can real property be sold as a product?

Question

I'm buying real estate from builders at a discount,selling it to individualswho are members of my "club" with private pre-arranged financing at full value with a 30 yr. mort., interest only for the first two yr.s. The difference in value is used to escrow the two yrs. interest and living costs for the two yr. period. Is this legal?

go to patricksmith.5gbfree.com and see the site. We are slated to begin soon.

The site I sent you to was a prototype of the finished product. It is a bit lacking in details. I'm doing the blog thing to prove something to a skeptic. But we have covered all the bases. The program is the result of 5 years of research and development. Included in the founding owners is a real estate broker, 2 real estate att. Wehave an investment network already with a combined worth of nearly 1 billion. And yes we do purchase properties in bulk to supply the needs of our network members. We are a network marketing company. You can look for us in Florida sometime in early summer. We have some builders already. We also have our own homeowners insurence and in talks with local municipalities concerning property taxes and impact fees. We have set up with several schools and univer. and one major labor management company. We even have lobbists at the state capital. Got it covered.

Cash out? Homes are purchased at 30% below market. That works out to be enough to cover.
The individuals we will be working with can't do it on their own and we intend to potect our interests so they will sign a contract to work with us. We did a market test survey and found no problem finding people who would.

Answer 1

If you have everything covered it seems you are trying to advertise here rather than ask a question. Can real property be sold as a product? Yes, everything is a product in marketing. Is real property a unique product? Not so much anymore. From manufactured homes to McMansions everyone is looking for a way to standardize the housing industry. I guess I do not understand two things about your plan. 1. How are you going to get cash out to pay the mortgage, taxes and insurance for two years without overfinancing? and 2. who is going to agree to deposit their income in a bank account that you have access to?

Good luck, sounds like you are trying to think out of the box.

Answer 2

You cannot sell real estate as a product, as that would mean it was personal property. States have enacted laws that designate separately as REAL estate.

About the only exception to that would be manufactured housing. Some states regard that as personal property.

I do not get your plan either. Don't see where the money comes from. No lending institution is going to loan to someone that has bad credit, and if you act as a straw purchaser, they can call the loan as you have resold the property.

If they would loan, usually the only loan at the market value. Some loan brokers can get up to 125% of the value of the property in CERTAIN markets, and if the debtor has a good credit rating.

Since you are selling what belongs to you, you won't need a real estate agent, but your "club" has problems. It appears to me to be a pyramid scheme.

If it isn't, you won't be able to do the deal with your target customers, as they would have to have at least $100,000 going in or they would not qualify as an educated investor. You would then have to have a prospectus. You might have to do that any way.

Answer 3

Sure. It's called "flipping."

Selling a product entails buying your inventory at wholesale prices, and marketing it to an end user at retail. To do this, you must actually "own" the product. If you want to sell other people's homes, you need a license, and you are providing a "service", not a "product."

I just read your update and checked out your site. No, it doesn't look legal... unless you are some billionaire who is actually BUYING all these houses. But if that was the case, I'd think you'd have an attorney for each state you're planning on working in.

Answer 4

MOST of your proposal seems legal. however, it is the last part that worries me. me thinketh that it is in your best interest, as well as the company's, to hire an attorney that is very, very conversant with banking laws. you also need a top notch real estate attorney.

another thing worries me: you say that you have a "club." who is in this club? what does it do? your question to us on the forum needs a lot of clarification to determine if what you are doing could get you into SO MUCH TROUBLE WITH THE LAW THAT WOULD WILL FOREVER BE IN DEBT TO DEFENSE ATTORNEYS--maybe criminal defense lawyers--for breaking mortgage banking laws. you see, a buyer could get wise to your little club, then whamo!, it is lawsuit time!!!

stop. find professionals. pay them. get solid advice. do not lose your reputation for a quick payout. you will forever regret that if you do it.

EDIT: this scheme sounds like what i learned AGES ago about "churing" real estate. ask the pros about that one too.

Answer 5

As in real estate? Absolutely, although I'm pretty sure this isn't the way you intended to word the question...

Answer 6

You should give an example or further explain what you mean, because your question isn't clear.