Archive for September, 2010
How To Keep The Pros From Stealing Your Deals Already Under Contract
It has been increasingly common in recent years for pro investors to steal deals that are already under contract by another investor. This is probably not a new trend but some disturbing methods have been employed by some pros in the past few years.
Stealing a deal that’s under contract simply means that the aggressor contacts the seller after a contract has been signed and offers more money than the contract already in place.
Often the “news” buyer will get a deed signed and coach the seller on what to say to his original buyer to “cancel” the contract. Sometimes a small amount of money does the job but most times the higher offer is 5000 which is definitely enough for a seller to go with the new buyer.
The new buyer will profess to know the legalities of the transaction and reassure the seller he is doing what is in his best interest the former buyer didn’t offer enough and the cancellation is legal.
One trick is to tell the seller that the original buyer didn’t give a good faith deposit of 1 or more so the contract is illegal anyway. This is absolutely untrue and the new buyer is committing fraud but his chances of prosecution are less than the seller being sued for “breach of contract” to honor the original contract.
So to take simple precautions to protect yourself here is what to do:
1. Use a State Standard purchase and sale contact instead of one given by a guru at a seminar as part of a bonus package. If there is a dispute you can’t sue the guru because he disclosed to you that you should seek legal advice before using your “free” contract. Never under any circumstances should you use stationary store forms. Do it right and you life will be much easier if something goes wrong like the legality of the contract being challenged.
2. Explain to the seller that your contract is the same as a deed in the eyes of the courts so the seller cannot sign another contract or a deed with anyone else or he will have committed fraud by selling his house twice. Practice saying this so it doesn’t sound like the threat it actually is.
3. Learn to explain about pro “scoundrels” who may be coming after you and the consequences to the seller and how the pro doesn’t care and that the seller should ask his attorney before signing any other contract.
4. File a “Memorandum of Contract” in the public records at the county clerk’s office. This document does not have to be signed by the seller but we tell the seller we will be filing the “Standard Memorandum” the next day. This document simply states that you as the buyer have entered into a legal and binding contract to purchase the property at suchandsuch an address. There is no sale price or terms of the contract that are made public.
If the clerk says the document can not be recorded ask for a Supervisor and then a County Commissioner because the clerk can not be allowed to determine what a legal document is. If you still have a problem let your attorney get involved to find out what it will take to have it recorded. The point of recording this document is to alert the title company for the next buyer that there is an open contract that supersedes the newer contract and this confusion “clouds” the title..
5. Finally as a last or first resort have your attorney send a certified notice to both the seller and the new buyer about the legalities of the contract and the potential liability to both the seller and the new buyer. This worked in every case where we have seen this “theft” attempted even where a new deed was recorded by the new buyer!
In summary you have discovered five powerful ways to stop or overturn an unscrupulous buyer who attempts to circumvent your contract with a seller.
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How To Get More Than The Asking Price For Your Property
How to Get More Than The Asking Price For Your Property
When the number of real estate buyers is greater than the number of available homes real estate property values usually go up. It’s an ideal environment for sellers because buyers are forced to compete and properties usually sell quickly often for even more than the asking price!
But as more properties go on the market buyer competition subsides. Prices level out and eventually drop. Most assume this is a bad time to sell a home. But in fact it can be the best time for educated sellers to tap into a littleknown market using the creative power of seller financing.
A seller’s best strategy
With the help of a professional Note Finder a seller can open the doors to buyers normally locked out by traditional financing. A socalled “down market” is the ideal time for resourceful sellers to target the millions of people who can’t get funding. These buyers are often willing to pay more in order to buy a home without traditional financing.
The seller sets the price determines and accepts a down payment and then finances the remaining balance. The buyer gets a home without having to fullyqualify for a traditional loan. It’s a favorable situation for both seller and buyer. And while this “outside of the box” form of financing can seem a bit daunting it can happen very smoothly and easily with the knowledge experience and guidance of a professional Note Finder like me.
Here is an example: If the seller wants 100000 for the property and the buyer gives the seller 10000 cash the seller will finance the balance of 90000. The buyer and seller would then agree to the terms such as the interest rate and the total term and use an attorney to create the mortgage document and close the deal. From that point on the buyer sends the seller monthly payments for the house he has just purchased.
A great opportunity for sellers
The whole process can really be that simple. But there are some substantial differences between a sellerfinanced deal and one that relies on traditional bank funding.
First of all the seller will not receive a large onetime payment at the time of the sale. In fact she will only receive the down payment. Since many home sellers are also looking to buy another property the seller may need to get enough at closing to pay her down payment. Without this payment the seller’s hands could be tied when she looks to purchase another house. There is a common solution to this issue that offers the potential for even MORE money to the seller!
Note Finders specialize in helping new mortgage holders sell newlycreated notes for a lump sum of cash. In the end seller financing could be used to sell property at a higher price than expected and the sellers could get the money they need. Essentially sellers can “have their cake and eat it too.
In summary
Step 1: Use the sellerfinance option to find unique customers willing to purchase at a higher price than would have been possible otherwise.
Step 2: Decide on the terms of the deal and create the note to complete the real estate transaction quickly.
Step 3: If the property seller needs immediate cash contact me to help locate a buyer for the new mortgage note. The person who buys the future payments from the seller will likely provide the funding to act as a down payment on a new house and every party involved in the deal comes out smiling.
Equity attracts Note Buyers
One key to liquidating a sellerfinanced mortgage is found in the property’s equity. The equity in the private note essentially acts as a “safety net” for the Note Buyer in case there is a problem collecting the payments. So note buyers find deals with strong equity more attractive.
Remember a Note Buyer is purchasing monthly payments secured by property. If the property is worth more than the remaining balance of the note the buyer could seize the extra value in a foreclosure situation by reselling the property. This allows the new Note Holder to recoup his initial outlay and receive the additional equity.
Most Note Buyers will do a quick equity check before looking at any other information. By first determining the note’s LoanToValue LTV buyers can decide whether to dig deeper or move on. The LTV is calculated by comparing the balance of all of the loans to the value of the property.
Two equity examples
To illustrate let’s consider two houses each valued at 100000. One home has loans of 95000 and the second home has loans of 70000.
The first home has an LTV of 95 percent 95k/100k = 95 indicating only 5 percent equity 100 95 = 5.
The second home has an LTV of 70 percent 70k/100k = 70 showing 30 percent equity in the property 100 70 = 30.
Clearly most buyers will not be as interested in the note on the first home because there is virtually no protective equity. In this situation the buyer of the note would want to discount the note purchase a fair amount to make up for the fact that there is little equity.
The second note with 70 percent LTV will require less discounting and the Note Holder will receive a larger portion of their note as compared to the note balance. This is because the Note Buyer stands to benefit from holding a substantial amount of equity in the property 30 percent if the Payor were to default on their obligation.
How Does Down Payment Affect Note Value?
For many Note Buyers the amount of the initial down payment at the time of sale can make or break a note deal. The down payment is applied directly toward principal creating instant equity in the property. Accordingly most Note Buyers want to confirm the amount of the down payment up front.
With no down payment it would take many years to build a meaningful amount of equity in the property. Take a look at the following example that illustrates this point.
House 1: valued at 100000 with a down payment of 20000 made at the time of sale.
House 2: also valued at 100000 but with zero down payment made at the time of sale.
The note on House 1 has 20000 in equity. No down payment made on House 2 means that there is no equity in the property before the first monthly payment is made.
Consider how much “upfront” money there is
Assuming that House 2 was sold for 100000 with a 30year note amortized at 8 percent interest it could take years to build 20000 in equity.
Because the Note Holder’s purchase is protected by the equity in the property the amount of the down payment is an important consideration. With the zero down note on House 2 the Note Buyer would need to apply a larger discount in order to make it a fair deal for him. On the other hand while the note on House 1 is secured by a 20000 down payment and has substantial protective equity even before the first monthly payment it would cost the Note Buyer a lot more.
Almost any note deal can be a good deal… for everyone involved
A strong down payment lends a side benefit related to having protective equity. When a large down payment is made at the time of sale that person is more likely to be committed to owning the house and keeping up with the note payments. Sellerfinanced deals with zero down payments are very attractive to firsttime home buyers or others without a large nest egg saved but it can be riskier for the Note Buyer. So the educated Note Buyers can offset this risk by increasing the discount on low or zero down payment notes.
Remember even a note created without a down payment can be a sound purchase. The key is to look at each situation individually and to establish a fair price based on the specific note.
Even when liquidating private mortgages at a discount Note Sellers still get to receive a lump sum of cash immediately instead of waiting years decades even before the debt owed to them is paid.
The bottom line is that a qualified professional Note Finder can bring a benefit to both parties the Note Holder and the buyer. In the end when a deal is struck everyone wins and ends up in a stronger financial position.
How Creative Home Sellers Have The Advantage
Creative home sellers offering seller financing can often sell their houses faster in a slow market often at a higher price! In the process these sellers act as the “bank” and begin to receive monthly payments instead of a lump sum of cash.
So what happens when those offering seller financing need an immediate lump sum of cash instead of scheduled future payments? Locating a buyer for the newlycreated cash flow could be the answer.
To get the money they need sellers that offer financing could sell the future mortgage payments they are set to receive.
How sellers get quick cash for their notes
This process can be streamlined when the savvy home seller lines up a buyer for the payment stream before the note is even created. This way the property seller could have a buyer for the payment stream ready to make the purchase as soon as the new private mortgage is created. Once the closing and the note sale are complete the seller will have the money she needs for her next home.
Finding the buyer for the sellerfinanced mortgage is the tricky part. Buyers won’t line up at the door. In fact they don’t often browse the newspaper or the web looking for people with notes to sell. This is where the professional Note finder comes in!
Note Finders are real estate professionals that specialize in connecting the people who create notes with those who buy them.
While I do not assist with the creation of a note I can provide general recommendations about the types of terms that are attractive to Note Buyers. With my knowledge experience and connections within the secondary finance industry I can save home sellers a lot of time and effort when liquidating a note. Most importantly I can help locate a buyer for your note and make the process smooth and easy.
When working with a property seller who needs a lump sum of cash immediately after selling real estate contacting a finder like me early in the process of creating the real estate note makes sense.
By involving a Note finder before a note is created the property seller can receive valuable input about the payment characteristics that Note Buyers prefer.
And for any completed sellerfinanced deals a qualified Note finder can help Note Holders obtain a large amount of cash in exchange for future payments.
Greetings
I specialize in developing creative cash solutions; namely I help note holders receive a lump sum of money in exchange for their secured real estate notes. I can also show home owners how to sell their property with seller finance.
Once a real estate note is created it can be sold for cash shortly after the close of escrow. Existing notes can also be sold to achieve cash liquidity.
Additionally if you are looking to purchase a paper asset for your own portfolio I have the resources to show you many viable opportunities.
If you are an attorney CPA real estate agent mortgage broker title agent or escrow officer I can assist you in helping your clients realize quick sales of hardtosell properties through the use of private financing.
If you would like to learn more about the creation and/or sale of secured private notes please contact me directly.
Sydney Griecci
sydneysmilingdogenterprises.com
Blog http://www.smilingdog.net
About the writer:nbsp;nbsp;I help real estate buyers and seller with creative financing with seller financed mortgage notes.
Many of your clients have trust deeds mortgages judgments structured settlements and other forms of IOUs. And 9 times out of 10 they wish they had the cash and not the income from these IOUs.
How To Choose Your Charleston South Carolina Condo
Many home buyers look for condos because of their low maintenance. If youre looking for a second home condos are a great way to ensure that youll be able to enjoy your stay without the headache of constant upkeep. Condo owners enjoy little to no maintenance living since they are only responsible for keeping up the inside of their condo and their porch or stoop if they have one. Maintenance of the landscaping exterior of the building parking areas and amenities is covered under the monthly condo regime fee. Insurance for the building is usually also included in this fee so condo owners generally only have to insure their personal belongings which is a low yearly fee of about 150.
When it comes to choosing a condo in Charleston there are 3 points that you should consider for resale value down the road.
1 Location is a major factor that affects condos more than other real estate such as houses. Buyers generally want a good location and theyre willing to give up a larger home to get a smaller place that has a good proximity to everything. In Charleston the best areas to consider are James Island Mt. Pleasant and West Ashley. Although you can certainly find condos in areas further out such as Summerville most of the buyers in those markets are looking for houses. So be sure to buy a condo thats in a desirable location. This is one of the most important factors to consider.
2 Regime fees in Charleston can vary drastically depending on what they include. Most regimes range from about 200 to 500 per month which can really affect the affordability of your new home! So its important to know what a communitys regime fee is and what it includes before you go look at condos for sale in it.
Regime fees are usually correlated with the newness and niceness of the overall neighborhood and amenities. So if youre looking for a low regime fee and you can go without all the bells and whistles such as a pool club house workout facility grilling area etc. be sure to talk with your real estate agent about options for lower monthly fees. He or she should be able to recommend neighborhoods that fit your monthly budget. For example Meridian Place on James Island has some of the lowest regime fees in the area. Although theyre technically townhouses theyre often listed as condos because of their general setup. Their fees are 60 per month which includes lawn maintenance and irrigation termite bond exterior maintenance of the home and upkeep of the tennis court and walking trails. Owners get their own insurance policy which means they get to shop around and find the best price.
3 Age of the condo is not something that most people think about when buying. However it can cause a lot of problems for some condo owners when they go to sell their home years later. Many condo communities that were built in the 70s or 80s are now needing renovations such as new roofs siding etc. and are undergoing assessments to pay for these updates. Depending on how the neighborhoods regime is set up this can cost homeowners thousands of dollars. Regime companies who looked to the future set up an account so that over time a portion of the fees go to pay for such costs when they come up.
However youll find that many condo communities are now asking their home owners to pay quite a bit for renovations and other problems that come up. So be sure to ask how the regime is set up. You should be able to get a break down in percentages of how the company spends the regime fees they collect. This is usually called a prorating statement. Look at this statement before you buy to make sure the company is setting aside money for the future. That way you see how much theyre spending today and how much theyre saving for future maintenance. This point applies especially to older condos but its important to know your regime companys setup for newer condos too.
About the writer: You can search all Charleston SC condos for sale on Lees website. You can also search by areas such as Mt. Pleasant SC condos and James Island SC condos!