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Top 20 tips for making offers on Freddie Mac/Home Steps REO properties

Posted by Lynda Poe on December 26, 2013 in Buying, Financing, Investing, Landlording, Lenders |

by WINSTON WESTBROOK on OCTOBER 5, 2009
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The Top 20 Tips for Making offers on Freddie Mac, Home steps or FHLMC Properties

#1. All offers should be submitted on your states association of realtors purchase contract. They will not touch an offer made with a contract you came up with or bought at your local office supply store.

#2. All offers should include a pre-approval letter from your lender if you are obtaining financing. A direct lenders pre-approval will carry more weight than a mortgage broker. A direct lender is one that lends its own money to put it simply.

#3. Investors! Do not ask for closing costs! Sorry, but they will not pay closing costs for an investor period.

#4. Do not ask for more than 3% in closing costs. You are wasting your time asking for anything more than 3%. If you try to raise your offering price above their asking price thinking they will pay more than 3% they will always counter back to 3%. Also when asking for closing costs ask for a dollar amount not a percentage. For example, in your offer you would state that seller is to pay buyers recurring and non-recurring closing costs not to exceed $5000. Remember this is only an example. Do not go asking for $5,000 on every deal cause Winston told you, lol. They need a dollar amount so they can quickly figure out the final net to the bank. If they have 40 offers the last thing they want to do is extra math trying to figure out the percentage.

#5. Do not ask for them to pay the property transfer tax. They will not pay this fee. Don’t ask for this cause they will always counter you back. I know the seller has customarily paid for this fee but Freddie Mac is exempt from paying this.

#6. Loan Applications to be submitted within 7 days. If you are obtaining financing to purchase the property you want to state that your loan application will be submitted to the bank a least within 7 days of them accepting your offer. Anything longer than 7 days and they will counter.

#7. Your offer should not expire less than 14 days. When you make an offer make sure that your offer will not expire until 14 days after the date it was submitted to them. Freddie Mac is inundated with a multitude of properties and things can delay them. The last thing you want is for them to toss out your offer just cause it expired and the other guys didn’t . Get my drift? When the bank has 40 offers to choose from don’t you think they look for any little thing to toss yours out?

#8. Submit your HIGHEST & BEST offer off the bat. The banks sit around and collect a ton of offers on their properties. Then they look at each other and say, “gosh darn it! These offers need to be higher bro” so they tell the listing agent to go send out a note to all the people that submitted offers to tell them to send to the bank their highest and best offer so we can squeeze more money from you. You then have to think about how much higher you need to go because you know that everyone else is going to be raising their offer. In the beginning when you submit your offer sit down and offer the most you are comfortable offering off the bat. Write on the top of your offer “HIGHEST AND BEST” . Then they know you have been around the block and you know what’s going on.

#9. Do you need that Home Warranty? You can ask for one but as long as it does not go over the 3% of the closing costs they will pay for owner occupied offers. It would be sad if you lost that deal due to a $300 home warranty.

#10. State what kind of buyer you are. Let them know off the bat if it’s going to be owner occupied or non-owner occupied. If you are a first time buyer or not. Yes, I am sure it matters to them. Which one is best? I would assume a first time buyer and owner occupied.

#11. Let them know if you are a licensed real estate professional. State on your cover sheer if the person purchasing the property is a licensed real estate professional.

#12.Freddie will provide a pest report and natural hazard disclosures. Do ask for them.

#13. Complete your inspections in under 10 days. The pre-printed length of days on CA contracts is 17 days. Freddie Mac will counter anything above 10 days. If you can complete all your inspections in 5 days then state it in your offer. I know some inspectors that will fly out to the property in 24hours and have the report back that evening. Remember you have to stand out of the crowd of 40 offers.

#14. Buyer to pay $50 per diem. State in your offer that, “Buyer will pay $50 per diem for buyer delays only beyond the agreed upon close of escrow date“. Flat out this means that you understand that you can be penalized $50 a day if the closing is delayed by any fault of yours (ex. Your real estate agent, your loan officer, your dog) for every day passed the agreed upon closing date.

#15. If you are paying cash go no longer than 20 days for the closing date. If you are not obtaining financing for the purchase they want you to be able to close the deal in under 20 days. Also if you are truly paying all cash state this fact and that you are not obtaining a hard money loan. State you have liquid cash funds available for this purchase and that no financing whatsoever is being obtained for the purchase of this home.

#16. Send proof of funds to close the deal. If you are paying all cash send a financial statement where the money is held. Hey people, don’t send a statement from Dec 2008, send them something current. If you do not have one go online and print one if you have online access to the account. You want to prove to them that you have the money for the down payment or the money to purchase the house outright.

#17. Put a big down payment. The bigger the down payment the more serious you are about buying the property. If you are going FHA lets say you need 3.5% down payment anyways so why not place that as your down payment. If you want the property bad enough you have to stand out from the crowd that only places the minimum down.

#18. State that you have visited the property. Some have been asking for proof that the buyer has physically visited the property. The reason for this is that a lot of investors are tossing out offers on properties and not physically going to see the property only to weasel out of the deal after inspecting the property. This wastes everyones time. When you go visit the property take a picture of yourself in front of the property on your camera phone or what not. Keep it as proof in case you are questioned.

#19. Make sure everything is legible, neat and organized. Need I explain? When you have 40 offers to choose from and the guy at the bank is trying to decipher your English hieroglyphics and can’t make out what the heck something says then what do you think you are going to get as a response? You are going to get, “Sorry but the bank has accepted another offer. Thank you”.

#20. Send a cover letter with your offer. On this cover letter you want to briefly explain the main selling points of your offer that you believe will make you stand out. Like for instance: A short closing period, huge deposit, short inspection periods, all cash, buyer has visited the property, owner occupied etc etc. Make sure to include all your contact information.

I hope these tips along with BiggerPockets.com in your toolbox will help you kick some tail out there in the game of real estate.

Good luck in all you do America!

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100 Tips to Sell Your House

Posted by Lynda Poe on September 30, 2013 in Selling, Staging |

How to Sell Your House: 100 Tips to Sell Faster and For More Money
by BRANDON TURNER on SEPTEMBER 19, 2013

How to Sell Your House
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Although I strongly believe holding onto properties for the long term is the best way to build wealth in today’s economy – sometimes an investor or a homeowner simply must let go of a property an venture onto bigger deals or priorities. However, letting go of properties and selling them can be a major challenge, especially in a slower market. There’s a lot of things to consider and it may run from checking the house, inspections, finding buyers, and so on.

However – have no fear! This list is going to give you a whopping 100 killer tips for making sure you learn how to sell your house for more money, faster than the competition. This list has been compiled from suggestions from members of BiggerPockets.com who have sold many properties over the years – and this list is definitely not comprehensive, so if you can add additional ideas in the comments below- please do!

Several months ago, I asked the question in the BiggerPockets Forums, ” Help Needed!! Tips for Selling Your House – (What is YOUR tip?)” and most of this list came from those answers – so I want to send out a special thanks to all the BiggerPockets members who contributed to this list – I don’t think I could have gotten to 100 without you all! Thank you Kyle Besaw, Alex Baev, Jerry W, Karen Margrave, Jimmy Hong, Dawn Anastasi, Bill B, Pat L, Jack Bobeck, Jenn B, Colleen F, Felicia Woolard, Pat L, J Scott, Ray Orellano, Jon Holdman, Carrie Collyer, and Michael Siekerka!

Alright – let’s get to the list…

How to Sell Your House: 100 Tips for Selling Your House Faster and For More Money

Kitchen Cabinet Handles

New pulls on kitchen cabinets and drawers- Replacing the pulls and handles on kitchen cabinets and drawers give an overall new appearance to older cabinets. This is one of the easiest and lowest cost replacements you can do to make your kitchen pop.

Buy it Right

You’ve heard it said before: you make your money when you buy – so one of the best ways to ensure you’ll sell your home is to buy it right in the first place. Don’t overpay for a property, or you may find yourself underwater when it comes time to sell. By “buying smart” – you open up many more options for your exit strategy!

Pressure wash driveway and any decks

You probably haven’t noticed just how much dirt has slowly accumulated on your driveway and deck over the years – but trust me: it’s not clean. Having a pressure washed driveway and deck is inviting and can be one of the first things potential buyers see when walking up. First impressions are everything – so make sure your first impression shines and reflects the quality of life they’ll find inside.

Mailbox
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New mailbox – The mailbox is often overlooked as a trivial part of the home- but having a brand new mailbox is another simple and inexpensive way to show potential buyers that the house is fresh and updated. A creative mailbox will also help distinguish the home from the hundreds of other homes on the market.

Fresh mulch, grass, or plants outside

Landscaping is a small cost, yet is one of the most important things to do to help sell a house. The good thing is it generally just requires some sweat equity and an afternoon to turn a boring front lawn into a beautiful work of art.

Spray and plug-in air fresheners

I’m sure you’ve heard the claims before – the human sense of smell can trigger powerful emotions in a potential buyer. A fresh scent signifies “new” – which everyone loves! Additionally, a good smell can hide the old smell of the house, if there was any.

Free of Clutter

Keep it free of clutter – If you are trying to sell a property that is not vacant, it’s important to clear away the clutter. By getting rid of junk and putting all your extra stuff in storage, you bring out the beauty of the room and help the room look larger, cleaner, and all around awesome. Additionally, by clearing out the clutter, people can
Drop Your Price – Don’t hold on to a high price if you aren’t getting any offers. Drop your price quickly and accept that your original price may have been wrong.

Stage a Neighborhood Clean Up Day

This probably won’t work… but you never know! Encourage your entire neighborhood to clean up their properties on a given day … maybe even give each person a gift certificate for the local dump.

Replace light bulbs

Make sure that darker rooms have higher wattage bulbs to brighten them up. It’s good for presentation and they’re very affordable to replace. Bright rooms = happy rooms.

Fresh paint 11949850421205223696paint_brush_costea_bogda_01.svg.hi
You can’t go wrong with fresh paint on trims, doors, or windows. You’d be surprised at how new you can make a house look with just fresh paint.
Update the front door knobs and hinges – If they seem outdated, update them! Every prospect will subconsciously notice these small things each time they open the door. If the knobs already look good – just keep them clean.

Have all windows cleaned

Do the cleaning inside and out. It gives better lighting and view to the outside. A $.99 bottle of window cleaner and a roll of paper towels can do wonders!
Post photos on sites – Posting your listing in the BiggerPockets Marketplace or in other online directories can help improve your chances of selling fast. Nearly all buyers check online for houses, so don’t get left behind.

Clean house

Do a quick clean on everything – Sometimes, right before a showing, you just need a “quick clean” if time is limited. Things you may want to consider first are the bedrooms, bathrooms, and kitchen sink.

Price it right how-to-sell-your-house-fast.s600x600

Nothing beats doing your research and setting the right price. More often than not, you may need an expert to help you calculate what that perfect price is – so don’t be afraid of speaking with some local real estate agents.

Hiring the right Realtor

To sell your house faster, a good Realtor might just be all you need. Make sure you choose one who’s good at marketing and is “hungry” to sell your property. If you are selling an investment property, focus on finding an investor friendly agent.

Spread the word whenever you canPerson With Megaphone

Even if you hire a real estate agent they won’t do as good of a job marketing as you could. Be the marketer you are looking for! Spread the news on social media, inform everyone you know that you are selling your home, and encourage others to share the news as well.

Leave neutral furniture and accessories

Naturally, you want to get rid of all personal items and all family pictures from around the house (clear the clutter, remember?) However, having neutral furniture and accessories in the home can help a buyer visualize what the home will look like for them. For more on “staging” your properties, check out this article.

Turn on lights

Makes a good presentation by turning on all the lights in the home when having a showing. It’s a simple trick – but it works.

Open Blinds

Open blinds – This is great for letting the light in. It also gives buyers an idea on how they can set the mood of the room with your blinds. If your windows don’t blinds or curtains, consider staging the home with some to add softness and dimension to the room – but keep them open!

Create a flyer

Flyers are great for marketing! Don’t forget to include all the positive attributes of the house and get include some high-quality pictures if possible on the flyer. Find creative places to put the flyers, like colleges, supermarkets, and more.

Play some good music while presentation

Turn on a stereo or iPod with speakers playing some soothing or popular music during showings or open houses. This may or may not have any effect with the buyers – but it may give you a boost in confidence when you present your house while having your favorite music in the background!

Clean and paint the closets

Women buyers always look at closets and visualize their clothes or shoes in them. Since typically closets are for women, and women often have the final say when it comes to buying a home, you can understand the importance of not neglecting the closet.

Clean Laundry

Clean and re-do the laundry room – A dirty laundry room is like a dungeon – it’s dark and creepy. Everyone wants a lovely laundry room, and it doesn’t take a lot to spruce it up. Some paint, new towels, a couple baskets, and fresh flowers can transform a room. Keep the colors light and airy.
Put in new kitchen cupboard doors – You don’t need to completely replace your cabinets – you actually just replace the doors for significantly cheaper. Or for even more savings, you can simply paint the doors to make them look brand new. Check out this product from Rust-Oleum to easily transform your cabinets (I’ve used it – it’s great!)

Clear fridge of all magnets

Make the kitchen special without those personal items. As odd as it sounds – buyers have a hard time buying a property that has “Little Johnny’s T-Ball Photos” all over the front. This is actually one of the things that most sellers forget to remove- so stand out from the pack and pack those magnets up!

Clean Cupboards

Clear all kitchen and bathroom counters – There’s certainly no need for your own toothbrush hanging around when presenting the house. Remove them whenever buyers are coming over.
Remove pet bowls, toys, and beds before showing – This is usually missed out if you have pets. Although you might love your little cat or dog- the next buyer might not want to be reminded that you have pets.

People look in medicine cabinets

Don’t leave your medication out for the world to see. Once again, remove personal objects as much as possible.

Beware of nasty pet odors

You may be used to the smell of your pets, but your potential buyers are not. If you have pets, get all rugs steam cleaned and be extra vigilant about vacuuming and washing surfaces. Try to keep pets outside or at your grandparents house.

Organize pots and pans

Pack up and store the bunt, angle food cake pans, waffle iron, fryer and other large items not used often to clear out the kitchen cabinets. Without all those random items – your cabinets will look much larger.

Always follow the “clean clean clean” rule – Cleanliness is next to godliness, they say – and this is especially true for buyers. You can’t go wrong with a solid cleaning of the house, even the tiniest detail. Pay special attention to light switches, door knobs and other areas that hands are always on.

Have a complete information sheet of the house images (95)
It should be accurate and mentions anything important. You don’t want to miss any of the crucial details, so have several other people look over the information sheet and make sure it’s up to par. Make enough copies so they can take the information sheet with them when they leave

door mat

A new mat at the front door – It’s cheap and it shows the home is fresh. Check out discount stores like Marshalls or Ross for nice, inexpensive mats.

Park a luxury vehicle in the driveway or garage

This might not apply for everyone, and it works better for more upscale homes, but taking a picture with an expensive car in the garage or driveway sometimes subtly gives buyers an feeling that the home is also a luxury item.

Take a video of the property

Although you or your agent may walk people through the house – it’s also helpful to provide a walking tour before the buyer steps foot in the home by hosting the video online. You can use YouTube or Vimeo – but if the ads are too much, look at welcomemat.com or another source to store and play videos.

A slideshow presentation for prospects – If you’re not into making videos or it’s just not possible with your available resources, then you could go for a simple SlideShare presentation showing the best features of your home in a photo slideshow.

Flyers

Make a take home booklet

This is more extensive than the MLS flyer you usually get and can include multiple pages with graphs, charts, and pictures in it.

Update the outlets and switches to coordinate

Make sure they match in color – and make sure they work.

Ensure that any little “dings” or dents in the wall are taken care of…

These are quite noticeable. Depending on the severity of the dents and dings, it may cost you to do a full repair, but if they are minor you can do the repairs on your own with just some wall putty and paint.

List it on selling sites

There are a number of listing sites online, like Craigslist, Zillow, ForSale.com, Trulia, and more. It’s easy to create an account and place your home details there for maximum exposure. Once again, the bulk of buyers are found online.

Do your own assessment

Go stand in front of your house and take a quick look: what stands out? You’ll be surprised to discover a lot of things to improve just by trying to get a new perspective. If this doesn’t work – as your friends to stop by and ask them what they notice. Multiple perspectives are great.

Have an accent on the front door door+006

Paint or repaint your front door. This is your chance to draw people’s eyes, and a freshly painted door can do wonders for the property. A nice contrasting accent color is a good one.

Make sure lawn is mowed

This just requires about 30 minutes of your time but the results are spectacular. Once again, landscaping wins. If you are unsure you can maintain the lawn at the appropriate level, hire a local landscaping crew to maintain it for you while the house is on the market.

Never cram furniture

Staging is good … but cramming a room full of furniture will make it look small and uninviting. Leave the ones that you think are necessary that show off the best features of the room, but get rid of anything that makes it look old or too “busy.”

Clean the carpet

You may try to steam clean them yourself using a Rug Doctor or you can bite the bullet and have a professional take care of it. When living in a property, it’s hard to notice how dirty a carpet can become – but after a good cleaning, you’ll be glad you did.

Table Flowers

Fresh flowers on tables – Fresh flowers are great to include on a table. Just having this simple piece of art can brighten an entire room.

Have a little snack at open houses

It encourages people to mingle and get a feel for the place. The longer they spend in the home – the higher chance they’ll make an offer.

Don’t ignore the back yard

Back yards are a big deal for buyers with families. The back yard is where the “entertaining” happens – and is a huge source of pride for homeowners. Be sure the lawn is kept short and defined, and include space for kids to play. trimboards

Check fences and trim boards

Do they need replaced or painted? Don’t let the fence tell a false story of how you have maintained the property.

Clean the stoves and ovens

Prospective buyers spend a lot of time in the kitchen at open houses and showings – and you can bet they are going to open up the oven to see how large it is. Make sure it’s fresh and clean for them.

Clean the baseboard trim

It may seem silly, but you can lose a sale just because a potential buyer sees dirty baseboards! Take some time to dust and, if needed, repaint any baseboards that need it.

Appeal to a woman first!

Again, it’s usually a woman that makes the final decision to buy, or not buy, a home. Even single guys house-shopping tend to look at it from a perspective of “I’ve made enough to afford this place, but would i bring a date here?” If you are a man, you might want to ask help from the women in your life to check out your home and make sure it appeals to women.

Aim for the “wow”

Every room or space in a home should be a “wow” of some sort, providing something that is beyond what’s expected. It doesn’t matter whether it’s a small or large “wow” – just be sure there is always a “wow.” For example, “Wow, look at these old beams and tall ceilings in the living room” or “Wow, cookies in this bright but small bedroom”. Lead the buyer though a property and make them discover those “wows” on their own – from front property line to the back area of the garage. Every room should have a “wow.”

Apple cinnamon smell

Many home sellers recommend the smell of apple cinnamon when trying to sell a house. Don’t ask me why!Walkway

Pressure wash the siding

If the home is not being fully painted on the exterior – at least take the time to clean the siding with a good pressure washing.

Hang easy-to-read house numbers

Sometimes, just the number of the house matters. New numbers are just a couple bucks each, but help a buyer feel that the home is “new” just by seeing the new numbers.

Take the right photos

Always find the sweet spot of the house to entice prospects. This requires a bit of artistry on your part, but sometimes getting the right angle can make the difference between a room looking boring and a room looking amazing. For inspiration, check out houzz.com

Repaint or stain the porch floor as needed

If you have a front porch – chances are, it’s dirty. Buyers tent to congregate here while waiting for their agent to open the front door, so make the porch floor clean and nice to look at.

Forget your style

Focus on the style of the prospect buyers. Try to understand the demographics of the potential buyer – and learn what style they like. For example, if you are selling to first time homeowners, they are probably young and not as interested in dark wood trim – so paint it white!

Open the closet doors

Although it may depend on the size and style of your room, it may be a good idea to actually open up the closets, making the room seem larger. Of course- these closets better be clean, near, organized, and mostly empty.

Pull your furniture off the walls.

Although it seems counter-intuitive, pulling your couches away from the wall actually makes a room look larger and more inviting.
Make it easy for buyers to live in – Ask yourself, would you live in this house? Sometimes a house that buyers can picture themselves living in is the key. If there are any drastic reasons why you wouldn’t live in the home – try to fix them before marketing the property.

dining room

Style your dining room table – A dining room table is great for staging – but if it’s empty, it just looks out of place. Besides the flowers we talked about earlier, consider setting the table with nice plates, silverware, wine glasses, or knick-knacks.

Symmetrical arrangements usually work well

Consider this when rearranging your furniture if you have no idea how to do it. If you have two couches in the room, they should either be perfectly perpendicular or perfectly parallel.
Know the “Rule of Three” – Knick knacks- such as candles, books, lamps, etc – tend to look the best when placed in a group of three.

Put up Arrow Signs

Direct traffic from the neighborhood to your home using inexpensive “for sale” arrow signs at the nearest intersections.

Create comfortable conversation areas

When staging, create areas that are conducive to conversation. For example, place a couch, chair, and bean bag around a coffee table – to make a nice conversation area in the living room. The same applies for the dining room, the back yard, the family room, the front porch, and more. Encourage conversation!

Appeal to everyone

Try to appeal to everyone who might come through your property by using minimal design. A six foot painting of the statue of liberty might appeal to you – but it’s probably a little too “taste specific” for selling a home. open closet

Underprice to Create a Bidding War

If you are in a hot market, try listing your house below the average … and let the buyers fight in a bidding war to increase the price. This way – you get you pick of the best offer, not just the first that comes in.

Organize Kid’s Rooms

If you have kids – you know how tough it is to keep their stuff organized and clean. Help convince your buyer that this house will do just that – by organizing your own kids’ toys neatly.

Give every room a purpose

No room should be without a reason for existence. This is why staging is so important- because it allows you to show potential buyers what a room could be.

Demonstrate purpose in awkward areas.

If you have an awkward room beneath the stairs, or a nook or alcove anywhere in your home, try to find a unique way to show it off. Again: staging is key. A storage area?lifestyle

Promote a lifestyle

Most buyers are not shopping for a home – they are shopping for a lifestyle. That lifestyle could be “luxury” or “simple” or “lavish’ – so try to create a feeling around your entire house of that lifestyle.

Plan for the Season

Your home should be staged to compliment the current season. If it’s winter – go ahead and show off the storage area for snow boots. If it’s summer, bring out the canopy in the back yard.

Double check your agent’s online marketing

Although we like to believe our real estate agents are super men and women – the fact is, sometimes the homes they list are just one in dozens that they are listing – so it’s easy for them to post your house on the MLS without any style or hint of promotion in it. Remember that the vast majority of prospects come from seeing your listings online, so be sure that listing looks great.

Network with the neighbors

Invite your neighbors and their friends in your open house – or send out mailers that let they can “pick their new neighbors” by sharing the house listing with their family and friends.

Facebook is a good way to sell your house th (6)

Post your house pictures on Facebook, and consider using Facebook Ads to sell the home. For an in-depth study on how to do this, check out Using Facebook Advertising to Super-Charge Your Real Estate Selling

Leave some good stuff behind

Consider what you could include with the sale of the home – that the homeowner would probably need to buy. Could you offer to include the washer and dryer? How about the kid’s swing set? The gas grill? Get creative!

Offer a Multi-tier pricing strategy

This is a tactic I used on a one home -and it worked great! I simply made three price levels on the home- that included different features. For example, there was the “base price” but they could also upgrade to could have a new heat pump for and extra $5,000, or the heat pump and granite counters for $10,000. By doing this – you are able to shift the buyer from comparing your home to others in the neighborhood to comparing yours to the other price points. For more tips on this strategy, check out Three Marketing Ideas Your Real Estate Agent Probably Won’t Do (But You Can…).

Beat the competition by offering quality

There’s a lot of homes on the market – however, you can stand out by offering quality properties. For example, you may be the only one in the area to offer termite checks or a lifetime roof warranty.

Check out the competitions

Drive around and look at other homes that are on the market. Get your agent to give you a tour of your most similar comps – and find ways to beat them!
Choose sophisticated neutral colors. – It doesn’t mean that you need to go all white. Rich midtone neutrals like mocha and “gray” create a sophisticated backdrop that can make everything look pulled together and modern.

Look at the sold comps

By looking at the information on homes that have recently sold, you can get a good idea of what people are looking for in a home. If every home sold has a swing set in the back yard – you may want to consider adding a swing set yourself.

Don’t act desperate

Selling a home is largely about negotiation. If you are desperate to sell, you may end up getting significantly less than what the home is worth. Don’t put yourself in desperate situations through over leveraging or obtaining too much debt. If you are desperate – at least don’t act like it!

Keep a good mindset

Always focus on maintaining a positive mindset. There are buyers out there looking exactly for your property – you just have to find them. Look at the sale of your property with “business eyes” – and try not to take it personal.

Consider your agent’s opinion

Find an agent you trust and follow their advice as often as you can.

Walk in the shoes of a buyer

Start by shopping online for local houses similar to yours. Learn how they price and present their house. What stands out to you? What makes you turned off? Take note of how you react, and then make adjustments accordingly.

Visit neighborhood open houses open-house2

This will give you an instant education in what not to do when marketing your own home, as well as what you should do. professional camera

Rent a professional camera

Since the vast majority of potential buyers will use the internet to scope out your home before actually stepping foot inside, the photos you use are the most important part of the listing process -so make them count. Use a high quality DSLR camera with wide angle lens to take photos of your house.

Sweeten the Deal

Throw in extra incentives for those who submit offers. I’ve heard of sellers including fancy cars, vacations, and other perks to incentivize people to buy a property.
Build trust – Be professional, talk with no hesitation, and create a “win win” atmosphere when marketing your property. If the buyer senses that you are trying to pull something over them – they are going to run for the hills.

Never over-upgrade

Only do updates that will pay off and get you top dollar. Overdoing the repairs won’t always raise the total price of the property but it might just make you owe more than it’s worth. Look at the competition and seek to be slightly better than them – but don’t over do it.

Always be up for a showing

You never know when your buyer is going to walk through the front door, so be prepared at all times. Keep the home organized, clean, and smelling great 100% of the time.outside

It’s about first impressions

Sometimes, the first impression is the only impression. In fact, most buyers decide if they’ll place an offer on a house within just seconds, so make sure it counts.

Make all necessary repairs

A leaky faucet or chipped paint on a baseboard can suggest to buyers that you might not be maintaining the house well. Do quick fix for these before any open houses or showings.

Check the season

Determine when the best season to sell your property is – and aim for that season if possible. In most areas of the country, selling in the late spring is usually the best time. swing

Just Do It

All the tips on this list are helpful – but don’t think that you need to do all 100 in order to sell your home. Focus on the few tips that you think will give you the biggest bang for your buck – and do them well.

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What is House Flipping?

Posted by Lynda Poe on September 30, 2013 in Buying, Financing, Investing |

House flipping is the process of buying a house and then selling it at a profit within the shortest amount of time manageable. An investor is aiming to make a good sum of profit within a very short period of time, thus the word flipping.

What is the difference between real estate investing?

Buy and hold real estate investment (oftentimes termed “land lording”) on the other hand, means buying a house or property, holding it for a period of time thereby creating cash flow through rental income. The buy and hold real estate investor may at some point in time sell that property at a profit or he may keep it forever.

How to Start?

Rule #1: Research
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If there’s one thing that is critical to your success in flipping houses, it’s doing exhaustive research on the demographic areas prior to implementing your house flipping plan If you buy a property in a run-down area with little historical price appreciation, then your target buyer is going to most likely offer below market price.

Rule #2: Network

The fastest way to get your foot in the door flipping houses is to get to know other real estate investors in your own area. When you are first starting, it’s important to know what you know, but even more important to know people who know!

Rule #3:Find Investors
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Without someone to lend you mo for the purchase of the house, you’ll have a difficult time getting your house flipping career started. You can find investors at REIA Meetings, networking groups, chambers of commerce. you can also find investors by asking friends, family, neighbor and business associates.

Rule #4: Start building your fix and flip team

This is an area where many people that are new to real estate investing are not so sure about. Fixing and flipping is not a solitary indeavor. Although the reality shows may make you think that it is, building a competent house flipping team is essential to your long-term success. flipping houses.

Rule #5: Start locating property
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Your real estate agent on your house flipping team is likely the best resource for you to locate good property deals, but you need to be careful. Real estate agents make money by buying and selling property-not by turning a profit on your house flips. Its extremely important to educate yourself and talk to them about your plan for buying properties and how you’re going to fix and flip them.

Rule #6: Analyze the deal
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One of the best ways to determine the value of a property is to compare it to other properties that have sold in that neighborhood that are similar to the property that you are thinking about buying. This is what is referred to as “comps.”

Rule #7: Make the offer

It stands to reason that you can’t fix and flip a property unless you actually buy it. This is where fear really manifests itself. This is where the rubber meets the road and you need to overcome that fear and actually make an offer.

Rule #8: Manage the rehab process
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Just like when you bought the property using a formula to control your purchase, controlling your rehab costs is just as important. Using general contractors is a great way to manage the rehab if you can afford them.

Rule #9 Sell your property
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You’ve worked hard and now it’s time to realize the profit. This where all your hard work really pays off.

ESSENTIAL HOUSE FLIPPING TIPS

Tip #1: Remember ARV

ARV (after repair value) is the price you sell a property for when you’ve completed the rehab. Make sure you revisit the ARV with your real estate agent before you put the house on the market to make sure the ARV still current. If the market has changed, you may need to adjust ARV up or down.

Tip #2: Use the 70% Rule

To make sure you profit on every deal, take your ARV and multiply it by 70%. Then deduct the cost of your repairs. What you have left over is your MAO (maximum allowed offer) – this is the maximum price you should pay for the property. Always stick to the 70% Rule!

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VA Loan Closing Costs

Posted by Lynda Poe on September 24, 2013 in Buying, Financing, Lenders |

VA Loan Guidelines

The veteran can pay a maximum of all reasonable and customary amounts for any and all of the “Itemized Fees and Charges” designated by VA as defined below plus a 1% flat charge by the lender plus reasonable discount points. Some special provisions apply to construction, alteration, improvement and repair loans.

HOW TO HAVE MINIMAL TO NO CLOSING COSTS

Please note that often times veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract. The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation with the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. Closing costs and pre-paid expenses can vary widely with 3% – 5% as the range for most places. If you want a more specific number in this regard after you have started looking for properties, we can provide you with a Good Faith Estimate for a particular property that you have an interest.

ITEMIZED FEES AND CHARGES

The VA defines allowable fees and charges that the veteran borrower can pay or closing costs that may be charged to the borrower. These costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable and generally paid by the seller when purchasing a new home or by the lender when refinancing your current VA mortgage. Itemized fees and charges are as follows:

APPRAISAL AND COMPLIANCE INSPECTIONS

The veteran can pay the fee of a VA Appraiser and VA compliance inspectors. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.

RECORDING FEES

The veteran can pay for recording fees and recording taxes or other charges incident to recordation.

CREDIT REPORT

The veteran can pay for the credit report obtained by the lender.

PREPAID ITEMS

The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.

HAZARD INSURANCE

The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.

FLOOD ZONE DETERMINATION

The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

SURVEY

The veteran can pay a charge for a survey, if required by the lender.

TITLE EXAMINATION AND TITLE INSURANCE

The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

SPECIAL MAILING FEES FOR REFINANCING LOANS

For refinancing loans only, the veteran can pay charges for Express Mail or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.

VA FUNDING FEE

Unless exempt from the fee (10% minimum disability from the VA), each veteran must pay a funding fee to VA.

OTHER FEES AUTHORIZED BY THE VA

Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may request VA to approve such a fee if it is, (a) normally paid by the borrower in a particular jurisdiction, and(b)considered reasonable and customary in the jurisdiction.

The following list provides examples of items that CANNOT be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat 1% fee.

Loan closing or settlement fees, document preparation fees, preparing loan papers or conveyance fees, attorneys services other than for title work, photographs, interest rate lock – in fees, postage and other mailing charges, stationery, telephone calls and other overhead, amortization schedules, pass books, and membership or entrance fees, escrow fees or charges, notary fees, preparation and assignment of mortgage to other secondary market purchasers, trustee’s fees or charges, loan application or processing fees, fees for preparation of truth-in-lending disclosure statement, fees charges by loan brokers, finders or other third parties, and tax service fees.

When reviewing allowable borrower fees and charges, many of the items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. Please consult with your Real Estate Professional handling the transaction.

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9 Fast Fixes for your Credit Score

Posted by Lynda Poe on February 6, 2013 in Buying, Investing, Lenders |

If your scores are below 760, you may not be getting the best rates for loans or insurance — so doing some credit repair can save you money.

So you’ve had a few problems getting the bills paid lately, and you’re wondering what you can do to repair the damage to your credit.

You’ve got plenty of company. Tens of millions of people in the United States have credit blemishes severe enough (and FICO credit scores under 620) to make obtaining loans and credit cards with reasonable terms difficult.

Or maybe your credit is OK, but you’d like to make it better. After all, the better your credit, the less you pay in interest and, typically, for insurance.

What to do if a debt collector calls

To improve your credit scores, it’s important to know where you stand now. You can get free credit reports once a year, but you typically have to pay to see your FICO scores. (You can get other credit scores for free at sites like Credit Karma, but these aren’t typically the scores lenders use.)

You can buy two of your three FICO scores for $19.95 each at myFICO. (One of the three credit bureaus, Experian, no longer sells FICO scores to consumers, although it still sells them to lenders.)

If your scores are above 760, you’re probably already getting the best rates. If they’re anywhere below that mark, though, they could stand some improvement.

Liz Pulliam Weston
So here are the nine steps you can take to speedy credit repair:

1. Get a credit card if you don’t have one
Don’t fall for the myth that you have to carry a balance to have good scores. You don’t, and you shouldn’t. But having and using a credit card or two can really build your scores.

If you can’t qualify for a regular credit card, consider a secured credit card, where the issuing bank gives you a credit line equal to the deposit you make. Look for a card that reports to all three credit bureaus.

2. Add an installment loan to the mix
You’ll get the fastest improvement in your scores if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans).

3. Pay down your credit cards
Paying off your installment loans (mortgage, auto, student, etc.) can help your scores but typically not as dramatically as paying down — or paying off — revolving accounts such as credit cards.

Lenders like to see a big gap between the amount of credit you’re using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help; getting balances below 10% is even better.

Though most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.

4. Use your cards lightly
Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What’s typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements.

You often can increase your scores by limiting your charges to 30% or less of a card’s limit; 10% is even better. If you’re having trouble keeping track, you can set up email or text alerts with your credit card companies to let you know when you’re approaching a limit you’ve set. If you regularly use more than half your limit on a card, consider using other cards to ease the load or try making a payment before the statement closing date to reduce the balance that’s reported to the bureaus. Just be sure to make a second payment between the closing date and the due date, so you don’t get reported as late.

5. Check your limits
Your scores might be artificially depressed if your lender is showing a lower limit than you actually have. Most credit card issuers will quickly update this information if you ask.

If your issuer makes it a policy not to report consumers’ limits, however — as is sometimes the case with “no preset spending limit” cards — the bureaus may use your highest balance as a proxy for your credit limit.

You may see the problem here: If you consistently charge the same amount each month — say, $2,000 to $2,500 — it may look to the credit-scoring formula like you’re regularly maxing out that card.

If you have an American Express charge card — the kind that must be paid in full every month, rather than the kind on which you carry a balance — you probably don’t have to worry, because charge cards typically aren’t included in the credit utilization portion of the FICO formula.

If, however, the card is categorized on your credit reports not as a charge card but as a revolving credit card, and either a credit limit or high balance is reported to the bureaus, your balances on the card could be a problem.

You could go on a wild spending spree to raise the high balance reported to the credit bureaus, but a more sober solution would simply be to pay your balance down or off before your statement period closes.

6. Dust off an old card
The older your credit history, the better. But if you stop using your oldest cards, the issuers may decide to close the accounts or stop updating them to the credit bureaus. The accounts may still appear, but they won’t be given as much weight in the credit-scoring formula as your active accounts, said Craig Watts, an executive at Fair Isaac, the company that created the FICO score.

So you might want to charge a recurring bill to one of those little-used accounts or take them out for dinner and a movie occasionally — always, of course, paying off the balance in full.

7. Get some goodwill
If you’ve been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a “goodwill adjustment” improve the better your record with the company (and the better your credit in general). But it can’t hurt to ask.

A longer-term solution for more-troubled accounts is to ask that they be “re-aged.” If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on-time payments.

Quiz: Estimate your credit score
8. Dispute old negatives
Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as “not mine.” The older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute.

Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.

9. Blitz significant errors
Your credit scores are calculated based on the information in your credit reports, so certain errors there can really cost you. But not everything that’s reported in your files matters to your scores.

Here’s the stuff that’s usually worth the effort of correcting with the bureaus:

Late payments, charge-offs, collections or other negative items that aren’t yours.
Credit limits reported as lower than they actually are.
Accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full.
Accounts that are still listed as unpaid that were included in a bankruptcy.
Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your reports.
You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your reports. It’s a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict.

Two more items you don’t need to correct:

Accounts you closed listed as being open.
Accounts you closed that don’t say “closed by consumer.”
Closing an account can’t help your scores and may hurt them. If your goal is boosting your scores, leave these alone. Once an account has been closed, though, it doesn’t matter to the scoring formulas who did it — you or the lender. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

4 common credit mistakes
Other actions to beware when you’re trying to improve your scores:

Asking a creditor to lower your credit limits. This will reduce that all-important gap between your balances and your available credit, which could hurt your scores. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it — but don’t do so without being asked.

Making a late payment. The irony here is that a late or missed payment will hurt good scores more than bad ones, dropping 700-plus scores by 100 points or more. If you’ve already got a string of negative items on your credit reports, one more won’t have a big impact, but it’s still something you want to avoid if you’re trying to improve your scores.

Consolidating your accounts. Applying for a new account can ding your scores. So, too, can transferring balances from a high-limit card to a lower-limit one or concentrating all or most of your credit-card balances onto a single card. In general, it’s better to have smaller balances on a few cards than a big balance on one.

Applying for new credit if you already have plenty. On the other hand, applying for and getting an installment loan can help your scores if you don’t have any installment accounts or you’re trying to recover from a credit disaster such as bankruptcy.
By the way, all these suggestions work best if you have poor or mediocre scores to begin with. Once you’ve hit the 700 mark, any tweaking you do will tend to have less of a positive impact.

And if your scores are in the “excellent” category, 760 or above, you’ll probably be able to eke out only a few extra points despite your best efforts. There’s really no point, anyway, since you’re already qualified for the best rates and terms. Here’s one area where it’s really OK to rest on your laurels and worry about something else.

Liz Weston is the Web’s most-read personal-finance writer. She is the author of several books, most recently “The 10 Commandments of Money: Survive and Thrive in the New Economy” (find it on Bing). Weston’s award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Click here to find Weston’s most recent articles.

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Buying Foreclosures with Retirement Funds

Posted by Lynda Poe on December 5, 2012 in Buying, Financing, Investing, Lenders |

With hard-to-get financing one of the biggest hurdles involved in a foreclosure purchase, funding those purchases with a retirement account could be an attractive option that helps investors forgo the hassle of traditional financing and also moves their offers to the front of the line.

A self-directed IRA allows investors to buy a property outright or at least provide a sizable down payment using money from their retirement account. These self-directed IRAs can be used to purchase properties in any stage of foreclosure — default, auction or bank-owned — according to experts we interviewed for the October issue of RealtyTrac’s award-winning Foreclosure News Report.

Strategy 1: Buy Short Sales in Default
Veteran real estate investor Stan Brady of Atlanta started using his retirement account to fund property purchases about 12 years ago, after a trip to Washington D.C. where he met with some lawmakers and asked them about raising contribution limits for retirement accounts. They expressed no interest in doing that, so he decided to take matters into his own hands with a self-directed IRA.

“The contributions alone would not be enough to get me where I needed to be for my family,” he said. “It was a footrace to my retirement and security for my children, and I knew that I couldn’t possibly contribute enough to make it work … I needed to speed it up.

Brady identified lists of homeowners in default and in the foreclosure process as one potential goldmine for deals.

“Those are great opportunities for an investor to investigate. Move to the front of the line by making those homeowners an offer before it gets tangled up in the whole foreclosure mess,” he explained. “Say hey, ‘you’re about to lose your house, would you like to sell it?’ And a lot of buyers will take you up on it right there.”

Strategy 2: Buy Homes at Foreclosure Auction
Brady is a client of Equity Trust, a custodian for self-directed IRAs that boasts more than 130,000 clients with approximately $10 billion in assets.

“We’re probably buying and selling 250 properties a week,” said Equity Trust CEO Jeffrey Desich, emphasizing that his company acts as a custodian for its clients’ retirement accounts and does not provide investment advice.

Desich said that investing with a truly self-directed IRA offers two big advantages: diversification of investments and tax benefits. Once an investor learns the ground rules of self-directed IRAs, the possibilities for creative real estate investing — not to mention other investments such as purchasing tax liens or mortgage notes — are many, according to Desich.

As an example Desich provided a possible scenario where an investor purchases a home with a $140,000 mortgage for $70,000 at foreclosure auction — which can be done with a self-directed IRA — and then sells the property back to the former homeowner for $100,000 using seller financing.

“Rather than evict you I’d rather come in and talk to you,” he said, noting that the homeowner gets to stay in the home but is making lower mortgage payments, which go directly back into the investor’s IRA, acting as the bank.

After a few years the homeowner’s credit should be repaired enough to qualify for a conventional loan, which then can pay off the entire mortgage balance to the investor’s IRA.

“(The investor) just made 30 grand plus the interest you paid me over three years on the hundred grand,” Desich explained, noting that the original foreclosing lender also benefits by getting “70 grand upfront” rather than having to deal with foreclosure, eviction, managing and marketing the property for sale.

Strategy 3: Buy Bank-Owned Homes
Lorraine Walls and her husband, Richard, purchased three foreclosed homes on the same street in Lehigh Acres, Fla., in late 2009 using their self-directed IRAs.

“We bought three on the same street because they were all foreclosing at the same time,” said Walls, named 2011 Self-Directed Investor of the Year by Equity Trust.

The income generated by the Walls’ IRA-owned homes flows directly back into their IRAs, as required by the Internal Revenue Service. Any property expenses flow directly out of the IRA, which is just fine with Walls.

“All the bills go to the IRA, all the interest is going to the IRA, and it never affects your household budget,” she said.

Although she and her husband purchased the Lehigh Acres homes primarily for the long-term cash flow, Walls said steady gains in home price appreciation have her rethinking that strategy.

“Actually I’m thinking about selling because the prices have almost doubled in the last two years,” she said, noting that her real estate agent is urging her to list one home in particular. “I paid 58 thousand for this property and he wants to list it for about 105 (thousand).”

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Sell A House Quickly!

Posted by Lynda Poe on November 20, 2012 in Selling, Staging |

Sell a House: Quick and Effortlessly

By: Diane Fitzpatrick
If you want to know how to sell a house quick and effortlessly, it means making it stand out among the competition and making wise marketing decisions that will attract buyers, whether they’re looking at the home from the street or taking a tour of the inside.
1. Price It Right
Before putting your house on the market, research current market trends, look at comparable houses in the area and price your house to sell. Don’t be tempted to overprice your property just to see if you can make a quick, high profit. Selling your house quickly means pricing it right the first time around.
2. Make Your House Neutral
You may love your hot pink kitchen wallpaper and your lime green bedroom, but it’s unlikely you’ll find a buyer who has the same tastes as you. To appeal to as many prospective buyers as possible, make your house interior as neutral as possible. If you’re repainting or recarpeting to sell, choose beige, cream and other neutral colors.
3. Clean and De-Clutter
When showing your house, clear off all counters, dresser tops, desks and tabletops to the bare minimum. It may look plain, but when seen through a buyer’s eyes, the more bare and stark, the better. Also clean out cabinets, cupboards, closets and all storage areas to give a neat, roomy appearance. That way, they can imagine their own items in your space.
4. Give the Exterior Curb Appeal
Look at the exterior of your house in the way a stranger would see it. Is there peeling or cracked paint? Dirty windows? Dead flowers and dried-up leaves in the flowerbeds? Regardless of the season, give your house a good sprucing up. If house shoppers fall in love with your house before they ever set foot in it, they’re likely to overlook some of its faults.
5. Shine a Light
You can’t have too much light in a house that’s on the market. For showings and open houses, turn on every light in the house, including ones you rarely use, ceiling lights and all lamps. During the daytime, open blinds and curtains. Also wash the windows before you put your house on the market. Check all lights, and replace any burned-out light bulbs.
6. Leave During Showings
When your house is being shown to prospective buyers, don’t follow them around the house. In fact, don’t even be there. Let the real estate agents handle the showings of your house. Put the kids and the pets in the car, and leave. House shoppers don’t want to feel rushed or on the spot while they’re looking at your house. Give them all the time they need. If for some reason you can’t leave the house while it’s being shown, try to stay in an out-of-the-way area of the house, and don’t engage in conversation with the prospective buyers.
7. Advertise Online With Photos
Real estate advertising has changed with the times. If your real estate agent isn’t putting multiple photographs of your house on the Web, they’re missing out on the bulk of the interested buyers. Home buyers often find the houses they want to look at by surfing the Web, and they let their agent know what they want to see. If they can’t see photos of the interior of your home, they’re likely to skip over it. Talk with your real estate agent about how they plan to advertise your sale.
8. Leave Anything That Should Stay
Don’t be greedy with items in your home that really should stay. Window treatments, especially drapes and blinds that are custom made to fit your windows, should stay in the house. Taking them to a different house is rarely successful, and it causes the new owners of your house to buy new ones. The same is true for custom-fitted rugs and built-to-fit furniture. Ask your real estate agent about regional standards for leaving refrigerators, washers and dryers, and other items. The more you’re willing to leave in the house, the more attractive your property will be to buyers.
9. Be Anonymous
Don’t offer personal information about yourself, your relationship to the home or your reason for moving. If a buyer knows you need to sell quickly, your situation may encourage prospective buyers to make a lower offer. You and your listing agent are under no obligation to tell a buyer why you are moving, your financial situation or any other personal details.
10. Don’t Overdo It
Some sellers set their dining room tables with elaborate centerpieces, plates and all, as if a dinner party were about to begin. Champagne on ice and two glasses next to the tub or the smell of simmering potpourri throughout the house are too obvious. Even the most gullible buyer will think you’re trying to hide something. Don’t waste your time staging a mood in your home. Use that time to make your home as clean and roomy as you can.

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Water the foundation please…

Posted by Lynda Poe on August 15, 2012 in Buying, Investing, Landlording, Leasing, Selling, Staging |

Living in Southwest Oklahoma we constantly struggle with drought conditions. Two issues as a result of drought are loosing plant life and grass and foundation damage.

It is imperative that you water not only your yard but also your foundation. I have been told by a local foundation expert that if your house sits on a pier and beam foundation, the kind you can crawl under, then water about a foot to three feet from the home to keep the ground from drying out. If you are on a slab then watering closer to the house is okay.

I was also told by the foundation expert that it isn’t the drying out of the ground that is so damaging to the foundation but it’s when it finally does get water and there is expansion of the ground from absorbing the water. Therefore trying to keep the ground around the house from drying out is the goal.

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Understanding the 1031 Tax Exchange

Posted by Lynda Poe on August 8, 2012 in Buying, Investing, Selling, Taxes |

Real estate investors looking to sell an investment property and purchase a new one can greatly benefit from the Internal Revenue Code Section 1031. Section 1031 is one of the most powerful tax deferral tools currently available for taxpayers.

In short, this section allows for a tax-deferred exchange. This means that taxpayers do not have to pay income taxes when they sell an investment property and reinvest the proceeds from that property into a like-kind or similar asset.

A 1031 Exchange comes with numerous advantages for taxpayers and paves a road of encouragement for real estate investors so that they might continue to invest. First and foremost, Section 1031 gives the taxpayer the ability to sell business, investment and income property and not pay federal income taxes on it if they replace the sell with a like-kind property.

According to the IRS, like-kind properties must be the same in character or nature. They can, however, be different in quality or grade. Real estate investment properties that qualify under this IRS code include rental houses, retail and commercial properties, apartment buildings, office and industrial buildings, ranches and undeveloped land.

Properties that do not qualify under a 1031 Exchange are personal residences, interests in partnerships, business inventory, and property owned by dealers.

While Section 1031 obviously presents a big perk for real estate investors, there is a disadvantage. Because the exchange reduces the basis for depreciation on the replacement property, the replacement property will then include a deferred gain that will be taxed in the future when the taxpayer sells his or her investment.

There are four types of exchanges made possible through Section 1031. First, is a simultaneous exchange. This type of exchange occurs when the taxpayer closes both properties on the same day. This is usually a back-to-back transaction with no lapse of time between the closings.

Second is a delayed exchange, also known as a “Starker Exchange.” This type of transaction refers to the closing of the replacement property after the closing of the relinquished property. A delayed exchange does not take place on the same day. The delayed exchange is mandated by strict time frames pursuant to Section 1031. Specific timelines are in place to allow the taxpayer a certain amount of time to search for a replacement property and sign a contract to purchase it.

Next is the reverse exchange also known as the title-holding exchange. This is an exchange that occurs when the replacement property has been closed on prior to the selling of the relinquished property. When entering into this type of an exchange, the intermediary will retain the replacement property’s title until the taxpayer closes the relinquished property.

Lastly, is the improvement exchange which also serves a title-holding exchange. This type of exchange refers to a situation that involves the taxpayer purchasing property and arranging improvements for it before it is actually received as the replacement property.

Since Section 1031 does not allow the taxpayer to improve the property, a mediator is employed to retain and close on the title of the replacement property until it is ready to enter as an exchange. Once the improvements are complete the liaison then passes on the title to the taxpayer.

As you can see, there are several situations applicable to Section 1031 that benefit real estate investors. To learn more about IRS Code Section 1031 and how to profit from it, contact your financial advisor or accountant.

Omar Johnson is a real estate investor and author of the home study course “The Real Estate Investors Guide To Finding Motivated Sellers” For more info visit http://www.findingthemotivatedsellers.com .

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10 Ways to Make Your Offer Stronger Without Increasing the Price by ELIZABETH NEWLIN on JUNE 13, 2012

Posted by Lynda Poe on June 27, 2012 in Buying, Investing |

1.Sooner close of escrow date – Many sellers want the deal done as quickly as possible. This is especially true of lender and investor owned properties. If it’s owned by a normal seller living on the property, it’s worth a call to the listing agent to see if the seller has a preferred close of escrow date. Sellers have lives, too. If you schedule around their child’s 3rd birthday party, it just might give your offer an edge.
2.Waive appraisal – If your offer is financed but you have a significant down payment, you may be able to waive your appraisal contingency. This means that you agree to pay the purchase price on the contract regardless of what an appraiser thinks the value of the house is. It means that you will have to be putting down the amount between the appraisal and purchase price plus the minimum down payment, so it’s not an option for everyone, but in this market with appraisals coming in all over the board, it’s an attractive feature to sellers.
3.Increase earnest – Earnest money is simply the money you give to title to keep you honest in the transaction. Putting down a larger earnest doesn’t cost you a dime more in the bigger picture, as long as you’re willing to live with the rules of the contract and it gives the seller the impression you’re serious and stable.
4.Don’t ask for concessions – In our current time of ‘cash is king’, many buyers want to ask the seller to pay their closing costs. This reduces the seller’s net by generally about 3% of the purchase price and weakens your offer. If you don’t need it, don’t ask for it.
5.Include an As-Is Addendum – The standard contract allows the buyer an inspection period and then the right to ask the seller to make repairs. The seller doesn’t have to agree, but then the buyer has the right to cancel. If the buyer includes an ‘As-Is Addendum’ with his contract, he still has the right to his inspection period and can cancel for anything scary he finds, but it lets the seller know he doesn’t plan on asking for repairs, which can be very attractive to a seller.
6.Write a letter describing your family and why you are looking forward to living in the house – Normal sellers like to think they make their decisions based only on finances, but the truth is they’re selling a part of their lives. Many sellers really want nice people who will take good care of their house as their buyers. If you make an effort to let them know this is who you are, they may just pick you over the buyer they know nothing about. (I should note if this is a lender owned property, save your ink and paper. The bank doesn’t give a rat’s patootie who buys the house.)
7.Use the title company the seller requests – This is generally something that’s important to the Realtor and not the seller, but regardless, it’s one less battle that agent will have to fight and makes your offer just that much prettier and shinier.
8.If you happen to meet the seller compliment them on their choice of everything in the house – Again, sellers are usually people with souls, who are vulnerable to flattery. Exploit that knowledge for everything it’s worth in a market like this. The seller holds the power; you gotta do what you gotta do to balance it out. Ex: Oh Seller, I just adore the color scheme in this room. I can’t tell you how long I’ve wanted a teal and peach wallpaper border. Can you tell me where you bought that poster of howling wolves? I really think it looks so right there, if I get this house I might have to buy one just like it.
9.Have your agent use connections to your advantage – If your agent knows or has worked before with the listing agent, have her call and sweet talk the agent. If two offers are the same, it makes sense to go with the one represented by an agent you know and trust. This makes the transaction go more smoothly. It can pay off to play the favoritism card.
10.Pay cash – This one also isn’t an option for everyone, but if it is, use it!

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