The cost for closing a deal varies with the terms of the deal and with the state, but generally it is around 2% to 4% of the price of the house.  These fees are for all the documents that need to be prepared, recorded and researched to make sure that the title to the property is free and clear of any liens and that the current owner has the right to sell the property. Your realtor should be able to give you a good estimate of the closing fees, but as with any estimate, make sure you can afford more than this number.

If you are bank financing the property, request a good faith estimate of the closing costs from the bank.  The bank’s initial good faith estimates tend to be higher than the real cost in order to ensure that you have the funds to cover the closing, but don’t count on this always being true.  Request a copy of the HUD-1 settlement statement from the closing attorney or the title company for you and your realtor to review at least 24hrs in advance of the closing to make sure there are no mistakes.  Remember title company employee’s issue many statements in a day, mistakes do happen, you want to be sure you aren’t overpaying.

The HUD-1 settlement statement provides a standardized accounting of all fees, expenses and distributions of funds made during the closing of the transaction. This statement discloses where every penny has been disturbed.  If the buyer is taking out a mortgage, the fees for that loan will show up on the buyer’s side of the statement. Any concessions made by the seller will show up on the seller’s side of the statement.

Closing fees can also be negotiated between the seller and buyer.  Some sellers will offer to cover a portion or all of the closing fees while in other cases the buyer will foot the bill.  This is all part of the negotiating process.  However, splitting the closing costs equally between seller and buyer is the general norm.

Estimating costs along the way and negotiating the terms upfront will prevent any shock when you actually sit down and sign the closing documents.   Keeping on top of the fees will prepare you for closing, which is the best way to make the process as stress-free as possible.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

Selling a home can be a daunting process.  Selling a home in a buyer’s market is downright frightful.  Following the recent and continuing housing crisis, there is an enormous surplus of homes and other properties on the market.  For buyers, it’s a goldmine; but for sellers—including banks, home owners, etc.—it’s a world of low prices and fierce competition.  Selling during a market like the current one is not impossible.  In fact, thorough adherence to a conventional approach to selling, with the help of professionals, makes the process relatively simple and reliable.

Selling when times are tough means getting back to the basics of selling: property preparation and transaction execution.  After an initial inspection and preparation of your home, it is time to focus on the transaction.  That means consideration of three basic facets of the business side of the selling process: financing, marketing, and deal-making (which could be called negotiating, but it encompasses so much more than that).  Unless you are an experienced real estate professional, it is impossible to navigate these waters without making some (potentially catastrophic) mistakes; use the help of licensed professionals at every step of the way to ensure that you do things the right way, in the right order, on time, and for the right price.  The cost of this advice will be insignificant against the potential losses of the mistakes that could surface without it.  Use the knowledge of the people who have been there.

Consideration of financing when selling real estate essentially comes down to one thing: setting a price.  Obviously, it’s not quite as simple as picking a number out of a hat.  You must make a realistic consideration of your home’s condition and location, and you must be well informed about the recent and current selling trends in your local market.  Being realistic and practical is crucial—you are probably not going to get the price you would have gotten five or even ten years ago, that’s just the nature of selling in a down economy.  In preparation for negotiations, you need to have at least three prices set in the stone of your mind: the asking price (an amount you’d be thrilled to walk away with), the expected price (an amount you predict will be the ultimate sale price), and the walk-away price (your absolute no—the absolute lowest amount for which you will sell).  Which of these prices actually shows up in the contract is a function of the market, some luck, and your negotiating skills.

Having your financing all worked out means nothing if you can’t attract buyers, and the most reliable (and easiest) way to do this is to work with professionals.  Buyers view homes for sale by the owner (FSBO) as opportunities to take advantage of amateurs, and so this approach—though perfectly possible—is not advised.  Instead, take advantage of the listing resources and contacts of real estate professionals to find the right buyer for you and your property (rather than taking a blind stab into the dark market).

With the help of professionals and adherence to the basics of real estate sales, selling your home is far from impossible, even in the wake of the recent housing crisis.  After a thorough consideration of your property itself (aesthetics, functionality, price, etc.) it is important to have assistance in executing each and every one of the steps that are involved in the logistical and legal process of selling a home, and that means turning to professionals for marketing, structured financing, contracts, negotiations, etc.  There are so many opportunities for amateur mistake (which can cost thousands at every turn), but stringent adherence to the established process can help any deal come successfully to fruition.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

Selling a home can be an extremely taxing process even in the best of times, and so it follows that selling is a difficult task when the market conditions favor the buyer.  With an enormous surplus of homes and various property types on the market following the recent housing crisis, this is certainly a buyer’s market.  However, selling your home is not impossible, and in fact it can be accomplished relatively smoothly and reliably by simply getting back to selling basics.

Selling property consists of two basic aspects: the transaction, and the property itself.  The first thing to consider is the property.  Again, this overwhelming category can be rather simply divided into two categories: aesthetic and functional.  The aesthetics are relatively easy, and can wait.  The first hurdle in your race to sell will be an official inspection of your homes major systems and safety considerations.  Don’t skimp on this—hire a certified professional with plenty of good reviews.  It’s important not to procrastinate on your home inspection; you will need to have it on-hand later in the selling process, and it is helpful to know what you are dealing with before you even get started.

There are a few major factors to take into account when considering your home’s aesthetics before selling.  First, prepare the inside of the house for tours and walk-throughs.  Obviously it must be neat and livable.  It is helpful to remove personal items (photos, small possessions, clothes, etc.) to give the visual impression that this is not necessarily your home, but rather an unoccupied home on the market.  Don’t go so far as to remove furniture, TV’s, lamps, etc.

Externally, the “curb appeal” of your home is the most important consideration.  This is the immediate first impression that your home creates when viewed from a passerby on the sidewalk or a car on the road.  Curb appeal is not difficult to improve (you will find that no single step in the process of selling a home is particularly difficult—it is the cumulative effect of all the steps together that makes the process so challenging).  The key is not necessarily to be the best home on the block, but you certainly want to be at or above the standard.  Landscaping, windows, doors, roof, mailbox—all relatively small improvements which can dramatically improve that first impression your home makes on potential buyers.  With an inventory surplus, the importance of curb appeal cannot be overstated.

The hardest aspect of prepping your property for sale will probably be dealing with the results of your inspection.  It will be up to you (hopefully assisted by some professional advice) how much money you want to sink into making your home market-suitable.  In some cases, it may be necessary to do thousands of dollars worth of repairs and updates in order to attract buyers; however, usually if everything is functional, everything is OK.

Beyond these property-based considerations, selling your home in a buyer’s market is a matter of marketing and executing a transaction.  These initial steps (prepping both the inside and the outside of the home—both aesthetically and functionally) are relatively easy to take care of, and it will dramatically improve your chances of attracting business to have these done early and well.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

Marketing may seem trivial to the novice real estate investor, but it is actually the life blood of your business. Without buyers for your products, you do not stay in business-period! Of course the basic real estate investment skills are vital, such as finding a great property below market value and closing the deal, but unless you market correctly you won’t be able to attract buyers.  Marketing is more complicated than obnoxious HTML flashing banners across your craiglist ads; it involves insight as to who your ideal customer is.

In order to market well, you should know who would want your property and why.  Is it a small studio, ideal for a young, single professional right out of college?  Is it a two bedroom, good for a young family with a young child?  Try to picture the ideal customer and craft your marketing accordingly.  For example, if the ideal buyer is a young professional in a larger city, you may want to advertise the proximity of the property to a bus line or subway since it is likely they are commuting.  You may also want to price your property slightly lower than the market, because young professionals often do not have a substantial accumulation of wealth.  Convenience is also important to them, so you may want to say the property is well maintained, has a dishwasher, laundry machine, a new sink, etc.  Target the buyer by marketing the specific benefits they would most likely be looking for. Include any information about pets as well, especially if you are renting out the property.  Renters with dogs can have a hard time finding houses, so if you don’t mind a dog definitely advertise ‘pets allowed.’  Keep in mind that on craigslist, padmapper, backpage and other similar sites, people search by keyword, such as “backyard,” “bus 81,” or “elementary school.”  You want to have as many of those keywords in your marketing headlines as possible.

If you are repairing the property, a good idea is to have a professional website or blog where you can post pictures; then place a sign in the yard with the website address on it.  Post pictures before the construction starts and update it as it progresses.  There is no reason to wait to advertise until after you have made repairs: the best time to advertise is to do it during the repair process so people can see the progress being made.  That way, you can generate a buzz about a new, renovated up and coming property and you won’t have to wait long after its finished to sell.  You may even find a buyer before the repairs are completed!

Successful marketing comes down to imagining yourself in the buyer’s shoes.  What would they want in a property?  Make a list of those qualities then convince them in your write up that your property is perfect.  Get creative and think about the best way to market your property, and you’ll have a buyer before you know it.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

For the real estate investor, finding buyers in a slow economy is often a bigger challenge than finding sellers.  Buying a house is a financial investment that some people are afraid to make in a slow economy.  However, there are buyers out there who you need to attract.

A good first step is to hire a realtor that has extensive experience in selling the type of home that you have and is a full time realtor.  Realtors are especially helpful if you are flipping properties because they know that you will have consistent product for them to sell. As a result, they should be constantly marketing for potential buyers and keeping those potential buyers abreast of the properties that are in the pipe line.  This will increase the likely hood of having multiple buyers in different stages of the buying process at the same time and increasing the odds that one of those buyers will be the right one for your property. You want a realtor that is pro-active and aggressive.  Just putting an ad in the paper or on the MLS is not enough: the realtor should be holding open houses, sending out flyers to the community, finding local hot spots with high traffic and have an extensive network of lead generating connections. In addition, they should be technologically adept, posting on craigslist, backpage, Ebay, and the MLS or have a system already in place that does this for them because the majority of potential buyers now look on the internet first before ever contacting a realtor.

You can also create relationships with realtors who are moving properties in your area by inviting them to a showing of the house before you list it.  You can offer an extra bonus if they bring a buyer in a certain time frame, but even if they don’t, it is still advantageous to create a working relationship with the local realtors.  It will give you credibility if you plan to do more sales in the area, as they will know who you are and the quality of your properties.

Generally, expect a much longer timeline to find a buyer in a slow economy.  Make sure you budget these additional expenses into your overall evaluation of the property before you make the purchase. Keep in mind as well that there will be more houses on the market and greater choices for the buyer.  So if you want to get your house sold quickly, develop a plan to make your house stand out in the crowd from the very beginning. If the house is still taking a long time to sell, reducing the price may help.  But make sure that when you initially price the house; that you are comfortably in the local market range and not over pricing.  Over pricing in this economic environment could mean the kiss of death.  Check up on your realtor to ensure that he or she is being as aggressive as possible, and evaluate feedback from showings.  What are you hearing on a repeated basis?  Is there anything you can do to address the concern?  Listening to you potential customer feedback will provide insight as to what you may need to adjust. Often, it is only something minor and thereby finding the buyer you’ve been waiting for.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

You’ve taken classes on real estate investing, you’ve done your research, and now you want to start making money!  But wait….where are the people who want to sell their properties?  Even though we are coming out of a recession, markets are still sluggish and housing prices are still low.  People tend to be afraid of making drastic changes in a poor economy, and that includes selling their home.   If there seems to be little activity in the market, how can you find the sellers? And how can you find the sellers who will accept the lowest prices?

This may sound unappealing, but the people who are the most desperate are the best sellers. They are in a position where they have to sell rather than want to sell.  A hugh difference. Although working with people who are in a bad situation may seem uncomfortable, you are actually helping them by taking a property that they can no longer afford.  The mortgage payments and debt that are piling up are putting them in financial ruin, and the faster they can sell their house, the better.

There are a few simple ways to find these kinds of sellers.  The first way is to put up bandit signs around the neighborhood or busy street corners that say “We buy houses,” or something similar.  Laws on solicitation on city property differ according to municipalities, so check if it is legal.  A potential way around municipalities that outlaw bandit signs is to set up bandit signs on properties you may already own.  This is no different that you putting a “for sale” sign on your own property.

A second way to advertize is to put ads in newspapers.  Check to see if ads are in alphabetical order, and if so, start your ad with an A or a 1 so it will be read first. It can be very expensive to run ads everyday in papers with large circulations, so a possibility is to simply place an ad only on Sundays. Neighborhood newspapers are also a great resource and ad space is generally cheap.

A third way is to use a website or blog to generate traffic.  Hire a professional or learn basic HTML, and use targeted keywords and links so that your website will come up on the first few pages of a google or bing search.   Make sure your website is easy to use, clear, and does not contain unnecessary graphics or music which would take a long time to load.   Stick to professional font and put up pictures of other properties to make your website seem legitimate and inviting.

If you do these three forms of advertising and still come up empty handed, you can always drive around a neighborhood looking for dilapidated homes.  Often, people who are not keeping up on repairs are also struggling with their mortgage, and you may find somebody close to foreclosing.  These are just a few simple ideas for the beginner to start out with. There are numerous other ways to attract potential sellers that are way beyond the scope of this post.

Just remember to get your name out there and you will find somebody willing and desperate to sell.  Persistence does pay!

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

It is no great secret of the real estate market that 2010 produced some pretty frightening statistics.  Namely that nearly 1% of all housing units in the United States received a foreclosure filing—and that’s in the third quarter of 2010 alone.  Distressed and foreclosed properties accounted for 25% of all real estate sales last year.  While an economist would look at these figures and shudder, an investor should view them as a gateway to profitable deals in the form of REO transactions.

Banks and other major lenders are sitting on an enormous surplus of dead inventory that they are under great pressure to unload.  Like any other investment transaction, perhaps the most important aspect of your involvement will be marketing.  This is true for any property—you always have to convince someone to choose you for their deal.  In the case of REOs, you are marketing to a bank (or more specifically, the bank’s loss mitigation department).  Just like any other deal, come prepared with figures and a plan of action, leaving no room for the bank to doubt your qualifications to proceed with the deal.

2011 will be marked be a significant increase in demand for these REO properties from the investment side.  Therefore, marketing will become more and more important, to ensure that your business is not scavenged by the swarms of upstart investors.  There is no doubting that it helps to know people—networking throughout the mortgage default industry is a necessity, and it should be done whenever possible (whether at conventions, private meetings, or any other opportunity).

To really get your foot in the door, consider pursuing avenues into the trade association for the mortgage default industry—REOMAC.  There is no shortage of companies involved in REOMAC that have important connections and contacts in key places for REO investors.  Before getting into the nitty-gritty of properties and prices, establish contact with some of these companies (by simply explaining that you are an investor looking to break into the market), and do whatever you can to establish a network of relationships in the market before attempting a deal.

In other words, as in all real estate investment pursuits, be prepared.  Get some people on your team before you select a property.  After that, marketing (distinguishing yourself from the hoard) will be a breeze, and you can focus on meeting the needs of asset managers and other officials overseeing your transaction.  If you can consistently meet those needs and requirements, and convince banks that your business can handle quantity, then you can establish an entirely new line of income starting in 2011.  Just make sure you go into it with enough reserves to carry you through the process of investment, turn-around, and sale (a few thousand dollars per property).  REOs will be the biggest market wave in 2011, and it may be your opportunity to make a substantial profit.

http://www.superiorprivatemoneyreturns.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

The shear volume of foreclosures in 2010 has opened up an entire market of buyers for bank-owned properties in 2011, so much so that interest in these deals has spread from investors to simple homeowners.  The burden of this enormous increase in inventory falls on banks and lenders, and that is a burden they squarely intend to ease in the coming year.  Many individuals and families are crowding to get in on these great investment opportunities as banks unload their properties.  If you are not a professional real estate investor, then tossing yourself unprepared into the lion’s den of competition for this investing hot ticket could be a grave error.  It is important to know a few things about bank-owned properties before jumping in.

First, don’t be swayed by numbers alone.  That is, don’t go dragging your family around the country chasing the best REO deals you can find, because chances are you’ll end up in some crummy neighborhood in a town you hate.  Instead, start by selecting a location.  Where do you want to live?  The current state of the national market dictates that there is no shortage of bank-owned properties in every state, city, town, community—practically every neighborhood!  Although some areas are more economically resilient than others, it would be prudent to begin your search by choosing a location.

The next thing to keep in mind about purchases from the bank is that you will be dealing with an organization, not an individual.  Although you will have countless interactions with many individuals, you are still working with a big company that has a lot on its plate.  This is crucial for two reasons: 1) the bank is a big target for investors, and that generates competition; and 2) the bank’s numerous properties, files, and requirements make the transaction process an incredibly slow one.

If you are a private investor (homeowner), there are ways to get around the issues associated with working with a bank.  The first is to hire a professional agent who deals in REOs (or short sales, or other bank-owned properties).  This will be invaluable for quickly and efficiently navigating the multitude of listings, paperwork, and deadlines that will be required.  It also helps your chances of securing the home.  Further, having an experienced agent who not only knows appraisers and contractors, but knows when to have them ready to work at a moment’s notice (when the bank issues a 10-day window to address contingencies, for example), is a benefit that most private investors will not enjoy.

There are ways to speed up the process of buying a bank-owned home.  The standard methods apply—purchase with cash, buy “as is”, make an offer over the asking price, etc.  However, in the case of bank-owned properties, the best way to expedite the process is to look for pre-approved bank sales (these are listed online and on MLS, and you can use your agent and contacts at the bank to learn more).  Essentially, these are deals for which all the paperwork and physical work has been done, prices have been worked out, and everything else is ready to go—but the transaction fell through for some reason (often due to investor oversight).  In these cases, often short sales, another approved buyer can simply walk in and offer the already-determined price, and quickly walk away with the deal done.  If you are looking for quick and cheap, this may be the option for you.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

If you’re new to real estate, you may find yourself at a loss on how to proceed once you’ve found the property you are interested in.  You’ve researched the market value, you like the location, and you’ve come to the conclusion that this is a good deal. Now what?

The answer is to inspect the property! Even a house priced 50% of market value could turn sour if the repairs on the house are outrageously expensive.  Before you close the deal, you need to hire an experienced home inspector to ensure that you won’t get slapped with expensive rehabilitation bills once it’s too late to turn back.

In Indiana, the average price of a good inspector is around $300.  This small up-front fee is nothing compared with the potential major complications if you buy a house with poor plumbing or a termite infestation.  Don’t assume a visual inspection is sufficient: you need a professional for this one!

The inspector will look at the foundation, attic, wiring, roof, plumbing, furnace and signs of any water damage, insect damage or mold.  The most expensive repairs to make are on the foundation, roof and mechanicals (wiring/plumbing/heating).  If you find that the property needs work in these areas, you must complete these repairs if you ever want to sell the home.  Don’t try to cut corners: a crack in the foundation can lead to flooding, water damage or foundation buckling, setting you back hundreds or thousands of dollars.  Bad wiring might be a fire hazard.  If the property has more damage than you want to fix, walk away.

Many of the REOs (real estate owned properties) will need work in these areas, so you should not be surprised when the inspection comes back less than perfect.  You should estimate the cost of repairs by getting several bids from contractors and then add 20% as a cushion.  Remember, there may be unforeseen surprises along the way even with having a professional inspection, so it is possible that the actual cost of repairs will be higher than the bids.  If the rehab costs, the price of purchase, the expected profit margins and all closing costs total less than the after repair market value of the home, then the deal is on!  After everything is inspected and you have accurately estimated the costs of the rehab, sign the closing papers with confidence.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

The house inspection is a crucial step in deciding whether to purchase a home or investment property.  The inspection will alert you to any intensive repairs in the foundation or the roof and will allow you to evaluate if this is a good deal.  An inspector who has overlooked signs of early termite or wood ant damage or missed a small water leak could end up costing you thousands and ruining your real estate experience.  Therefore, the quality of the inspector is extremely important.  You don’t want to trust the success of your deal to an amateur inspector you found on yelp.com without evaluating him first.

The vital nature of the inspection can not be stated enough, especially if the house is an REO, which likely has not been maintained.  If you are purchasing a property locally, then it is possible to meet with the inspector before hand and judge his experience and quality of work.  If the purchase is out of state, you should contact a home inspector that will take pictures and can send you everything electronically. You want the information as quickly as possible so you can close the deal.  It is not uncommon that lenders may require an inspection to be completed before approving a loan. You should also ask the inspector for a sample of his work, such as a report from another property, to judge what he will provide. A pdf of 20-30 pages with photos is a good length to expect.

This is an important aside: make sure to personally re-inspect or appoint someone if the property is out of town, to re-inspect the house before closing.  If the deal takes a while to close, say 90 days instead of the normal 30 days, any minor problems could have become major problems in that period of time. The re-inspection doesn’t have to be a formal one and there is no need to hire an inspector.  However, if there were previous problems like mold (which can grow) or water damage (which can get worse), you may want to bring a professional with you.  If the problem has grown faster than you expected, there is still time to back out or renegotiate the deal.  The care you take to inspect your property will ensure that you know what you are buying without any costly surprises.

If you are looking to invest in a number of properties, it would be a smart decision for you to accompany the inspector during the inspection process for the first few purchases.  Over time, you will become adept at evaluating the property yourself and can decide at that point if you wish to invest the extra $275-$400 to have an inspection completed. For the beginner, however, hiring a home inspector is a wise investment decision because often, you don’t know what you don’t know. This is a great way to protect yourself from your lack of knowledge and also gain a great learning experience in the process.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.superiorprivatemoneyreturns.com