After reveiwing a property I called the RE agent to make an offer. I had a list of questions, but never got past the first one. The seller seemed pretty adament about offering owner financing, so I wanted to know why. This was my first question. When I asked, the agent was honest and told me that it was because the seller had lied on her income tax returns, saying the property had brought in less income than it actually had. Consequently, it would be hard to get bank financing on the property. I was shocked to hear this and told the agent I would have to mull that one over and get back to him. Since then, I’m not sure if I should call the IRS and have them audit her, just walk away, make an offer on a great deal, etc. My gut instinct is that if she will lie to the IRS, she’ll lie to me and anyone else with whom she has financial dealings. Consequently, that is my current sway; I’m just kind of p**d off, because when someone tries to play outside the rules, it messes up the whole system. Is this a common practice out there that I should be prepared for as I get more involved in commercial real estate??? Thanks for any advice!!!
Howdy Mike:
All sellers are liars. This is what I learned in the early 80’s. Today there is more forced disclosure and liability for sellers lying. It still happens. Also a lot of times if you do not ask they will not volunteer information that is for sure. A statement like the tenant pays on time can mean that they pay no later than 30 days late.
I had a partner once that was very honest except to the IRS and other govt branches and to big corporations too. He would get over on them all if he could. I was glad to get away from him.
Whatever you do be careful of slander. Also be careful of someone like my ex partner.
Thanks Ted. I see what you mean about them lying. I think they think of it as spin control…
Mike,
We have a saying here in Dallas.
“Buyers are liars, and sellers are thieves”. Words to live by.
Whew,
Talk about being tainted.
Unless the property is an unbelievable deal, the hastle you will have to go through will not be worth the aggrivation.
I will say, though, Don’t let these sourpusses get to you.
I’ve been in the lending game for 15 years and have found far more honest people than dishonest.
I find that dishonest people generally end up dealing with other dishonest people because they are both trying to beat the system.
I own a Christian Lending Company and run my life that way. For some reason, the people I end up dealing with seem to have the same agenda. I just seem to keep bumping into good people.
While it’s true that there are unscrupulous sellers and lying buyers, it has been my experience of the years that we only notice the crooks because they are the exception and not the rule.
I wish you well…
Jeff
Wow, Jeff!!! Thanks!!! That’s just what I needed to hear this morning!!! I am begining to build an investment company based on Christian principles. It has been my privelege to come in contact with some of the finest people I have ever met since beginning this venture, so this one caught me off guard. I’ll just keep pressing on - and playing by the rules!!! Thanks again!!!
My Pleasure.
Wish you the best.
Go get 'em. 
Jeff
Mike, Jeff,
Great to hear there are other Christians in the business. If you guys want to talk some deals, email me. Mike, have any new deals?
Jeff, do you give referral fees on loans?
David
Hi David,
Yes we do give very generous referral fees.
Yes, it is absolutely legal in commercial loans to give referral commissions.
You can email me or call. I generally take calls in my office between 10AM - 5PM.
Life is great! Use it!
Jeff
Mike,
your offer should be based on the income the property produces. the income is told by the tax return. it’s not your problem if he lied on his tax return, (and no, don’t report him, Karma will come back and get you - don’t be the kid in class that tells on the other kids) base your offer off what he reported to the irs - which means you buy the property way cheaper or not at all. He’ll lose far more on the sale than he gained by cheating the taxes, and you end up with a better deal. When he tries to argue that the property produces more income and is worth more money, tell him to show it to you on his tax return and you’ll change your figures 8).
I’ve actually decided to have nothing to do with the seller. I want to build an untarnished reputation and to do so, I’ll pass on a deal or two here and there. I’ve already found several to replace it!!!
Mike_hearne,
Way to go. Good decision.
Buckeyes,
Karma has nothing to do with it. Unless you choose to pray to hindu idols.
I’m not sure about whether or not to report them, unless you have not ever lied or done anything like that, however, the income is dependent upon the returns.
Jeff
Thanks, Jeff. I’ve taken the whole “he who has no sin throw the first stone” stand on the matter of reporting her to the IRS. I DEFINITELY once walked in ignorance!!! I read forum entries all the time and wonder how people think they can be a true success without striving for absolute integrity in every part of life… I may never get there, but I make it my aim!!! Thanks to all of you who replied and God bless!!!
hindu gods, christian god, whatever makes you happy. point being, mike is making the right decision on not causing anyone a problem who has done nothing wrong to him.
“income is dependent on the returns” was pretty much my point. along with that, then, the offer is dependent upon the income. see the cycle?
mike, best of luck to you. you’re right, there is never a shortage of profitable deals you can feel good about.