing that. The broker has to give up even more when you have the middleman in the equation.

You're right, my bad!


I agree. I had some question as to what the gift cards actually were, but I finally saw that they did have examples on the website. Assuming that's representative of what you get, then there are good cards.

Based on what we know so far, the worst part that I see is that you don;t know who the brokers will be that participate 5 years from now. It's possible the national franchise types bail on the thing, then you're left with IDK what. Worse case, theoretically, I guess they could have some one man shop, you never heard of, that only does their referals. That wouldn't be good.
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recording a contract or memorandum of contract is not a lien, and not anywhere near as frightening. And the homeowner might not be aware it has been done.
I stand by my statement: they would be fools not to record.

they are trying to patent that, I think. I am not going to go back and read the claims. I bet they are hoping they will get a significant number of contracted houses to be put on the market sooner, rather than later. maybe the people that will fall for this are pretty broke anyway, and will have to sell their homes to get out the equity.

so, they are providing the homeowners with a valuable service: essentially a cut of the commission that they can not likely negotiate on their own. :)

was it the inadequate coffee?

yep. And they might CAUSE that result by insisting on high cooperating broker commissions, resulting in many of the brokers to fall off their list.
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On 8/22/2014 12:35 AM, micky wrote:

Never give up control of something you own. Run away as fast as you can.
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On 08/30/2014 02:47 PM, Bob wrote:

I wouldn't let someone control MY computer. If they think something's wrong, they can tell me about it.
--
Mark Lloyd
http://notstupid.us
  Click to see the full signature.
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'Bob[_66_ Wrote: > ;3278158']

That's exactly why I don't like these "reverse mortgages" you hear advertised on TV. Basically, you sell half of your house back to the reverse mortgage company for whatever the price is NOW. Then 20 years from now, when you pass away, your estate only collects half of what the house sells for. The reverse mortgage company you deal with pockets the other half.
When I was a kid, people built houses for $25,000 dollars. Those same houses are now selling for 10 to 15 times as much.
People buy houses now presuming they're going to increase in value, and it's exactly that presumtion that causes prices to go up on houses. Each buyer figures he'll get more when he sells it than he paid, and so the prices continue to rise with every flip. But, that situation is unsustainable. Once the baby boomers that were born after WWII start going into the nursing homes and cemetaries, their homes are going to go on the market, and there will be a glut of houses flooding the market. Then, prices will start falling, and all of the people that bought houses as investment will try to sell them for what they can get, and that will cause the situation to get even worse.
If people considered houses to be a commodity, which is what they are, which is something you buy as you need it, like food, clothing and fuel, there wouldn't be the steady increase in housing costs that attracts investors, and there wouldn't be the volatility in housing prices that we see.
Back in 2008, there were thousands of people that bought houses on a "teaser" zero percent mortgage. The mortgage would stay at 0 percent for three years, and then jump up to 6 percent. Lots of people figured "Great, I'll just keep this house and let it appreciate in value for three years, and then sell it." It was those same people that are now deeply in debt because their mortgage went upside down. The value of their house fell below what they bought it for, and now they owe the banks money on a house that's been foreclosed on them. Terrible investment.
--
nestork


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On Saturday, August 30, 2014 6:40:45 PM UTC-4, nestork wrote:

IDK about that. The price of a hamburger, gas, cars, and the vast majority of all items we buy have gone up 10X too. They didn't go up because people wished them higher. It's mostly inflation, ie the dollar being worth less.

I thought we just had the real estate debacle of the century in 2008. You mean it's coming again?

The fact that everything it takes to build a house has gone up isn't a primary driving factor? That in many urban areas, the supply of land has gone down? If housing prices are high just because of speculation, then you should be able to build houses and make a killing, because the margin should be huge. Seems like that isn't happening.
I agree there is some truth to what you say. The debacle in 2008 was due to a bubble and that bubble is driven to a great extent by govt policy. If you work in a job, you can get taxed as high as 39% federal and then state on top. If you speculate with the house you live in, it's tax free for most people. And if you speculate on other houses, it's still only taxed at 15%.

I guess that's what bankruptcy is for.
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That's not exactly how it works. It is a rising debt loan, the interest continues to accrue, and this increase compounds over time. You may end up with more or less than 50% of the proceeds from the sale.
I think that before a reverse mortgage is entered into, serious consideration should be given to downsizing: selling the house, buying a smaller house or condo, and putting the rest of the proceeds away for careful budgeting.
And your remaining lifespan has a lot to do with how much sense it might make.
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On 8/30/2014 7:46 PM, Pico Rico wrote:

I know a couple that did the reverse mortgage in their mid 70's. While not what I'd call a great financial deal, it worked for them Small house long paid for needed some expensive septic work, their car died, etc. Not to mention some medical expenses. The RM allowed them to take care of the sudden big expenses and they still get by normal expenses on their monthly SS checks.
IMO, it is something to be used as a last ditch way of surviving, not a way to take a long vacation or buy a Lamborghini. You don't have to be wealthy to do a little basic fiscal planning and get your house paid off before retiring, no credit card debt, etc. If you can't do that, chances are a RM is only a temporary aid.
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On Sun, 31 Aug 2014 00:40:45 +0200, nestork

I see your point, but what if your income from pension etc. is inadequate to meet your needs, and the only asset you haven't sold is your house and your car, and you don't want to move.
I know, at least I'm told, it's expensive compared to what one gets just selling his house, And I expect they give you a monthly check which never goes up while inflation raises other prices.
But what is better for someone who doesn't want to move?.
The only alternative I can see is to try to get a regular mortgage, probably hard to do when your income is too low for you to live on. But if you could get the mortgage, say 100,000, and you put 50,000 away to make mortgage payments with, you'd only have half the money also. Then every month you'd make the payment and the amount you owed would go down, and if you lived 15, or 20 or 30 years longer (depending on the term of the mortgage) you'd own the house again completely. And you'd die with a 120,000 asset, while living short of money all those years.
With a reverse mortgage, you die with nothing, because yo've spent it all, but you don't have to worry about running out of money as long as you're living, because the mortgagee (plus your pension and social security) pays you as long as you live.
I really want you're counter arguments.
I think I have enough money to last me for the rest of my life if I spend down the principal too, but the problem is I don't know how long I'll live.
I don't want to run out of money early-- that would be horrible -- , and I don't want to live a scrimping life and then leave too much to my niece, nephew, and charities.
People can have this problem at many levels of wealth. Not just poor. Wealthier people just have different views as to how low a level of their spending is oppressive. People with no children, or children who already have, say , as much money as their parent does, don't want to leave a lot of money behind,
Micky
Maybe tomorrow I can reply to the rest of your post.

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On Sunday, August 31, 2014 1:13:02 AM UTC-4, micky wrote:

Then it depends on the extent of the inadequacy, how much equity you have in the house, and how long you expect to live and actually will live.

Wouldn't it be better to find out what they actually are, instead of speculating? They can be lump sum or more typically they are line of credit type, where you can draw whatever you want.

You'd also be actually paying interest on $100,000 from day one, instead of accruing interest on maybe $1000 in the beginning of the reverse mortgage. Which would you rather pay interest on?
Then

If you could pay for a new mortgage, you probably wouldn't need the new mortgage. For many of these people, the point is to not die with a $120,000 asset.

You typically don't die with nothing, just substantially less. Whatever equity is left in the house is still yours. The mortgage apparently only continues to pay if that's the type you selected. A one time, lump sum one won;t.

Seems like that's the reason some folks choose a reverse mortgage.
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