finding, flipping & fixing the beginning real estate...
TRANSCRIPT
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Finding, Flipping & Fixing
The Beginning Real Estate Investor’s
Basic Training Course
Timothy McKierney
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Finding, Flipping & Fixing
The Beginning Real Estate Investor’s
Basic Training Course
Introduction………………………………………….7
Section One – Birddogging (Finding)
Find a Property……………………………………….15
Lead Sheet……………………………………………28
List a Property……………………………………….31
Sell the Property……………………………………..34
NCND……………………………………………….41
Resources 1…………………………………………..46
Section Two – Wholesaling (Flipping)
Wholesaling………………………………………….49
Finding Sellers………………………………………64
Investor Profile Sheet……………………………….69
Filling Out the Lead Sheet and Profile……………...72
Agents and Properties……………………………….78
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Contracts……………………………………………..86
Section Three – Fix and Flip (Fixing)
Fix and Flip…………………………………………..95
Resources – Videos…….…………………………..109
Resources – Books……………………………….....116
Forms and Documents
Forms and Documents…………………………….118
Affidavit & Memo………………………………...121
Back to Back Closings ……………………………127
B-C Real Estate Purchase and Sale Sample……….129
Business Card……………………………………..143
Buyer Script……………………………………….145
California Information…………………………….147
Commission Agreement…………………………..150
Disclosure Agreement…………………………….151
End Buyer Down Payment Statement…………….152
Land Contract…………………………………….153
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Land Trust Revocable Trust………………………..159
Probate Letter………………………………………166
Probate Tracking Sheet……………………………..168
Property Appraisal Sheet……………………………172
Real Estate Affidavit & Memo – Generic…………..177
Real Estate Affidavit & Memo – Simple……………187
Realtor Script………………………………………..190
Resources Books…………………………………….193
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Real Estate Investor Training
INTRODUCTION
Welcome to Real Estate Investor Training!
The objective of this course is that you will be able to find,
evaluate and sell properties quickly at wholesale prices. To
do that, you will also need to find buyers, market your
properties, write contracts to protect yourself both as a
buyer and seller and to negotiate effectively for the best
deal.
You will learn all of that in this course. And you don’t need
a website. All you need to succeed is a cell phone and
internet connectivity.
You may think there’s a lot to learn but don’t worry, we’ll
take it step by step and learn it one piece at a time so that
by the end of this course, you will be a true real estate
investor. As you go through this program, you may
discover many things you do know, you just haven’t
applied them to real estate. Take notes, study and apply
your knowledge as soon as you can. I recommend doing at
least one thing a day, beginning today.
In this course you will learn three methods of making
money from real estate. The first method is commonly
called “birddogging.” In this method, you collect a Finder’s
Fee for each property you find and sell to an investor. How
much you receive from each home you find is negotiable
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but I recommend you use either a percentage method or a
fixed fee basis.
The second method is “Wholesaling.” This is when you
find a property, put it under contract and then either assign
or sell the property to an investor. This has a bit more risk
than birddogging and will require you have some cash to
pay the deposit and possibly a down payment. That’s why
birddogging comes first, so you can build up your cash
reserves before going into Wholesaling. Wholesaling is
also called simply “Flipping.”
Method three is “Fix and Flip.” Locating and evaluating a
home is the same as in the first two strategies, but in Fix
and Flip, you will buy the house and then fix the minor
deficiencies with the property. Next you will raise the price
of the property to a level you think is fair – lower for a
quick sale, higher if you can afford to wait longer for the
sale.
Fix and Flip requires that you are able to evaluate the costs
of repairing and upgrading the property accurately (within a
range) and that you have the cash set aside to repair the
property and then that you have the cash set aside to hold
the property until it sells. Some investors use this strategy
exclusively and have made millions using Fix and Flip.
We also provide a Financial Management Planning course.
This is available separately and will help you manage your
income, invest for cash flow and provide a means to
monitor your income and expenses.
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With the Financial Management Planning course, we will
show you several passive income sources. Passive income
is – ideally – where you make an investment and then never
go back to it, but the money from that investment keeps
rolling in forever. Less ideal is where you make an
investment but then have to spend a few hours a week (or a
month) to maintain the cash flow from that investment.
Passive income sources vary widely in their returns ranging
from just 2% or 3% a year (or even negative) to well over
100% a year. More typical returns currently are 15% to
25% each year. As you may imagine, the higher the return
the higher the risk so we will also teach you how to
evaluate the risk and benefits of an investment.
Most passive income investments require that you be an
“accredited investor.” The IRS defines an “accredited
investor” as someone who has earned an income of at least
$200,000 in the previous two years AND has a net worth of
at least one million dollars AND you expect to earn at least
$200,000 in the current year. This means you probably
won’t be able to make a passive investment tomorrow, but
if you keep investing in real estate, sticking to the basics –
and don’t get crazy or make outrageous risks – and if the
economy doesn’t poop on us – you will be an accredited
investor sooner rather than later.
OVERVIEW OF STRATEGY ONE
1. Find a property
2. List the property
3. Sell the property
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Let’s take each step one by one and explore what you’ll be
getting into.
Find a Property
We will show you 7 different ways of finding suitable
properties for sale. Then we’ll show you how to evaluate a
property to weed out those that are not suitable, keeping
only those that will sell fast and start putting money into
your pocket quickly.
List the Property
Listing a property for sale begins with finding possible
buyers for your properties. We will show you at least 3
different ways of finding buyers. Next we will provide you
with a set of websites that allow you to post your home for
sale for free so that you receive national exposure for your
homes.
Sell the Property
Most likely you will be selling your homes to other
investors. These will be the on the list of potential buyers
you developed from above. As buyer inquiries come in,
you will respond with a Finder’s Fee agreement, telling
them that specific details of the property (address & MLS
number if it has one) will be sent to them as soon as they
have signed, dated and returned the Finder’s Fee
agreement. You will also tell them that they may use your
broker to buy the property or they can acquire their own. I
suggest this for two reasons. 1. If they use your broker you
have greater control over the transaction meaning you will
be less likely to get cut out of the deal (doesn’t usually
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happen, but sometimes it does). 2. By using your broker, it
saves your buyer time in finding their own broker. Because
the homes you find often are sold within a few days (by
others competing against you), you want your buyer to be
able to buy from you as soon as possible. We will give you
an email format to use for this.
And that’s pretty much it for the Overview of the program
and the Overview of the first strategy.
A few tips:
For your phone number, I do not recommend you use your
home phone. Either use your cell number or get a separate
cell phone or online phone number for your business. See
Resources for details.
Business cards. You will need business cards eventually.
You can order up to 250 cards free from Vistaprint.com
and just pay the shipping charge – usually $9.95.
Emails: When corresponding to sellers, agents, buyers,
attorneys or other professionals, you should keep the length
of each line of your email to a maximum of 60 characters.
There are several studies that indicate that emails with a
line length of 60 characters or less are viewed more
favorably and as being more professional by their
recipients. Also emails with line lengths of 60 characters
are replied to more often.
Your office: You don’t need one. Use your bedroom, the
local McDonald’s, a spare room, closet, the garage,
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whatever. I used a table in the shade of the veranda in the
courtyard at Tempe Mission Palms Hotel in Tempe, AZ. I
was outside all day (Loving it!) and when I got too hot, I
went inside for some cool air. I was within walking
distance of a Dunkin’ Donuts and Starbucks where I got my
coffee and donut or bagel for breakfast and within walking
distance of about 20 restaurants of all types for lunch. After
a long, hard day of work (LOL), I was within walking
distance of about 15 taverns, bars and pubs where I would
go for a beer or two and fries, wings, a burger or sometimes
a salad – if I was feeling in a “health mood.”
Business license. You are operating a business so
technically you will need one. But I would be careful about
this. The odds are high that as a private investor, the office
providing business licenses will have no category in which
to place your business and as a result they may give you a
license that is unsuitable for what you do, requires undue
restrictions or places restrictive regulations on your
practices. As a private investor I never got a business
license. It was only when I started a trust, LLC, partnership
or corporation that I obtained a business license. But
remember, you are not an “agent” or “realtor” so stay away
from anything that suggests you are. Why?
Real estate license. If you say you are an agent or realtor
you will need to get a state real estate license. You aren’t
an agent or realtor. You don’t need a license to be an
investor, but you may want to get a real estate license for
your own education. I don’t feel a real estate license is
necessary and they may be more of a hindrance than a help.
I never got one.
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Internet connectivity. You can’t operate this business
without some way of accessing the internet. You will be
locating, listing and evaluating properties largely through
the internet. You will also find many of your buyers on the
internet. As long as you have internet access and a device
that connects you to the internet, you have all the internet
connectivity you need.
Two Final Thoughts
There are two axioms in real estate investing that you may
have heard:
“Cash is King.”
“You make your money (profit) when you buy a property,
not when you sell it.”
The “location, location, location” axiom you may be
familiar with does not apply here because, if the price is
right, there will always be someone who’ll buy, regardless
of where the property is located.
Cash is King. If you have cash to make a deal, you will
always get the deal over someone who does not or who has
to borrow money to make the deal. Our goal is for you to
have enough cash on hand – eventually – for “cash is king”
to be a reality for you.
You make your money when you buy a property, not when
you sell it. Ok. This may be new to you and a little difficult
to understand. Proper real estate investing is when you buy
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a property and know that no matter what happens, you can
make a profit from that property. That may be the ideal, but
it doesn’t usually occur in practice. Instead, what most
successful investors do is evaluate a property, estimating
their potential profit and establishing an exit strategy for
that property – all before they buy it. That way the odds
that they will profit from the deal rise substantially and risk
is greatly reduced. That’s what I teach and it will save you
a lot of heartaches (and lots of money) if you follow it.
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FIND A PROPERTY
I am very excited for you to begin this training and I know
that you will become a very successful real estate investor
if you stick with it.
Getting started as a “birddogger” is easy. You won’t be
getting rich, but you will be making a good enough income
to live on.
This is an action-oriented program. You must do what is
necessary in order to succeed. There may be days in which
you don't feel like working, but those are the very days
which will define your success. Get out there and do what
you know you must do. You can take a vacation when you
have achieved your first monetary goal.
Follow this training in order and you should have no
trouble in learning and implementing the material.
My goal is for you to become a successful and skilled real
estate investor and you must learn the material and do the
work in order to succeed.
I have total and complete confidence in you and I know
that your success is just around the corner.
A quick review of what you'll be getting:
Section 1 - Finder's Fees (Birddogging)
Section 2 – Wholesaling (Flipping)
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Section 3 - Fix and Flip
Along the way you'll be receiving a list of resources -
ebooks, books, articles and videos. Read and watch these at
your convenience. They are not required, but they will be
very helpful to your real estate education. You may order
any of these books from me. I will be happy to send them
out right away.
You will also learn how to negotiate a deal, write a
contract, conduct marketing and buy, sell and evaluate
properties.
This is an exciting course and I am excited for you! I know
you are going to be successful!
This training manual is organized into three sections.
Please go through each section in the order described in the
first part of each section.
The sections are:
Finder’s Fee (Birddogging)
Wholesaling (Flipping)
Fix and Flip
You are currently in the first section – Finder’s Fee.
FINDER’S FEE
Please read the following in this first section in this order:
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Find a Property (what you’re reading now)
Lead Sheet
List a Property
Sell the Property
NCND
Resources
FIND A PROPERTY
Following is a list of sources for finding homes to sell.
Hud.gov
This is hands down the best place to find homes at
wholesale prices. You can’t just buy a home here, you have
to place a bid and you have to place a bid through a NAID
broker, but we’ll go over that in a bit. We’ll come back to
this in a bit.
Other Wholesalers
There are other investors in your area that are selling homes
at discount prices. Find them and offer to help sell their
homes for them. Who is going to say “No”?
Bandit Signs
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These are those obnoxious yellow signs you have probably
seen at intersections, nailed to utility poles and alongside
the road. They usually say something like “I Buy Homes
Cash” or something to that effect. This is one of the best
means of attracting sellers as well as buyers if you post
your signs in well-trafficked locations.
Flyers
Create a flyer saying you buy properties cash and then hand
them out all over the place or get someone to hand them out
for you. Not real effective, but you get some inquiries this
way.
Business Cards
Get a business card and hand them out to everyone, place
them wherever you can and stick them up on community
bulletin boards etc. These work fairly well.
Craigslist Ad
A Craigslist ad is one of the best ways to get buyers but not
so effective to obtain sellers. To get sellers using Craigslist,
you will have to go through the real estate for sale section
and start emailing or calling the ads.
Backpage Ad
I’ve heard good things and bad things about Backpage.
What I mean is that for some people it seems to be effective
while for others it has not been. Backpage has not worked
for me, but maybe it will for you.
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There are literally dozens of ways to attract sellers and
buyers, but we will focus on just these seven, especially the
first – Hud.gov
Hud.gov
If you haven’t taken a look at Hud.gov, go there now. On
the first page you will see a lot of information about all the
areas and issues the Department of Housing and Urban
Development (HUD) is involved with. We will use
Hud.gov to find our first set of homes and you may want to
use this exclusively if it is working for you.
Because this is a government site, they don’t make
navigation easy so copy and paste the following link to go
to the homes for sale page.
https://www.hudhomestore.com
You should see a map of the United States in the upper
right and a field for searches roughly in the center.
To find a house for sale, simply click on your state.
Click on the down arrow on “Buyer Type” and click on
“Investor.”
For “Status” click on “Accepting Bids.”
Next on the beds and baths, click on 3 beds and 2 baths. 3
beds and 2 baths are the most sought after homes and you
should be able to sell one quickly if the price is right. If you
don’t have enough homes listed, or any, change your
parameters to 2 beds and 1 bath and see if that works. If
you still don’t get any homes, begin searching through
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neighboring states beginning with 3 beds and 2 baths and
dropping that down to 2 beds and 1 bath until you get a few
homes to review. Don’t use the “Any” category in either
field and don’t use the 1 bedroom option. You will have a
hard time getting someone to buy a one bedroom home –
unless you get a specific request for one.
When you have a list of homes on the hudhomestore site,
arrange them by price by clicking on the down arrow next
to the Price column. You may need to click a couple of
times.
I begin with lowest price first because I want to find homes
that are highly discounted from the local market value.
You need to establish the ARV and market value of a home
before you place a bid. ARV stands for “After Repair
Value.”
To get the ARV, open up a new tab and paste in the
following
http://express.realquest.com
80% of the time, Realquest will provide the best estimate of
the ARV for any given home. Sometimes it doesn’t which
is why you will also need to establish the market value.
For Realquest, go to the Hud site and copy the street
address of the home you need to compare and paste it into
the Realquest search field. Then type in the zip code and
click on the search button.
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You now come to a page that has information about the
home. There should be photos as well as a description of
the property. In the upper left you will see “Estimated
Value.” This is the ARV for that home according to
Realquest’s estimate. Jot down the estimated value.
To obtain the market value, copy and paste the following
http://www.zillow.com
Copy and paste the street address in to the zillow search
field, type in the zip and click on search.
The page that opens in Zillow should be a page with
information about the home. At the top left of the page you
should see the address of the home. To the right is a button
with the word “Filter,” click on it.
Uncheck “For Rent” if it is checked and check “Recently
Sold.” Then click the “Apply” button. You may have to go
back and close and reopen the Zillow page before you get
to this screen.
If the home you need to get a figure for does not show up
on the map, just go up to the address of the property, go to
the end of the address and click. A small panel or field
should show up on the map with the home on it.
Click on the address of the home in the panel or window on
the map. This will take you to a description of the property
with several photos of the home.
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To the right there is a column, often with the names of 2 or
3 agents at the top. Scroll down this column until you come
to “Nearby Similar Sales.”
Scroll a little further and click on “See sales similar to
xxx,” with xxx being the address of the property.
This will bring up a map and list of recent sales.
Beneath the map and above the list of recent sales there is a
group of tabs. One of these reads “Sold On,” and has a
down arrow below it. Click on the down arrow a couple of
times. You want to have the sales in descending order with
the most recent sales at the top.
Review the square footage of the properties sold and ignore
any in which the square footage is 50% higher or lower
than the square footage of the home you are researching.
You want to be able to compare the sales prices for at least
5 or 6 homes of similar size if possible. But if less, just get
as many as you can.
I use Excel, but you can use any spreadsheet you prefer for
the next step. Type in the sales price of each home from
Zillow and sum them. Then get the average. This is the
estimated market value of the home and may be a more
reliable figure than the ARV, but you need them both.
I now create a worksheet for each home filling in the
details of the home. You are going to be using these details
over and over again so you need to have this data readily
available.
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This is the template I use for each home.
Home cost:
HUD ID #:
State:
Description:
Inspection Report
HVAC
Appliances
Plumbing
Water heater
Septic
Roof
Electrical
ARV per Realquest:
ARV per eppraisal.com:
ARV per Zillow:
ARV Average:
Comps:
I use the average of 3 ARV estimates and then compare
that to the comps below. A “comp” is the market value
based on the average of the last several sales of similar
sized homes.
To fill in the details of the home, go back to the
hudhomestore site and click on the “Addendums” tab.
Under “Addendums” you will see a list of reports regarding
the home. These usually, but not always, include a lead
paint report, sales contract packages and a PCR or Property
Condition Report. The PCR is what you need.
Download the pdf and choose the data you need to fill in
the template. You will note that I don’t have it in the same
order as the PCR. I suppose it doesn’t make a difference
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really, but I wanted to disguise my source for the data, so I
rearranged the headings under “Inspection Report,” but I’m
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If they tell you they may be interested in buying a home
from you ask them what they are looking for in regard to a
home. You may have to dig a bit, but try to get them to
divulge the following information if you can:
Size of home you are looking for, (number of beds and
baths). Type of home, (single family, multifamily,
etc).Location or area you want to buy in? What percentage
of fair market value do you prefer to buy at? How fast can
you close? Will you be using cash or financing?
Another good source for other wholesalers is your local
real estate investors association. Join and attend the
meetings and network with as many people as you can.
Hand out your business cards to everyone. Ask them the
same questions as above. These people should be a good
source of both homes to sell and buyers who will buy
homes you find.
Here’s a good technique I learned from China. Before you
attend the next meeting of your local real estate investors
meeting, buy yourself a small (5 inches by 8 inches or so)
spiral bound notebook. Also get yourself a small stapler
and some staples. Now everytime you meet someone,
staple their business card to the top of the page and write in
your notes about that person on the page. Include contact
info, the types of properties they are looking for, whether
they are cash or finance buyers, etc.
Evaluating homes from other wholesalers
To evaluate a home provided to you from another
wholesaler, open up zillow.com, eppraisal.com and
Realquest (express.realquest.com). Then for each of these,
go through the process you used to evaluate a home above.
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You won’t be able to use the template for hudhomestore,
just use something that makes sense to you. Generally try
to fill in as much of the same data as you can.
Bandit signs
Some investors swear by these and others claim they are
ineffective. They work ok for me. (If the police or DPW
doesn’t take them down). I would tell you to follow the
sign regulations in your city.
Bandit signs are the yellow 24x15 or so signs you see
everywhere. They are the same signs you used to obtain the
list of other wholesalers.
To attract sellers, get a Sharpie and write “I Buy Homes
Cash. Fast Closing. 999-555-1212” Use whatever works for
you. Replace the phone number above with the phone
number of your cell or your real estate business number.
From here and for all the rest of the selling sources, you
will be using the Lead Sheet. This document (attached) will
give you the data you need to acquire every time you talk
with someone about buying their home. Either transfer this
data to your spreadsheet or type directly into your
spreadsheet when obtaining the data.
Also from here on out, evaluate the ARV and comps
(market value) for each home using the procedure above.
Flyers
On a 8x10 or 8.5x11 sheet of paper write the information
you would for your bandit signs, then hand these out
everywhere. Don’t put these into mailboxes, that’s illegal.
You can stuff them into the crack of a door, underneath the
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windshield wiper of a car or as doorhangers for the home
doorknob.
Business cards
Get your business cards from Vistaprint.com or some other
source. Hand these out everywhere, post to community
bulletin boards and leave wherever you can. Some shops
and stores allow local residents to leave a small number of
business cards on the counter or elsewhere in the store.
Some investors use fluorescent yellow or green cards so
they will stand out from all the other business cards.
Craigslist ad
I’ve had some of my best results in getting buyers from a
Craigslist ad, but for sellers, not so much. Give it a try and
see if it works for you.
Backpage ad
Same as Craigslist ad, try and if it works great, if it doesn’t,
you haven’t lost anything except a few minutes of time.
LEAD SHEET
When you find a home for sale or someone calls you
regarding a home they want to sell you, complete a lead
sheet on each home. I have included a Lead Sheet for you
to use. Just go through the Lead Sheet asking about item
and filling in the details as you go. This will help you to
evaluate a lead and help you to decide if it is a home that
merits further attention.
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LEAD SHEET
Seller Contact Info (include phone, fax, and email)
-
Address of Property for Sale –
How you generated this lead –
Bedrooms and baths –
Square footage –
Construction type (block or frame)–
Repairs needed –
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Reason for selling (be specific. “moving out of
state” is not specific. “moving out of state
because mom is DYING” is specific) –
Are there any taxes due or liens on the property?
Loan balance -
Will you take what you owe?
Are payments and taxes current? If not, how
much is owed?
How much was paid in last year’s taxes? When are
the next payments due?
Asking price –
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If we pay cash, close quickly, and take the
property in its as-is condition, what is the LEAST
you will take? (ask it JUST like this) -
TAV (tax assessed value – you can find this on
county tax website) -
(zillow.com or trulia.com may also have this as
well as realquest.com)
ARV (use realquest.com ONLY) -
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LIST A PROPERTY
To sell a property you will need to find buyers first.
We have gone over a couple of these methods such as your
local real estate investors association and calling the
numbers on bandit signs. We will review a couple of other
methods that have worked.
Craigslist ad
Craigslist is a great way to find buyers for your properties.
Just create an ad describing the property and post. Then
wait for the emails to come in. It’s easy, quick and costs
nothing.
Local agents
You can also contact local real estate agents. Many may
want to work with you to help you sell your property. They
can sometimes be an impediment but often they can help.
Try this avenue if you want to give it a try.
Classified ads
You may want to place an online classified ad on a free site
like Backpage or other. These have worked well in the past
and are likely to continue working well.
You may also want to use paid online ads.
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Create an ad in Facebook and direct them to a website
where you have your properties listed. I said you don’t
need a website, and you don’t, but if you have one you can
send people to it using Facebook and other online paid ads.
Website
You don’t need a website but this is an option you can
choose if you decide to follow this route. You can either get
a paid website or use any of the free website services or a
free blog site. I use several including Blogger.com,
weebly.com, Bravenet.com and others.
Groups
Join several online real estate groups. You can find these at
Yahoo.com and Linkedin.com If you search you will find
others you may want to join. Usually I recommend waiting
a week or two after joining before listing a property, but
use your own best judgment.
Listing a property
I define this as posting a home for sale to a real estate
listing site. These include:
equitypropertydeals.com
postlets.com
sellmyhousefast.org
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myhousedeals.com/property/create/
postyouradvert.com
sellpoint.com
Sellpoint is a pay to post site so it isn’t necessary to use, but
take a look at it and decide for yourself if you want to use it
or not.
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SELL THE PROPERTY
OVERVIEW
1. Write the Finder’s Fee Agreement
2. Send the Finder’s Fee Agreement to inquiring
buyers
3. Receive dated and signed Agreement back from
buyers
4. Provide property details (address) and broker
information to buyers
Write the Finder’s Fee Agreement
A Finder’s Fee Agreement is a legal document between
you and the person you will be referring the property to.
You are not selling the property, you are selling access to
the property. This is worth whatever you can negotiate for
it, but I typically charge 2.5% of the selling price.
Percentage Method
At 2.5%, I don’t always get much, sometimes just $50 or
$75, but sometimes you can get a payday of a couple of
thousand dollars. You may want to charge more or less for
your percentage. If you’re a good negotiator, you might be
able to charge a higher percentage.
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Set Fee Method
Other people charge a set fee to provide access details to a
property. Sometimes they only charge a few hundred
dollars but I often hear figures in the thousands. I have
heard of some people charging $5000 or even $10,000, but
that is uncommon. Usually I hear figures of between $2000
or $3000 to about $5000.
I don’t use the Set Fee method because I don’t feel I have
to. The properties have a certain value in the marketplace.
By charging a set fee, I may upset that perceived value
making the property more difficult to sell. By charging a
percentage, I may not always get much, but the perceived
market value of the home is not skewed out of place.
Use whatever method you feel will work best for you. Next
we will take a look at the different parts of the Finder’s Fee
Agreement.
The official name for the Finder’s Fee Agreement is
actually the NCND. This stands for Non-Compete, Non-
Disclosure. This will legally protect you from having the
person you give information about a property to from going
around your back and cutting you out of the deal. It may
still happen, but now you have legal recourse if it does.
You won’t have to write or find your own NCND. I am
giving you mine to use and you can make changes as you
see fit, but it will be helpful for you to understand what
each part of the document does.
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The first part of this document is the representation of
participatory parties. What this long title does is simply tell
us who the parties signing the document are.
Next is the reason the document is necessary. What is the
purpose for this document? This should be a concise,
succinct statement, no more than one or two sentences in
length.
Next is a set of definitions as used in the document. In the
NCND I have provided, there is only one definition stated –
“Confidential Information.” After this we have the clauses
of the agreement.
“Properties Purchased” does not indicate what specific
properties are being purchased, that is left to a different
document, it describes what happens if and when a property
is purchased under the terms of the agreement.
The Finder’s Fee statement provides for the amount of the
Finder’s Fee.
Next is another definition; in this case “Introduced” is
defined.
“Non-Circumvention” as well as the first clause of the
document are the enforcement paragraphs of the agreement.
They set the parameters and responsibilities by which
signatories are bound.
After this comes a set of short clauses which further define
the document and set the parameters and conditions by
which the signatories are confined.
38
click on your state and fill in your city or zip and make note
of the available brokers. If there isn’t any or if no one
accepts your offer, widen your search by including
neighboring zip codes, cities or states.
When you begin calling brokers – do not email (never
worked for me) – simply ask them if they would be willing
to place bids for you on the Hudhomestore site.
When a potential buyer accepts your offer of using your
broker, simply put the two in contact with each other.
Follow-Up
If a deal does not go through quickly it probably won’t go
through at all, houses often do sell fast on this site. If you
don’t hear anything from the buyer or your broker in a few
days, email the buyer and find out what is going on. Also
call your broker and ask about the transaction. If you find
out the deal is in progress, follow-up with the buyer and ask
a few questions about the transaction. Act as if you know
what it is happening (you do) and ask about prices, actions
and what the buyer’s hopes are in buying the home. This
should be enough to remind the buyer that you are keeping
on top of the transaction and that you are expecting a
paycheck from them soon.
I wouldn’t be blatant and start accusing people of trying to
go behind your back and cut you out of the deal. They may
be doing that, but to accuse people in that manner will be
sure to generate more enemies than friends. If things work
39
out, you can continue your relationship with that buyer or
discontinue your relationship with them as you choose.
Recourse
If someone does go behind your back and buys a house you
referred to them and they don’t pay you the Finder’s Fee,
there really isn’t a whole lot you can do. This shouldn’t
happen ever, if at all, because most business people at this
level need to maintain a clean reputation to remain in
business. But if it does happen, stop working with that
person, obviously. If it happens you have two possible
courses of action you can take; 1. You can sue the person
and 2. You can forget about it and move on. I seriously
recommend you select option 2. The repercussions,
negative feedback, lost time (and lost deals) and costs
associated with pursuing a lawsuit are just not worth it.
There are plenty of buyers out there; just choose the next
and move on.
Why California?
You probably noticed that the Agreement is bound by the
laws of California. The reason for this is that California has
the most stringent and effective legal codes for dealing with
disputes between parties.
Next Steps
Begin. Order your business cards, start looking at homes on
the hudhomestore site and list them on the listing sites and
Craigslist.
40
Begin finding buyers, join your local real estate investors
association, get your bandit signs – handwrite them only –
printing is less effective – and get in contact with other
wholesalers and ask if you can help them sell their homes
and if they would consider buying your homes if the price
is right – and then find out what that price is. Get started,
nothing happens until someone buys something – get
someone to buy something today.
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NCND AND FINDER’S FEE AGREEMENT
This Agreement is effective on the date signed below between
________ (the Representative) and
(name)______________________________________________
_”or assigns” (the Recipient).
WHEREAS, the Representative wishes to provide to Recipient
certain proprietary information pertaining to properties that
Representative provides to Recipient, the Representative and
Recipient agree as follows:
1. CONFIDENTIAL INFORMATION
“Confidential Information” is defined as any financial,
business, customer or technical information previously
or hereafter supplied to or acquired by other or learned
by Recipient and/or Recipient’s officers, partners,
shareholders, unit holders, employees or agents in the
course of our discussions or in communiques with
Representative. Recipient acknowledges that
information concerning opportunities, situations or
persons are the personal property of Representative who
brought this information to the awareness of Recipient
and, therefore, Recipient agrees not to circumvent or
bypass Representative in any way, and agrees to
maintain the confidentiality of information concerning
Confidential Information.
2. PROPERTIES PURCHASED
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If, and only if, Recipient “or assigns” purchases and
closes on any property which was introduced
(“Introduced” is defined below) to Recipient by
Representative, or introduced to Recipient by
Representative whom received the property from
Representative, then Recipient agrees to pay a Finder’s
Fee as follows:
FINDER’S FEE: Pay to Representative 2.5%
of purchase price.
Total Finder’s Fee paid by Recipient will be two and
one half percent (2.5%) of purchase price paid from
escrow on the recorded date of closing. Representative
shall be paid separately and individually.
If Recipient “or assigns” does not purchase and close on
said property, then Recipient shall not owe to
Representative any fees, payments or compensation of
any kind.
“INTRODUCED” is herein defined as a direct email or
other communication from Representative to Recipient
enabling Recipient to ultimately contact the seller or
seller rep of said property.
3. NON-CIRCUMVENTION
Throughout the process, Recipient may learn the names,
telephone numbers, websites, online profiles, email and
contact information of investors, borrowers, lenders,
agents, brokers, banks, employees, principals, officers,
lending corporations, individuals and/or trusts, herein
called Contact(s). Recipient acknowledges, accepts and
agrees that the identities and contact information of the
43
Contact(s) will be recognized by Recipient as exclusive,
valuable and proprietary information of the
Representative. The Recipient agrees to keep
confidential any names or contact information of any
Contact(s) introduced or revealed to the Recipient and
that its firm, company, joint ventures, other associates,
corporations, partnerships, divisions, subsidiaries,
employees, agents, unit holders, shareholders, heirs,
assigns, designees, co-brokers or consultants will not
contact, deal with, negotiate or participate in any
additional transactions with any of the Contact(s)
without first entering into an agreement with the
Representative. Such confidentiality will include any
names, addresses, telephone, telex, facsimile numbers,
email and/or other pertinent information disclosed or
revealed by Representative.
Representative also mutually grants the same rights
to the Recipient in regards to their Contact(s) as
defined above.
4. GENERAL
A. Representative and Recipient agree to keep the
details of this agreement confidential.
B. Recipient agrees to return to Representative, upon
written request by Representative, all writing and
other materials containing Confidential Information.
C. This Agreement shall be binding upon the parties
hereto, and also for the successors and assigns of the
parties hereto, and upon any corporation or legal
entity in which the Recipient holds an ownership
interest.
44
D. This Agreement shall be governed by the laws of the
state of California.
E. This agreement may be amended from time to time
by mutual consent.
F. It is agreed to by all parties to this Agreement that an
e-mailed or facsimile copy of this Agreement is to
be considered as valid and as acceptable as the
original, and that separate signed copies may be
considered as an original if supplying the necessary
signatures in the aggregate.
G. REMEDIES FOR DEFAULT: The parties
acknowledge that in the event of a breach of the
provisions of this Agreement, damages alone shall
not be a sufficient remedy and therefore each party
shall be entitled to all equitable remedies, including
injunctive reliefs and specific performance of this
Agreement.
ACKNOWLEDGED AND AGREED;
Representative:____________________Signature:_________
_____________________________
Address _
Address_________________________________
City, State_________________________Zip__________
Email_______________________________________
Office/Cell___________________________________
Date____________________________________________,
Recipient:
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Company
Name_______________________________________________,
Individual
Name______________________________________________,
Authorized
Signature___________________________________________ ,
Date_________________________________,
Address_____________________________________________,
Address_____________________________________________,
Phone______________________________________________,
Email_______________________________________________,
46
Resources
Articles, Videos 1 & Listing Sites
Free Online Real Estate Investing Articles
http://www.reiclub.com/real-estate-articles.php
Free Online Real Estate Investing Videos 1
http://www.reiclub.com/realestateinvestingvideos.php
Listing Sites – use the following sites to list your properties
Connectedinvestors.com
Freerealestatenetworking.ning.com
Invesdoor.com
Equitypropertydeals.com
Postlets.com
Sellmyhousefast.org
Myhousedeals.com
Postmyadvert.com
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Craigslist.org
Backpage.com
The following is a fee based site, but the fee is low.
Sellpoint.com
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49
REAL ESTATE INVESTOR TRAINING
SECTION TWO - WHOLESALING
Introduction to Section Two - Wholesaling
With this section please read the following sections in
order:
1. Wholesaling
2. Investor Profile
3. Discussion
4. Agents and Properties
5. Contracts
The Discussion is how to fill out the Lead Sheet and
Investor Profile.
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WHOLESALING
Simply put, wholesaling is buying a home at a discount and
then selling it at a profit, most likely to other investors.
This section will give you the information you need to
successfully and profitably find, inspect, evaluate, market
and sell a wholesale property. Secondary objectives include
contacting real estate agents, what to say to them and how
to get them onto your team; how to write contracts and
understanding the closing process. We will also take a look
at different types of financing.
We will look at these areas in the following order.
WHOLESALING
How to Find a Wholesale Home
How to Conduct an Inspection
Evaluating a Property (for Wholesaling)
Marketing to Buyers and Sellers (Additional techniques)
Real Estate Agents
How to Write Contracts
Understanding the Close
Financing
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I know that seems like a lot to learn and it is, but you
probably already know more than you think you do.
AN OVERVIEW OF WHOLESALING
Wholesaling has been popular with savvy investors for a
very long time, but it has really taken off and been adopted
by many more investors since the Market Crisis of 2008.
There is a specific reason for this: foreclosures skyrocketed
and banks had to dispose of properties quickly. Banks
needed to dispose of properties partially for regulatory
reasons, but also because every foreclosed home was a
debit on their balance sheet and the amount of money they
could legally borrow or receive from the Federal Reserve is
limited by their net assets – as reported on their balance
sheet.
To quickly dispose of their properties, many banks put their
foreclosed home portfolio up for sale at prices equaling the
value of the mortgage remaining on a home. Investors
realized this was a golden opportunity and quickly stepped
in to “help” the banks (and line their own pockets with
cash).
Cash buyers (because banks selling REOs (their foreclosed
homes) (REO = Real Estate Owned) only sell to cash
buyers) were able to buy a home for just the amount
remaining on the mortgage. This could vary widely with
many newer homes having a high mortgage remaining, but
there were nearly as many with low balances – the
recession was an equal opportunity recession – everyone
got hit.
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Investors could conceivably buy homes in some areas for
as low as 10% of their market value. In parts of Ohio,
upstate New York, Nevada and Arizona, homes that had
cost hundreds of thousands of dollars could now be bought
for as low as a few thousand dollars – the amount
remaining on the mortgage. These investors then turned
around, upped the price of the home by 10, 20 or 30
thousand dollars, or more, and still quickly sold the home.
This could only happen for investors who had boatloads of
cash; cash is truly king.
Of course, into this market another market arose; the hard
money lender and the transactional funding strategy.
Hard money is money loaned to an individual often by
another individual at high interest rates for short periods of
time. Interest rates were often 12%, 15% or even 18% with
typical terms of the loan for a commercial property of 3 to
5 years. Residential hard money loans were typically 1 to 3
years. But this didn’t always work for the investor who
needed cash in 72 hours (for example) and only needed it
long enough to close a deal. In steps the transactional
funding model.
Transactional funding is money loaned to an investor to
buy a home. Often, they only need the money for 24 hours.
In order to stay clear of usury laws, cash heavy lenders
charged points rather than interest on the loans they made.
One point is $1,000 per $100,000 loaned. Usury is a law
prohibiting extreme interest rates. If the lender loaned their
money out for just 1% interest but the loan was just for 1
day – 24 hours – the annual interest rate would be 365% ,
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which would clearly be breaking the usury laws if anyone
chose to enforce them. To avoid this potential conflict with
usury, the lenders charged 1 to 3 points on their loans, often
collected only when the deal closed (if it closed) and often
collected from the buyer.
The investor had the best of all worlds. He or she was able
to buy a property using no cash of their own except for the
deposit, sell the property and have the buyer pay for the
costs associated with the closing (This is called a “net”
closing). The investor saw only profit. Transactional
funding lenders also made off very well. Buyers also did
well – they purchased a decent home for a price they could
afford - and perhaps it was the banks that fared the worst.
That is a brief overview of wholesaling. Now it’s your turn.
The industry began slowing in 2011 but it is still a great
time to buy (and sell) real estate. For wholesalers, an
increase in national housing starts and local home prices
indicate the party is very quickly coming to an end, if not
already over in some places. Good deals may still be found
in high cost states such as California, New York and
Massachusetts, but they – as of 2012 – are already rare and
will only become rarer in the days and years ahead, barring
another recession or even, possibly, a depression.
HOW TO FIND A WHOLESALE HOME
The techniques discussed in Section 1 – Finder’s Fees –
remain valid and still must be the primary sources you use
to locate homes. Look again at Craigslist and place an ad
there once a week. It should say something like “I buy
homes cash. Close today” and then your phone number
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(cell phone or business number). Thursdays and Fridays
seem to be the best days to place real estate ads on
Craigslist or Backpage. (Don’t ask me why, I don’t know,
but several studies substantiate this.) You should also be
upping the number of bandit signs you put out in the area
you want to operate in. The bandit signs should say the
same as your Craigslist ad. These two sources alone should
bring in a large percentage of your homes. Also contact the
other investors in your area; they may have homes you can
buy and then sell for a profit or – as with the Finder’s Fee
method – you can sell the home for them for a percentage
of the sale. Concentrate on the members of your local real
estate investors association, they will provide many leads,
homes and advice as you continue your career as a real
estate investor.
Your best source may remain the HUD site. Here you may
find many homes that need more work than an investor
may want to consider, but you will also find many homes
that will work for you. If you can’t find homes on the HUD
site in your area, there is no reason you can’t go out of state
(on the HUD site) and buy and sell homes in other states
using virtual methods. You attract buyers with Craigslist
ads and work the deal the same way you would as with the
Finder’s Fee method.
HOW TO CONDUCT AN INSPECTION
Inspecting a property is actually one of the easier things
you will do in wholesaling. First, fill out the Lead Sheet on
each home. Next, make an appointment to visit the home.
Be sure to take a pad of paper with you and take notes, (or
take notes on an electronic device) you will also need a
55
camera or your phone to take photos. While there, look for
any obvious defects, check the roof, is it sagging? Do
shingles need replacing? Take photos of every defect you
find. Look at the siding and paint, does it need repair or
repainting? Inside, check door and window seams, paint
and paneling on the interior walls and flush the toilet and
run the shower for a second or two. Look for stains on the
ceilings. They could be indicative of water leaking from the
roof. Are the appliances in the kitchen present; if so do they
appear to be in working order or do they need to be
repaired or replaced? Turn the faucets on – are they
working? Are the kitchen cabinets in place? Turn on the
lights in each room, do they work? In the basement look at
the foundation. Are there leaks or stains? Is there water on
the floor? How is the home heated/cooled? Is the furnace
and/or ac unit in working order? Is there are a water heater
present and if so, does it appear to be in working order?
If you have reviewed all these areas you now make a
guesstimate of what the costs of repair will be. I compute
costs in $5,000 blocks. If I find just a few things are wrong,
I say the home needs $5,000 worth of repairs or less. If
there are a few more things wrong I add another $5,000 to
the cost of repairs. A few more and I add another $5,000. If
the house is perfect I say it is in “move-in condition,” or of
it just needs a splash of paint on a wall stain or a new carpet
in a room or two I say the home is in “near move-in
condition.” Use your own best judgment to assess repairs.
If you really want to go the extra step, hire a contractor to
inspect the house and provide you with a written estimate
of repairs.
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Always provide the level of repairs when you speak with a
potential buyer and always list the repairs required on the
contract when you sell the home. (You do this as an
addendum to the contract). That way a buyer can’t come
back to you and demand recourse because you failed to
mention an obvious defect.
Your primary source of buyers will be other investors.
Most buyers will have a level of repair they are comfortable
with. Only offer them homes in their comfort range. Some
buyers will have little or no interest in the cost of repairs;
they may want to do a full rehab or take the property down
to rebuild another structure in its place. Allow the buyer to
guide your search for homes to sell to them.
I also post the photos of the repairs required online and
then direct my potential buyers to the photos. That way
they can see for themselves what needs to be done and they
can make their own assessment as to the costs of repairs.
EVALUATING A PROPERTY
Evaluating a property for wholesaling purposes is a little
different and more involved than it is for a Finder’s Fee
home. With a Finder’s Fee home you simply were looking
for the ARV and the market value or comps. Your goal will
still be to establish these figures, but because you will be
buying and then selling the home in your own name (even
if you control it for just a few hours) you want to get a
more precise idea of the costs and profit potential of the
home.
57
Your investor will want a certain discount on the homes
they buy from you. This could be 15%, 20%, 30% or even
50% or more off the market value. And this price must
include the cost of repairs plus your profit.
It’s easier to understand this with an example. Let’s say
you found a home and you have run the comps and
estimate the ARV at $100,000. Let’s also say that you have
inspected the property and, using our method above,
estimate repairs at $20,000. If your buyer will only buy a
home at 30% off market value = $70,000 – then you need
to subtract the cost of repairs from this figure - $70,000 and
that will be the price at which you sell the home to the
buyer. And this still needs to include your profit.
If the ARV is $100,000 and the buyer wants to buy at no
more than 70%, then your current price for the home is now
$70,000. The next step is to subtract the repairs. If you are
doing a Fix and Flip, you will be conducting the repairs,
but with wholesaling, your buyer will be doing the repair
work. Because you want your buyer to keep buying homes
from you, you will inform them of all repairs you know
about, provide the photos of the repairs and then subtract
the cost of the repairs from the sale price. Your $70,000
sale price has now just dropped to $50,000. You now
subtract your proposed profit margin – let’s say you want to
make at least $10,000 – and that’s the maximum price you
can buy the home at. Anything over that and you’re cutting
into your profit or losing money.
So for your $50,000 home (with an ARV of $100,000) you
can only buy the home for $40,000 or less. (40% of ARV)
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Now you see how difficult it may be to find a home that
works with all these conditions – but they are out there, and
in some places, they remain just as plentiful as they were
during the 2008-2011 housing crash.
MARKETING TO BUYERS AND SELLERS
Building Your Buyers List
As a wholesaler, in order to sell your homes quickly, you
will need to have buyers lined up BEFORE you buy your
first home.
One of the best and easiest ways to do this is through
Craigslist. It also happens to be free. =)
Pick a day of the week - Thursday or Fridays are usually
best – and place your ad once a week on the same day. Do
this every week and stop only when you have built up a
significant number of buyers or you feel you have the most
you can handle with quality.
Place your ad for your city, or the nearest city available.
Your ad should say something like
Handyman Special
3/2 available
call xxx-xxx-xxx
Of course, fill in the 'x's with your phone number or the 800
number of your business or service.
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Another ad is
Wholesale Houses!
Cheap
xxx-xxx-xxxx
Anything similar should be just as effective.
Use the same ads on Bandit signs and place them wherever
you do business. If you want to do business in a distant
city, put an ad on Craigslist to hire someone to place bandit
signs offering
to pay them $25 or $50 to put up some bandit signs. To
confirm they have put up the bandit signs, have them take a
photo of each bandit sign they put up in both a close-up - so
you can see what is written - and a wide shot so you can see
were the sign is. Also, place the same ad on Craigslist as
you did with your own city. Get a bunch of bandit signs -
25 to 50, write your ad on them, put your 800 number on it
and then mail them to the person who will be putting up
your signs. Use yellow bandit signs and write on them with
a black sharpie. Whenever someone calls about a sign use
the following script. Freebanditsigns.com is a good place to
get bandit signs.
(Fill out the Investor Profile as you go along.)
Hi, thanks for calling. Before we continue can I get your
cell number so I can call you right back in case we get
dropped?
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Thanks.
And your name?
Ok, (use their name)
Could I also get your email so I can send you details?
(Do not say anymore than this because you don't currently
have a home, or if you do, you may not have a home that
meets their criteria)
Ok, great (or whatever you would say)
Well, I'm out of inventory right now (If you are or if you
have something that meets the criteria, then describe your
property and then continue) but I have property coming in
all the time. If I can get some basic information from you I
will give you a call (or send an email if you don't like
calling) when I get something that meets your
requirements.
Are you looking for residential or commercial?
(If residential, continue with next question to end. If
commercial skip next question only)
What kind of property are you interested in? 2/1, 3/2, 4/2?
(This refers to the number of beds and baths, the first
number is generally considered to be the number of
bedrooms)
And what kind of neighborhood are you looking to buy in?
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Do you have a specific price range? 50-150? 150-200, 250-
300? 300-500? 500-1 million? (They will probably stop
you before you go through this and tell you what price
range they are looking for).
Are you looking for a rehab or something in move-in or
near move-in condition? What is your price range for
repairs?
If commercial ask the next 2 questions, skip if they want
residential:
And what are you looking for in an occupancy rate?
And what kind of cap rate do you prefer?
Finish with:
Ok, (use their name), when I have something that comes in
that meets your requirements, I will notify you promptly.
(And that's all)
Note: Commercial property is anything that has 5 or more
units, regardless of whether they are business units,
residential units or a mix. Of course, a commercial property
also includes any real estate used primarily for non-
residential business purposes.
A residential property is anything that has 1 to 4 housing
units.
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Cap Rate
Where residential value is determined by condition of the
property and by comparing the sales price of recent sales of
nearby properties of similar style and size (the "comps"),
commercial values are based on the cap rate, (primarily).
The cap rate is determined by taking the net income of the
commercial real estate and dividing it by the asking price.
In today's world, anything above 8% is good and may be
something you want to look at further. Anything below 8%
may be something you want to stay away from unless you
have a specific plan in mind for the property.
I still don't look at anything below 10%, but the cut-off
figure is up to you if you're buying it for yourself or up to
your buyer if you're looking for a property to sell to them.
Regardless of who you are buying for, always check the
crime map to assess the level of crime in the neighborhood.
Always provide this figure to your buyer although you can
phrase it in a more palatable way. Go to
http://www.mylocalcrime.com and type in the address of
the property you are considering. That will bring up a map
of recent local criminal activity.
A high crime rate is not necessarily a "no-go" factor for a
commercial property. If a warehouse you can always put up
fences and hire extra security. If a retail facility, you can
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always emplace extra security and provide shuttle service
from distant parking areas to your retail center.
An office building in a high crime area won't work
regardless of what you do, (unless you buy the whole high
crime area, tear it all down and rebuild). (If you want to do
this, ask me, I've written an article about this).
For an apartment or condo complex, one way to reduce the
crime rate is to offer 50% off or even free leases to police
officers and firemen.
If the cap rate is too low, that's a negotiating point and you
may be able to get the seller to reduce the price to a value
that makes sense for you.
When you have the Investor Profile sheet filled out for your
buyer, your next move is to start looking for property that
meets their criteria.
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FINDING SELLERS
HUDhomestore, bandit signs and Craigslist ads will still be
important for you to use to obtain sellers, but you will also
need other methods to keep your sales funnel full.
Networking
Networking is nothing more than meeting people and
talking to them. Join local groups, the first of which you
should join is, of course, your local real estate investors
association. Also look into such groups as the PTA, (yes,
really), The Elks, Knights of Pythias, Knights of Columbus,
Rotary, VFW and American Legion. You never know
where you will find potential leads. Once at a meeting, talk
it up and hand out your business cards. Let people know
you are a real estate investor and that you have discount
homes for sale and that you are looking for discount homes
to buy.
Business Cards
Hand these out and leave them everywhere you can. You
may want to set a goal of how many cards to hand out each
day; if you do, stick with it religiously. As you hand out
cards, give a little background about what you are doing
and why you are handing out your card to a perfect
stranger. They may want to buy a house from you, know
someone looking to buy or have a home to sell or know
someone who has a discount home for sale.
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Classified Ads
Your local community paper will have classified ads. Look
for the real estate section and place an ad using the same
wording on your bandit signs.
Online Classified Ads
Craigslist, Backpage, etc. Run a search and find out how
many sites will allow you to place a free classified real
estate ad.
Social Media
I’m going to bunch Facebook, Twitter, tumblr, YouTube et
al all together in this category. Most of these sites will let
you buy an ad and with YouTube you can also create a
video or an infomercial about your business. You may not
get many hits from a specific social media site, but if you
do, they tend to be more highly motivated than other
sources.
Inline Ads
“Inline ads” are what I call the signature at the bottom of
your email. You will need to review your email setting on
how to change your signature, but this is something you
can use to promote your business.
Online Groups
There are many online real estate groups out there. Join
them and get active; these could be a very good source of
leads for you, both for sellers and buyers. Linkedin.com is
a good site to find groups that suit your interest. You can
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also find good real estate groups on Yahoo. Do a search for
other groups and you will almost certainly find several you
can join.
Flyers and Door Hangers
Flyers are what you hand out or post on windows or doors
of local shops or restaurants and door hangers are a printed
medium hung on the doorknobs of homes. Contact your
local printer for details.
Mailers
You may have received a mailer. These can either be a
single postcard or letter or you can have your ad packaged
in a group. Again, contact your local printer for details or
research these sources online. Click2mail.com is a postcard
mailing service that will do a lot of the work in getting your
information out to potential buyers or sellers.
Mobile Marketing and Apps
“There’s an app for that!” Yes there is, or if there isn’t, you
can have one made. Apps and mobile marketing may be the
wave of the future. We are right at the beginning of this
form of marketing right now, and my guess is that it will
grow significantly in the months and years ahead. How you
will use this medium I will have to leave up to you because
this avenue is still too new for anyone to know exactly
what is or what isn’t effective. You will need to find a
mobile marketing specialist or service and ask them what
they offer and how what they have may help you with your
business.
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PR
This is one of my favorites because it has never failed me.
And it’s free. (Other than the initial cost of the mailing) I
send out press releases to local newspapers, radio stations,
cable services and television stations. Every time I have
done so, someone has always called me to set up an
interview. Try it and see if it works for you.
Big Media
I’m going to make another group of sources. This consists
of radio and TV ads, infomercials, magazine and
newspaper ads and mass mailings. You may want to wait
until you have a good cash flow coming in from your
business before you want to try this because it is capital
intensive, or if you have a lot of cash on hand, you can use
this method right away.
Create a Class
Once you have some sales and experience under your belt,
you could create a class, seminar or talk. Go to your local
community college, tech school or high school and offer to
talk about your experience as a real estate investor. If you
have a lot of experience, create a class offering your
insights and the wisdom from your experience – worked for
me – (you’re reading this right?)
Other
I once read that there was over a hundred different means
of marketing a real estate business, if so, I sure don’t know
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what they all are, nor do I use them, the above work for me
and I find it is pretty much all I need.
SUMMARY
Wholesaling has the potential to make you a lot of money.
With wholesaling you find a home at a discount, contract to
buy it, and then either sell it or assign it to a buyer. We’ll
go over this process in more detail in the next section.
Wholesaling carries more risk than collecting Finder’s Fees
but the potential rewards (money in the bank) are also
much higher.
The marketing process is the means you use to find both
sellers and buyers. How effectively you use marketing
multiplied by the quantity of your marketing is what
determines your success in this business or any business.
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INVESTOR PROFILE SHEET
Real Estate Investor Training
FIRST NAME__________________________LAST
NAME____________________________
ADDRESS________________________________________________
______________________________________________________
CITY_________________________________STATE_____________
____ZIP_____________
OFFICE PHONE__________________________________________
HOME PHONE___________________________________________
CELL PHONE____________________________________________
FAX____________________________________________________
EMAIL__________________________________________________
ABOUT YOUR INVESTOR
Would you consider yourself - Beginner (3 years or less) Intermediate
(4-10 yrs) Advanced (10+ yrs)
WHAT AREA OF INVESTING INTERESTS YOU THE MOST?
Wholesale Buying and Wholesale Selling____Wholesale Buying and
Retail Selling____
Buy and Sell Owner Finance____Assigning Contracts____Buy, Rent &
Hold____Other__________
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WHAT PERCENTAGE UNDER FAIR MARKET VALUE DO YOU
LIKE TO BUY AT?__________
WHAT AREA DO YOU BUY PROPERTY
IN?_________________________________________________
WHAT AREAS INTEREST YOU THE MOST?
LOW INCOME AREAS______________WORKING CLASS
NEIGHBORHOODS_________________
MIDDLE CLASS AREAS________________HIGH-END
HOMES________________________
PRICE RANGE________________________
WHAT PROPERTIES ARE YOU INTERESTED
IN?________________________________________
1 FAMILY_____DUPLEX________2 – 4
UNIT______COMMERCIAL_________
DO YOU CURRENTLY OWN PROPERTY?_________
HOW OFTEN DO YOU INVEST?____________________
DO YOU PLAN TO INVEST IN THE NEXT
30____60____90____DAYS?
CAN YOU CLOSE IN 5 DAYS?__________10 DAYS?___________
ARE YOU OPEN TO PARTNERSHIPS?________________
NOTES___________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
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_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
______________________________________________________
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Filling Out the Lead Sheet and Investor Profile
Lead Sheet
Filling out the Lead Sheet is pretty straight-forward.
Fill out the seller contact info, address of the property and
how you heard about this property.
Next you describe the property filling in such details as
number of beds and baths, square footage of the home,
construction type – whether it is frame, brick or block, and
then describe the repairs needed. Later, you will estimate
the cost of repairs and put that figure here as well.
The trickiest question to ask may be the “why?” “Why are
you moving?” or “Why are you selling?” You need this
information in order to gauge the motivation level of the
seller. If they are highly motivated to sell, they may be a
party you can work with, if they are not highly motivated to
sell, you still may be able to buy the property, but
sometimes it may be more of a hassle than you want to go
through.
Taxes due and liens are important to know. If there are any
back taxes due or if there are any liens against the property,
the property cannot be legally bought or sold without
resolving these issues first.
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You may be able to resolve these issues in the process of
selling the property to your buyer. If so, you should almost
never sell the property to an owner-occupant but only to an
investor. Investors are usually familiar with these situations
and know how to handle them, but a homeowner, family or
young couple looking to move into their first home may
have no idea how to handle these issues and feel you are
trying to do something illegal or unethical. Either fix these
issues yourself or only sell a home with taxes due or liens
to another investor. And always provide all the detail you
can to the buyer about these issues.
The loan balance is how you gain leverage. If low, you may
be able to negotiate the property purchase for a lower price.
If the balance is high, you may be able to extend the terms
or have the seller take back some of the financing “seller
financing.”
You achieve this leverage with the next question; “Will you
take what is owed?” If they are highly motivated to sell,
this answer will often be “Yes,” but if they are not highly
motivated you may hear “No’s” more often than you hear
“Yes’s.”
Taxes and payments. The next two questions deal with
payments and taxes. You want to know if the home is
current on its taxes and payments. If not, these must be
fixed first. Taxes is a bit redundant to ask again, since you
asked this question earlier, so feel free to skip it if you like,
but the purpose it is here to ask again is to provide a check
against the first time you asked the question. You would be
surprised at how often someone will remember they have a
recent tax payment due or a tax payment coming due soon
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after they have been talking to you for a while about their
home.
Asking price is straight-forward. Many real estate guru’s
and trainers may tell you to try to talk this price down by
“negging” the property or by complaining about what a bad
condition the property is in. To me, that’s just petty. Don’t
do it. You can get a good deal with everyone feeling good
without saying their property is a dog. If it is, they know it
and they don’t need you to remind them. If it isn’t, you
simply want to negotiate from a position of strength and
putting the property down is not a position of strength – it
will often put the owner on the defensive.
In the event you meet a seller who feels their property is in
great condition and their asking price indicates this – but
the property really is in terrible shape – or simply not worth
the price they want for it, go ahead and tell them about the
comps. “The house down the street sold last week for xxx
dollars. This house here sold for xx dollars. The house on
the next block sold for xxxx dollars. This house is worth
about xxx dollars according to these sales and in order to
make a profit, I have to offer xxx.” If you say something
like that, you have educated the seller about recent sales
prices without talking down to them and you’ve also
provided a way for them to negotiate with you for a good
price for you both – “I have to offer xxx.”
The next question – in bold – is the “magic” question. Ask
it just as it is written – always. “If we (or I) pay cash, close
quickly and take the property (or home) in it’s as-is
condition, what is the least you will take?”
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This gets the seller thinking you can close quickly and put
cash in their hand quickly – money in hand is always a
great motivator, “Cash is king”.
I know of some investors who will take out their checkbook
at this point, fill in a figure (but not sign the check) and
then hand the check to the seller and ask “Will this work
for you?”
I’ve heard this works about a third of the time for an
experienced investor which is pretty good, especially since
the price the write on the check is often far less than the
seller is asking for – a check in hand really does make a big
difference.
So what do you do if you do this and the seller says “Ok?”
Take out your state approved purchase and sale agreement
and begin filling it in. So what do you do with the check?
You have two options, one is to sign it and let the
homeowner cash it – not suggested – or two is to tell the
seller that you will sign and date the check upon closing.
(You will actually be writing another check to the title
agency – but it’s the same thing).
A check in hand increases your leverage with the seller and
shows them you mean business. And a check is a de facto
indication that they have accepted your offer – even if they
change their mind in the next few days. Should another
investor come in and offer them more money, you can
always tell the seller you already bought the property and
you are just waiting for the paperwork to clear – might
work – or if it doesn’t, tell them you will void the check.
And then wait for their response. They may say “OK” and
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you get the property or they may say “Go ahead and void
the check.” If you don’t get the property, don’t despair,
they are still a lot more around.
Phone Voice
Many years ago, when 1-800-Flowers was just getting
started (and before I got into real estate), I was a manager
there. I used to say to my associates to always smile when
they were speaking on the phone because the other person
can “hear” you smile. I am sure the associates thought I
was a little crazy, but when they tried it, they found it was
true, the other person related to them better, was more
engaged with the process and often purchased a little higher
of an order then they were originally intent upon buying.
Smiling on the phone works, try it.
Investor Profile
The Investor Profile sheet is also pretty straight-forward.
Just ask the questions on the sheet getting all the
information you can about your investor. Your investors
are the people who you will be selling the homes you find
to and you don’t want to waste your time – or theirs – by
offering something that doesn’t meet their criteria.
As you talk to your investors, you will find that some are
more interested in one thing while others are more
interested in something else – and neither is indicated in the
Investor Profile. Just go ahead and write in whatever notes
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and comments you need to find the properties that investor
wants from you.
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Agents and Properties
This section includes a discussion of agents (real estate
agents and realtors), properties, contracts and assigning
contracts. This document will include agents, properties
and an overview of information regarding the laws
concerning real estate investing.
Agents
The world of real estate agents and real estate investors are
two distinct worlds with very little overlap.
Real estate agents are licensed professionals working under
state guidelines representing individuals who have property
for sale. Because of this, they must maintain high legal and
ethical standards in order to meet their client’s needs
professionally and effectively.
One of the most successful of all real estate agents is
Barbara Corcoran from the TV reality show “Shark Tank.”
Successful investors include Donald Trump, Ted Turner
and McDonald’s. I include McDonald’s because part of
their business (and a very big part of their business) is to
own the real estate they build their restaurants on. In a
sense, McDonald’s is a real estate development business on
which they take raw real estate and build a franchised fast
food restaurant.
Real estate investors have an entirely different focus than
real estate agents. Agents must meet their guidelines and
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licensing requirements for their state and must keep their
licenses current. Investors are professionals working for
themselves and they thrive or starve by the amount of profit
they derive from their investing activities.
Real estate is and has been a factor in approximately 70%
of all millionaires and billionaires wealth. Today, almost
every wealthy individual has some degree of their portfolio
invested in some form of a real estate investment.
You will need a real estate agent on your team. This
doesn’t mean you employ them and provide them with a
check every two weeks. This means you consult with them
on a periodic basis to pick their brain, ask their advice and
determine what properties they may be representing at that
time that meet your purchase criteria. Often they won’t
have any themselves, but real estate agents – to be
successful – have a very wide network and they may know
of someone who has property available that will be exactly
what you are looking for.
Make an appointment to interview several real estate agents
in your area. Offer to meet them for lunch if they have the
time and of course, mention you will be paying for the
meal. Tell them you are a beginning real estate investor and
you were hoping to ask them for advice. That will usually
work. Most people like to be recognized for their
achievements and when you approach people in this
manner – even potential competitors oftentimes – they will
be happy to meet with you and provide advice in the field.
You are looking for an agent you can work with. That will
vary based on the type of personality you have and on how
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well you are able to recognize those areas in which you
need help and in which the agent will be a complement to
you.
Agents often have “back-pocket” listings. These are private
listing that are not advertised and which they provide only
to those people they trust. You want to be one of these
people. Maybe the prices will be outside your investment
range many times, but if you are clear about the type, size,
condition, area and price of home you are looking for, your
friendly agent will be referring more and more back-pocket
listings to you. Do not hesitate to ask about these listing
during your first meeting. You need to know if the agent is
going to be someone you will be able to work with and one
of the means to determine this is to gauge their willingness
to talk with you about their private listings. You don’t need
to know the details about any listing – and make sure the
agent knows this – you just need to know if they have any
and if they would possibly be willing – at some time in the
future – to refer any such listings to you – if the property
meets your criteria.
When you have found an agent or two (or three) you can
work with, I suggest taking them out to lunch on a periodic
basis. Meet them every three or four weeks or so. You
don’t always need to talk business 100% of the time. Get to
know then personally, ask about their families and become
friends with them – but only do this if you can be sincere. If
not, don’t even bother.
If you’re not the personable type, keep your meetings on a
professional level.
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When you call an agent about a property and you don’t
know the agent, be friendly. It may seem odd to you that I
am mentioning this, but my experience has been that if it
isn’t mentioned, there will be someone out there who won’t
do it.
You can begin with small talk but keep it short. Next you
will ask about the property and simply fill in your lead
sheet as you go along. Always conclude by asking if the
agent has other similar properties available and to keep you
in mind if they should have any property coming up which
meets your criteria and then reiterate – or provide your
criteria and contact information.
Properties
As a wholesaler, you are looking for properties you can
purchase at a wholesale price and then turn around and sell
them – at a wholesale price. You do this because you will
primarily be selling to other investors who will also need to
make a profit from their sale of the property.
We have gone over evaluating a property for wholesale
purchases. This process will assess whether a property you
are looking at makes sense for you to buy. If so, buy it.
Always have in mind the thought that when you find a
property that even comes close to what you want you will
buy it unless…
With this thought in mind, you will be buying property at a
pace that will make a decent profit for you and will help
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you to overcome procrastination and unease about jumping
into investing.
The first step is always the hardest. We have the systems in
place that will (hopefully) prevent you from making such a
disastrous deal that you lose your shirt or are ruined, but, as
with any business, such possibilities cannot be entirely
eliminated.
Most investors invest in only one type of property and
specialize in properties if that type. Other investors are
more generalist in nature. Usually, if you are just starting
out, you begin with specializing in a certain type of
property, often within a certain price range and condition
and usually in certain types of neighborhoods. Specializing
in this manner will, over time, make you an expert in that
type of property and your business will flourish (barring
economic distress, etc).
Only after time would I suggest you begin looking into
other areas and types of real estate. And there are many
types and areas you could look into – commercial property,
storage units, medical, $100,000 homes, $300,000 homes
$500,000 homes, million dollar homes etc. Frank
McKinney specializes in building and selling homes
ranging from 10 million dollars and up. There are several
investor groups you could join which specialize in buying
and selling homes only in the $300,000 to $500,000 range.
Others specialize in small, “starter” homes, while still other
investors specialize in buying and selling 3 bedroom, 2 bath
homes.
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The most popular home to sell is the 3 or 4 bed and 2, 2 ½
or 3 bath home with plenty of living space, garage and
yard. These are very popular with the middle income class,
young professionals building a family and others settling
into family life and new communities and jobs.
These homes can be found on the HUD site, but are also
available as estate sales (when someone dies), when an
older couple with grown children is looking to sell their
family home to move into something smaller or as a result
of some form of economic distress.
When you locate a home that is for sale as a result of some
form of economic distress, I don’t feel as if I am “robbing”
the homeowner or that I am taking advantage of them or
preying on people who have fallen on hard times. I know
many will tell you and many believe this is so. I disagree.
The way I see it is that I am helping them to attain a
solution that would only be a disaster if I hadn’t stepped in
to help.
I see it like this: Maybe they are losing their home.
Admittedly, they may be angry, confused and stressed out.
I’m certain I would be if I was in a similar situation. But I
would also realize that if I don’t sell my home, my credit
will be ruined, the debt on the house will be hanging over
my head, the headaches won’t go away and the stress will
just continue – even if the bank reclaims the house.
I would know that I need to sell the house for the best deal I
can get so I can make this headache go away. That’s where
I come in and that’s where I want you to come in. You are
kind, you are friendly, you are full of optimism and
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enthusiasm, you are a professional and you can present a
solution the owner can live with.
You work with the seller, not against them. You work to
find a solution that works for you both. You need to make a
profit but you also want to take into consideration the
situation that the seller is in. Sometimes you can help them
to part with their home by offering something other than
money. Maybe you have an agreement with another party
that can help with college tuition for their children, maybe
you know someone who is an attorney who can help the
family, maybe you can put them in contact with a good
financial or tax advisor, maybe all they need is someone
they can talk to.
I knew someone who would throw in a free one-time time
share at a resort in the Caribbean. I also knew several
people who would throw in a car. I heard of someone
offering to pay for piano lessons for one of the sellers
children and another who offered to help locate a school for
an autistic child. Be creative. There are many ways to work
a deal and you are limited only by your imagination (and
the bounds of the law, of course).
Which brings me to the next point. The law. The law on
real estate investing varies from state to state. Some states
allow you to assign contracts freely while others have very
strict guidelines on what constitutes an assignment. Some
states allow seller financing while others do not. Do not
ask the real estate agent – or any real estate agent – on what
laws govern real estate investing. Trust me, they won’t
know unless they are a real estate investor themselves and
invest on a regular basis. The only advice you will receive
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from a real estate agent about real estate investing is bad
advice.
Only ask other real estate investors about the laws in your
state regarding real estate investing. Also search your local
library or surf the internet. Most states have some
information online about their rules and guidelines
regarding real estate, although they often have little to no
online data about real estate investing.
Your best source of the laws about real estate investing will
most likely be other real estate investors, but an attorney
skilled in the area of real estate investing will also be able
to provide competent advice. To find these attorneys, either
browse online or contact your local title companies and ask
which of the attorneys close on properties the most. You
may or may not get an answer, but if you do, that may be a
good lead for you to follow.
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Contracts
A contract or an agreement to buy or sell real estate is a
legally binding document between two or more parties to
buy and sell real estate.
This agreement specifies the property to be bought and sold
and specifies the conditions under which title of the said
property will be transferred upon execution of the contract.
Most states have extensive laws governing the purchase
and sale of real estate and it is never a good idea to attempt
the process alone. You will need a competent attorney and
a title company to manage the sale.
You may also need representation in the form of a real
estate agent whether they are acting as a seller’s agent or a
buyer’s agent. Other professionals may be required
depending on the laws of the state, the property in question
or the conditions or circumstances of the sale.
The Wholesale Transaction
A wholesale transaction is different than a simple purchase
and sale.
A wholesale transaction consists of three – not two – steps
or parts.
In a regular real estate purchase, a seller must sell the
property – part 1. The buyer must buy – part 2. In a
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wholesale transaction, there is an additional part – the
endbuyer. This process is known as an A-B-C transaction.
You, as a wholesale investor, are the “B” in the above
process.
You buy the property from “A,” and then around and sell it
to “C.” Because of this, the wholesale transaction is a bit
more involved than a straight A to B purchase, but not
markedly so.
B to C
It may be easier to review the B to C transaction first.
As the wholesale investor, you are the B. Your objective is
to find a property from a seller “A” at a steep discount, so
you can mark it up a bit and sell it to a buyer – “C” at a
profit.
When you buy the property, you put your name in the name
field of the purchase and sale agreement – at least you do
with a simple A to B transaction. You don’t do this with a
wholesale transaction. With a wholesale purchase, you
always write in your name (or that of your company) plus
“and/or assigns” “And/or assigns” gives you the legal right
to sell the property to a third party.
Although the price you sell the property to the third party
(“C”) to will be the same price you paid for the property
from “A,” you will also create a separate document
specifying an “assignment” fee that you will assess to “C.”
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How much you charge for the assignment fee is entirely up
to you and your negotiating skills, the house or real estate
in question, market conditions and whether or not “C” can
make a reasonable profit from their eventual sale of the
property.
We have gone over how to value a property for resale to an
investor. For a brief review, you want to sell the property to
the investor at a low enough price that they can make
decent profit from the sale. To do this, you need to find a
property at a sharp discount from market value, which you
determine by establishing the most recent comparable sale
prices of homes in the area – the “comps.” The investor
will need to sell the property at perhaps 70% to 80% of
market value in order to make a quick sale, but your
investor will let you know what discount rate works for
them.
From your projected sale price to the investor, you must
subtract your intended profit, and you subtract the
estimated repair cost. Someone has to pay for the repairs
before the property is sold and if you aren’t doing the
repairs your investor-buyer will have to. After you subtract
these amount, you are left with the maximum value at
which you can purchase a home. The average is about 30%
to 40% of the market value, but it could be as low as 20%
or even lower.
On the contract, there is almost always some room for you
to write in several conditions of the sale. Here you want to
describe the repairs necessary and what you have observed
or have not observed about the property. You also must
indicate that the property is being purchased “As-Is.” When
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you sell a property “As-Is,” the seller understands that there
may be work required on the property before it can be sold.
The buyer is also informed by this statement that there may
be issues with the property that neither you nor the buyer
have yet discovered. Although many real estate trainers
will say that describing the repairs isn’t a necessity if you
have the “As-Is” statement included, (“This property is
being sold “As-Is.”), I always recommend that you
describe, to the best of your ability, the repairs required.
Although you do not generally indicate so on the contract,
you may also want to tell your investor-buyer of your
estimate of the cost of repairs.
I recommend you do this for two reasons. The first is that it
shows a level of professionalism that others may not and
that will set you apart from other sellers the investor may
work with. The second is that, in my opinion, it is more
ethical to indicate your assessment of the property than to
not mention them, even if you have verbally told your
investor about them. By including them with the contract,
you assure your buyer that you are taking the high road in
your activities. By noting the repairs on the contract for
sale, your buyer will notice and may come to you before
going to other sellers in the future.
Some contracts will have a section titled “Defects,”
“Warrants” or something similar where it will say that the
seller knows of no issues with the property and that there
are no known liens or encumbrances against the property.
Either cross this statement out or have your attorney draw
up a new agreement where you can write is in the repairs
required.
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“Net purchase” A net purchase means the buyer is going to
pay all closing costs. You will need to indicate this on the
contract or the title company will automatically assume you
will be paying closing costs and deduct those costs from
your proceeds. Including a “net purchase” statement on a
contract with an owner-occupant will almost certainly
cause confusion and could cost you the sale; I don’t
recommend including this cost with an owner-occupant.
Use the “net purchase” clause only when dealing with
buyers who are investors – they will understand what it
means and commonly have no issue with it, (although they
may claim they do, I usually refuse to remove this
statement when working with an investor, but when I get
the feeling that the statement will cost me the sale, I
remove the statement and pay for closing costs myself).
A “net purchase” statement can be as simple as “Buyer to
pay all closing costs.” I recommend you keep it simple to
avoid confusion or any potential obstacles to the sale.
“Inspections” The only thing you may want to change here
is the duration of the inspection period. Shorten it when
you are selling, lengthen it when you are buying.
“Acceptance” is usually the term for how long the buyer
has to accept the contract before it becomes void. I have
heard some investors say that 24 hours is the figure they
use. I usually use 48 hours. Some will provide 3 or 4 days.
5 days in my opinion is excessive. Use your own best
judgment, after a few sales, you’ll get a feel for the right
amount of time for you.
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The A to B Contract
The A to B Contract is the contract used when you are
buying a property to flip. This isn’t a special contract, it is
just a description of how a contract is used.
Generally, speaking there are very few changes between
the B to C contract and the A to B contract. The only
differences may be in the amount of time you allow
yourself for the inspection, see above, and the “net
purchase” clause. Usually the seller pays the closing costs
and investors recognize this and will often pay the closing.
When you are buying from a distressed homeowner, you
may want to get the deal done as soon as possible. In order
for this to happen, you may want to pay the closing costs
yourself to buy the home, then have your investor-buyer
pay the closing costs when you sell the home.
“Deposit” The only thing you may want to change is the
deposit. When you sell the home, you want to make sure
you keep the deposit if the deal should fall through for any
reason. When you are buying, you want to insert a clause
that will give you your deposit back if the deal falls through
for any reason. “Earnest money deposit shall be returned to
buyer upon non-performance of contract,” is one phrase
you can use to get your money if you are buying and
something goes wrong that prohibits the purchase. “Earnest
money deposit shall not be returned except upon specific
non-performance of seller,” is a term you can use to keep
the deposit if you are selling.
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For all contracts, review them thoroughly with your
attorney before signing on the dotted line. Taking the time
to review a contract line by line will help avoid a lot of
mistakes that many buyers and sellers can make when
buying or selling a property.
ASSIGNING A BANK-OWNED OR REO HOME
“It can’t be done,” is the first thing you’ll hear from most
people when you ask if it is okay to assign a bank owned
property. The banks will certainly tell you this. You also
“can’t” do it with a HUD home. But, you can.
You have partners of all kinds when you buy or sell a
home. These “partners” include the bank, the seller, the
mortgage company, the title company, the lawyers,
accountants and attorneys, building or real estate
inspectors, brokers, real estate agents and the person you
sell the home to.
You may have additional partners in your business or you
may have partners other than those detailed above. Most
investors will have a bit fewer “partners” than those
described, but, you will have partners of one kind or
another.
The reason I’m making such a point out of partners is that
you will need a partner in order to assign a bank-owned or
HUD home.
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Assigning a property means to sell the home to another
buyer when you buy the home. Generally this is
accomplished through a two-step process.
The first step is to write “and/or assigns” after your name in
the original purchase and sale agreement. The second step
is to write a separate assignment fee document describing
the assignment fee amount and referencing the home
mentioned in the purchase and sale.
You can’t do this with a bank-owned or HUD home. But
you can add your partner’s name after yours.
When assigning a bank-owned (REO) or HUD home, leave
enough space after your name on the real estate contract to
write another name. Then, when you have a buyer for the
home, call the bank or HUD and ask them if you can add
your partner’s name to the agreement, they will almost
always say “yes.”
What happens if they say no? Don’t buy the property.
If the bank or HUD says “no,” you can’t add your partner’s
name to the contract, that means you are going to have to
buy the home and hold it for a period of “seasoning” before
you can sell it. Most often, you will need to keep title of the
property for at least 90 days, although some states are now
requiring 6 months to a year or more. If you can afford to
hold a property that long, fine, but most investors don’t
want their capital tied up for that length of time.
Another way of getting around this is to start either a trust
to buy the property – although the banks are now
scrutinizing this method also – or you can create a
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partnership or LLC. For some reason, the trust structure is
invoking a high level of scrutiny by the banks while the
LLC or partnership seems to avoid this level of attention.
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REAL ESTATE INVESTOR TRAINING
SECTION THREE – FIX AND FLIP
Introduction to Section Three – Fix and Flip
With Fix and Flip, you will complete your training to be a
real estate investor. This section is also the shortest section
because you have learned nearly all you need to know to
get started in this industry in the previous two sections.
If you have any questions or are unsure of anything, please
go back and reread that section – and then implement it –
do it!
The best and most effective means of figuring something
out is to try it and make any necessary adjustments as you
go along.
I’m very happy you have made it this far in your training
and I know your success as a real estate investor is just
around the corner.
This section consists of just one unit – Fix and Flip.
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Real Estate Investor Training
SECTION THREE – FIX AND FLIP
OVERVIEW
The objective of this section is:
1. Find a property
2. Fix a property
3. Sell a property
You have learned steps 1 and 3 in earlier sections of this
training. The only step you need to learn is how to fix a
property cost effectively so that you can sell it for the
highest profit.
First let’s review steps one and three and then we’ll build in
step two.
ONE – Find a Property
In section one you were introduced to several different
methods of locating a property. These methods included
online resources and sites, Craigslist, using bandit signs and
flyers, handing out business cards and networking with
other investors.
Of course, you should be talking to everyone you meet
including your children’s teachers and soccer coach, the
person at the Laundromat or grocery store, the cashier and
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your pharmacist. Tell them what you are doing and ask
them if they know anyone who is interested in either
buying or selling a home, then hand them your business
card.
You shouldn’t be afraid to talk with anyone about your
business, if you are, you’re in the wrong business. You
should fell proud and have a sense of joy and excitement
when you are working for yourself and if these attributes
are missing, you are not doing what your spirit is longing to
do. Find out what you love to do, what your passion is, do
that and find a way to make money from doing it. If you do
that, you will – as someone once said – “Never have to
work again.” You’ll still be working, but you’ll consider
more like getting paid to play or being paid to be on
vacation rather than working for a living.
Once you have found a property that you will fix and flip,
you will need to inspect it, conduct a survey of the repairs
required and obtain a professional estimate of the repair
costs and then obtain a general contractor to make the
repairs or do the repairs yourself. We will discuss all this in
detail a bit later. For now, let’s move on to the next step
you have learned.
STEP THREE – Sell a Property
One of the most effective means I have found to sell a
home is Craigslist. I have never failed to find a buyer using
Craigslist, but there are many other sources you may use
including selling your home on eBay, posting it to real
estate websites, contracting with an agent to sell it, posting
bandit signs in the yard and at nearby intersections and
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offering it to members of your local real estate investors
club.
If you are selling a property in a Fix and Flip, the process
of selling it will be different than the process you learned in
Section One of this training.
In Section One, you sent Finder’s Fee Agreement to
potential buyers and provided the details of the home you
had located to the buyers when you received a signed
Finder’s Fee Agreement back from them.
With a Fix and Flip you are going to need to list the house
for sale using any means described in the “List a Property”
section. The purpose of this section is not so much to sell a
house as it is to build a list of buyers who will want to buy
homes from you over and over again in the future.
Because this is so important, we will review this also.
LIST A PROPERTY
In the “List a Property” section, you were introduced to
Craigslist, Backpage.com, real estate agents, Facebook,
classified ads, groups and websites.
Of course, you can also use mailers, flyers and other
handouts, business cards, doorknockers, etc. With the rise
of apps, you may be able to find someone to build an app
that will post your homes for sale or that “push” your home
for sale to mobile users.
In all of this, you may realize that the primary objective of
listing a property is not to sell the property, but to build a
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list of buyers who may want to buy a home from you in the
future.
EVALUATING YOUR BUYERS
When anyone calls you or contacts you about a property
you have for sale, you are going to fill out an “Investor
Profile” on each person. This is from Section Two. You
want to find out what kind of property the buyer is
interested in, if they are an investor or owner-occupant, the
size of homes they are interested in ( 3 bedroom 2 bath
homes sell best), the location they are interested in buying
homes in, the price range they want, the amount of repairs
they are comfortable with, other home details they require
and how soon they can close on a sale.
Cash buyers are going to be your cash cow – your money
machine – so you are going to want to focus on them,
without disenfranchising your other buyers. But if for some
reason you have to make a choice, concentrate on your cash
buyers. People who use cash can often close very quickly
and will keep your cash flow in place.
In the “Wholesaling” section, we also took a look at the
neighborhood crime level. This could have a high impact
on your ability to sell a home in any given area. Some
buyers are only comfortable with very low rates of crime
while others will find slightly elevated levels of crime
acceptable.
I suggested you type or paste the address of the home you
are considering buying into the website mylocalcrime.com
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before you buy the home in order to gauge the level of
crime in the neighborhood.
FIX AND FLIP
Now that we have overviewed the basics of what you have
learned so far, let’s get into the essentials of the “Fix and
Flip” process.
OVERVIEW OF “FIX AND FLIP”
To “fix and flip” a property means to find a property that
needs some degree of repair, buy it or put in under your
control (there are other ways of controlling a property
without buying it but those are beyond the scope of this
training), make the repairs and then sell the property.
The training you have received so far has taught you the
key tools you need to be successful at parts one and three of
this process – find and sell.
In the “Wholesaling” section you also learned how to
evaluate, interpret and negotiate contracts so that you have
the advantage in any deal whether you are the buyer or
seller.
EVALUATING A PROPERTY
Primarily, the basics of evaluating a property will be no
different than what you have learned in the “Wholesaling”
section with the following differences.
Because you are going to be making the repairs yourself or
you are going to be hiring a contractor to make the repairs
for you, you want to have a detailed estimate of the repairs
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required to sell the property for a family to move in at
closing if they should so choose.
In the “Wholesaling” section you were taught to make a
gross cost estimate of the repairs required and to base your
decisions on this estimate. That won’t work when you are
using a “Fix and Flip” strategy.
First, take a look at the property estimating the cost
according to the process as detailed in the “Wholesaling”
section: “If you have reviewed all these areas you now
make a guesstimate of what the costs of repair will be. I
compute costs in $5,000 blocks. If I find just a few things
are wrong, I say the home needs $5,000 worth of repairs or
less. If there are a few more things wrong I add another
$5,000 to the cost of repairs. A few more and I add another
$5,000. If the house is perfect I say it is in “move-in
condition,” or of it just needs a splash of paint on a wall
stain or a new carpet in a room or two I say the home is in
“near move-in condition.” Use your own best judgment to
assess repairs.”
With a Wholesaling strategy, that was all you needed in
order to assess whether or not a property was up to the
standards you need to sell the home quickly. In a Fix and
Flip strategy, that is only your starting point.
When you make that assessment of the cost of repairs, you
now have a decision to make: Based on your guesstimate,
is the house you are considering going to make you a profit
after you complete the repairs, hold the home for a month
or two (or three or four or more) making tax and whatever
other payments may be required before you sell the home?
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If your guess is it will, then you move forward on this
home. If your guess is that it will not make you a profit,
then pass on the home and move on to the next.
When you have acquired the skills and experience in
buying and selling homes, making repairs, effectively (and
profitably) negotiating with contractors, buyers and sellers
and have a couple years of experience doing this then you
can adjust your decision template to include homes you
would not have considered buying when you first started.
But if you are first starting out and especially if you are
doing this on your own or with someone else that has little
or no experience in real estate investing or providing
accurate repair and holding costs, then you are going to
want to pass on any home that seems like it might not work
for you.
There may be real estate gurus that will tell you to say
“yes” to every deal unless you find out some way or
somehow that the deal won’t work. That sounds like a high
risk strategy to me and it is beyond my comfort level but
you will need to do whatever fits within your own comfort
zone.
PUT THE PROPERTY UNDER CONTRACT
When you have decided to move ahead on a property, the
next step is to put the property under contract.
We also discussed in “Wholesaling” how best to do this so
that you are protected in your purchase of the property.
Let’s take a look at this again.
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When you wrote a contract to buy a property, you want to
include “and/or assigns” after your name. Banks and HUD
won’t permit you to do this, but private sellers will. This
procedure allows you the opportunity to assign the home to
another buyer.
If you are working with HUD or a bank owned home, leave
enough space after your name if possible to include another
name. Then if you do find another buyer that wants to buy
the home from you right away and at your price, go ahead
and call the bank or HUD and ask them if it is okay to add
your “partner’s” name to the agreement as an additional
buyer. Almost every bank will allow this as will HUD (at
this writing).
Then sign a separate assignment fee contract with your
buyer and sell the home to them.
INSPECT THE PROPERTY
With the property under contract, the clock is ticking and
you are going to want to move fast. The next step to do is
to arrange an inspection of the home by a third party real
estate inspector or appraiser, general contractor or builder.
Make sure they understand that you need a detailed written
estimate of the repairs required. Assure them you will not
hold them to an exact figure, but let them know you need as
accurate a figure as possible.
MATERIALS AND SUPPLIES
If you want to repair the home yourself, you will need the
proper tools and equipment. This report does not go into
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the tools and equipment you will need to be a general
contractor or builder or even a do-it-yourself repair person.
But you will need all the tools and hardware a builder will
require.
Making the repairs on your own will require a trip to your
local hardware store, lumber yard or Lowe’s. Take the
estimate of repairs required that you obtained from the
home inspection and purchase everything on the list. You
may want to do this in stages to prevent a large outlay of
money upfront and to prevent cluttering the work space
around your project home. This will also reduce the
potential for loss from thieves or passersby.
HIRING A CONTRACTOR
Most real estate investors utilizing the “Fix and Flip”
strategy are builders first and real estate investors second.
Being savvy business people they recognized opportunity
when they saw it and realized that fixing and flipping
property for a healthy profit could be something they could
do.
Other real estate investors use a different strategy. Often
this group are real estate investors first and builders second.
Although they also recognized the large profits that could
be made from a fix and flip strategy, they don’t possess the
skill set to actually make the repairs that are required. So
they outsource the work to competent builders or
contractors. They trade making lesser of a profit for a skill
they do not possess.
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EVALUATING A CONTRACTOR OR BUILDER
The best way to find a competent builder or contractor is
simply to ask around of people who have had homes built,
homes repaired, additions built or framing, siding or
plumbing work done. Then consult with these people to
ascertain who you can work with and who seems the most
complete to you to complete the work required within the
budget you have proposed on your estimate of repairs.
Have the builder or contractor complete their own estimate
of the cost of repairs necessary and compare their estimate
to the earlier estimate you received. You will always get
minor differences but if the differences seem major or are
over a thousand or 2,000 dollars, you will want to question
the contractor or builder for their reasoning behind the
difference in prices – unless their estimate is lower of
course.
Most times, the same contractor or builder completing the
original estimate will be the builder or contractor you hire
to make the repairs.
MAKING THE REPAIRS
The next step is to make the repairs. This may require
anywhere from a few days or a few weeks or up to several
months or more depending on the amount of repairs
required.
The specific details of what repairs will be needed on each
house will vary from property to property depending on
what needs to be done. Because of this, there is no way for
this book to conclude how long repairs will take or what
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the cost of those repairs will be. But there is one thing that
is certain: you will feel a great sense of satisfaction when
the repairs are completed, especially if you did all the work
yourself.
SELLING THE HOME
When all the repairs have been made you are ready to sell
the property.
To sell the home, utilize all the steps you learned earlier.
Contact all the buyers on your buyer’s list. I usually email
them 24 hours before I post the home for sale on websites
or place bandit signs.
Post bandit signs telling about the home for sale –
remember, hand written bandit signs work best – tell the
people in your network, offer the home to the people in
your local real estate investors association, post or hand out
flyers, send out emails and post notices to Twitter,
Facebook, Instagram and other sites.
WRITING THE CONTRACT OF SALE
When you have found a buyer, you want to write a contract
that protects you to the greatest degree possible, limiting
your risk, while obligating your buyer to follow through on
the transaction with as great as security as possible.
Clauses you can use on the purchase and sale agreement
when selling the home include “as-is” or “home is sold as-
is,” indicating that the buyer is creating a legal bind to
purchase the property regardless of the condition of the
property. “Time is of the essence” is usually a printed
107
portion of all modern agreements but check to be sure it is
there, if not, write it in. State that the offer price as agreed
is only for a limited amount of time and then specify the
time – 72 hours, 48 hours or even 24 hours. This places a
degree of urgency upon the buyer and helps them to make a
decision quickly.
You also want to consider all the local, state and federal
riders required. These may include lead-paint inspection,
pest-free certification, airport warning, flood zone
statement, et al. You may want to have your buyer initial
next to each of these to indicate that the buyer understands
these. Further, the process of initialing next to each of these
riders affects the psychology of the buyer obligating their
subconscious further into buying the property.
You also want to limit the inspection period of the
property. Often this is anywhere from 10 days to 2 weeks.
With bank-owned or HUD homes, the original purchase
and sale agreement will often state that no prior inspection
is permitted, but upon you actually signing the document,
or somewhere through the process, you usually receive a
document from the bank or HUD that will include the
period of time you are allowed to inspect the property –
usually 10 business days.
When writing a contract to sell your home, you may want
to reduce the inspection time to five days or even three
days. I know of no study or research that indicates this
improves the percentage of successful sales, it is simply a
suggestion you can experiment with.
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THE CLOSING
The closing itself is usually a fairly straightforward
process. Although often fraught with a greater level of
stress for all parties, the actual procedure is almost entirely
controlled by the lawyers and title companies representing
the parties involved. You merely have to endure the
process, sign where they tell you to sign and proceed from
step “A” to the final step as instructed.
CONGRATULATIONS
With this, you have finally bought and sold your first home,
you are now a “real” real estate investor – and I am so
proud
Or, at the very least, you have completed this training,
either way I am very happy for you and I hope to see you in
the investors circle soon.
Good luck and may all your deals be profitable.
Timothy McKierney
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Resources – Videos Part 2
These are additional videos to use for training. You may view
these at any time.
How Do I Find Motivated Sellers?
http://joecrump.com/qandavideo/qandavideo9.html
Can You Really Buy Houses with Zero Down Payment and Bad
Credit?
http://joecrump.com/qandavideo/qandavideo14.html
Tony Robbins – The Power of Clarity and Purpose
http://www.youtube.com/watch?v=On4LbZNHhkQ
4 Tips for Marketing to Motivated Sellers (Offline Marketing)
http://www.reversewholesaling.com/video3.html
5 Common Mistakes New Investors Make
http://www.reversewholesaling.com/video5.html
110
Getting Started – Real Estate Investing Checklist
http://reiclub.com/videos/real-estate-investing-checklist
How Do I Clean My Credit?
http://joecrump.com/qandavideo/qandavideo8.html
I Need a Mentor, But Can’t Afford Your Fee
http://joecrump.com/qandavideo/qandavideo10.html
How to Build a List of 200 to 400 Motivated Sellers in 3
Minutes
http://joecrump.com/qandavideo/qandavideo19.html
How to Create $10,000 Passive Monthly Income and Retire
http://joecrump.com/qandavideo/qandavideo2.html
How Can I Help Sellers Who Are…?
http://joecrump.com/qandavideo/qandavideo6.html
Sellers Laugh at Me When I Make Zero Down Offers
http://joecrump.com/qandavideo/qandavideo17.html
111
Life Gets In My Way – How Do I Get My Business Going?
http://joecrump.com/qandavideo/qandavideo4.html
Where Is the Best Market to Invest?
http://joecrump.com/qandavideo/qandavideo12.html
Are Lease Options Legal in All States – Including Texas?
http://joecrump.com/qandavideo/qandavideo3.html
How to Build a Massive, Effective, Profitable Buyers List
http://joecrump.com/qandavideo/qandavideo18.html
7 Steps to Building Your Buyers List
http://reversewholesaling.com/video2.html
How to Find Cash Buyers for Your Real Estate Deals
http://reiclub.com/videos/cashbuyers
Does Your System Work in Canada and Other Countries?
http://joecrump.com/qandavideo/qandavideo15.html
112
Quick Formula for Estimating Repairs on a Junker
http://reiclub.com/videos/quick-formula-estimating-repairs-
junker
How to Perform a Basic Home Inspection
http://reiclub.com/videos/homeinspections
What Zero Down Structure Should I Use?
http://joecrump.com/qandavideo/qandavideo5.html
How Do You Do Creative Financing in a Boom Market?
http://joecrump.com/qandavideo/qandavideo7.html
How to Get Signed Contracts without Ever Talking to a Seller
http://joecrump.com/qandavideo/qandavideo20.html
Making Your Real Estate Offer as a Wholesale Buyer
http://reiclub.com/videos/realestateoffers
113
Tips for Making Offers on Properties
http://reiclub.com/videos/tips-for-making-offers-real-estate-
properties
Investor Checklist to Negotiate with Sellers
http://reiclub.com/videos/sellernegotiations
How to Find and Train Realtors to Sell Your Homes
http://joecrump.com/qandavideo/qandavideo1.html
Are You a Scam?
http://joecrump.com/qandavideo/qandavideo16.html
Real Estate Closing for Wholesale Property Deals
http://reiclub.com/videos/realestateclosings
What Kind of Business Structure Should I Use as a Real Estate
Investor?
http://joecrump.com/qandavideo/qandavideo11.html
114
How to Get a Life Like Mine
http://joecrump.com/qandavideo/qandavideo21.html
Try a Virtual Assistant Free for 40 Hours
http://reiclub.com/videos/virtualassistant
Setting Up Your Real Estate Investor Website
http://reiclub.com/videos/realestateinvestorwebsites
I’m Having Problems Buying REOs, Can You Help?
http://joecrump.com/qandavideo/qandavideo13.html
7 Keys to Hiring a Property Management Company
http://reiclub.com/videos/keys-hiring-property-management-
company
Should Real Estate Investors Hire Property Managers?
http://reiclub.com/videos/propertymanagement
115
Commercial Real Estate – Introduction to Commercial Real
Estate Investing
http://www.youtube.com/watch?v=f0TgKRr4mUQ&feature=pla
yer_embedded
116
Resources – Books
You may order any of these books at any time. You will
need a PDF reader to read them. A popular PDF reader is
Adobe. (Adobe.com)
Please go to FindingFlippingFixing.com to order.
Real Estate Investing: Tips, Myths and Realities
Flipping Your Way to Financial Freedom
Think and Grow Rich
Success Secrets of Self-Made Millionaires
Conquering Your Life Goals
Automatic Reverse Marketing Systems – about real estate
marketing
Flipping Fortune: Making Big Money Wholesaling Real
Estate
How to Buy a Wholesale Deal without Taking a Bath
Mentor for Life – Insider Secrets to Real Estate
Wholesaling
Getting Started with Wholesaling
Real Estate Investing Simplified
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Monster Wholesale Profit System
FreedomSoft Outsourcing Guide – creating a virtual real
estate office
12 Issues to Discuss with Your Real Estate Partners
The Property Manager – Your Wealth Is In His Hands
Quit Your J.O.B. in 19 Weeks or Less
118
Forms and Documents
Real Estate Investor Training
I have included all the forms and contracts I use on a day to
day basis. I have also included a few bonus documents that
help you out with some issues that come up from time to
time. When you wanna be a rockstar, you need to be
smarter and faster than your competition. Using the right
forms and setting things up the right way, will make your
life a lot easier and help your business run a lot smoother. I
will be giving a quick summary of each document/form and
then giving detailed instructions for each document in my
instruction manual.
Forms and contracts included:
Affidavit & Memo – You can use this document to record
notice of your contract on a property with the county. The
document will cloud the title and mean that the title
company needs to contact you before the property can be
bought or sold. The only time I use this is when I am the
buyer with a seller that I don’t trust or is trying to back out
on a deal with me. When you need this document though,
it is GREAT to have!!!
Back to Back Closings – This give an explanation of the
back to back closings.
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B-C Real Estate Purchase and Sale Sample – Sample of
a B-C closing agreement, modify as you need.
Business Card – a sample of a business card you can use
Buyer Script – What to say to potential buyers.
California Info. – California has some unique differences.
We have a summary of how to do these REO deals in
California plus a list of a couple escrow companies and an
attorney familiar with these kind of transactions.
Commission Agreement – Agreement for commission you
should get.
Disclosure Agreement – Just a suggestion.
End Buyer Down Payment Statement – Insert this in
your contract to insure you get the down payment if the
buyer cannot complete the transaction.
Invoice – Some title companies require an invoice before
they pay marketing fees on the HUD. Here is a blank
template of an invoice for you to use.
Land Contract – Sample of a Land Contract.
Land Trust Revocable Trust - This is a state specific
document but the principle can be used in any state if you
wish to flip the property using a land trust.
Property Appraisal Sheet – You should keep a sheet like
this for every deal you do. Keep you accounting in order
and all the relevant info. in one place.
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Real Estate Affidavit & Memo – Generic – Generic form
of Purchase and Sale.
Real Estate Affidavit & Memo – Simple – Simple form
of the Purchase and Sale.
Realtor Script – How to talk to Realtors.
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AFFIDAVIT AND MEMORANDUM OF
PURCHASE AND SALE AGREEMENT
STATE OF
COUNTY OF
BEFORE ME, the undersigned authority, on this day personally
appeared __________________________________________,
who being first duly sworn, deposes and says that:
1. A Contract for the Purchase and Sale of the real
property described herein was entered into by and between
the Affiant, as Buyer, and
___________________________________________________,
as Seller, on the ________ day of
___________________________, 20___.
2. Any interested party may contact:
____________________________________________________
_____, whose mailing address is
____________________________________________________
__________________________, and whose telephone number
is ___________________.
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3. ALL PROSPECTIVE PURCHASERS BEWARE, Affiant has
an equitable interest in the herein described real property by
virtue of a properly executed contract. Affiant is, and has
been, ready, willing and able to close this transaction.
DESCRIPTION OF REAL PROPERTY
(Insert Legal Description)
FURTHER AFFIANT SAYETH NOT.
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Signed, sealed and delivered in the presence of:
__________________________________________________
AFFIANT: _______________________________________
Sworn to and described before me this ______ day of
_______________, 20____.
________________________________________
NOTARY PUBLIC
After Recording Return To:
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Agreement to Assign Contract for Sale and Purchase
Subject
Property:____________________________________________
_________________.
Legal Description:
This agreement is made between
___________________(ASSIGNOR) and
_________________(ASSIGNEE) regarding purchase of above
referenced SUBJECT PROPERTY.
Whereas ________________________(BUYER) has entered into
a Purchase and Sales Agreement with
__________________________(SELLER) for the purchase of
SUBJECT PROPERTY, and whereas BUYER wishes to assign its
rights, interests and obligations in the Purchase and Sales
Agreement, it is hereby agreed between ASSIGNOR and
ASSIGNEE as follows:
1. ASSIGNEE shall pay ASSIGNOR a NON-REFUNDABLE assignment fee of ________ (payable $________ with signing of
contract and balance at close).
2. Assignee’s inspection period shall expire upon execution of this Assignment.
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ASSIGNEE accepts all terms and conditions of the
contract for Sale and Purchase between BUYER and
SELLER in its entirety.
3. ASSIGNEE acknowledges receipt of legible copies of the original Contract for Sale and Purchase in its entirety including all
Addendums associated with this transaction.
4. Additional terms and conditions of this Assignment are as follows:
- This assignment contract is non-assignable without the express written consent of the ASSIGNOR.
- No changes to the Purchase Contract can be made without written Consent of ______________.
5. Disclosures and Acknowledgement: a) ASSIGNOR and affiliated associates make no
warranty, expressed
or implied, regarding inspection reports or
other reports provided
to ASSIGNEE by ASSIGNOR or third parties
concerning this
property.
b) ASSIGNEE acknowledges they are conducting a transaction dealing directly with ASSIGNOR for the purchase of
SUBJECT PROPERTY.
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ASSIGNEE is not relying upon or being
represented by a REAL ESTATE BROKERAGE
in this transaction.
AGREED AND ACCEPTED
ASSIGNOR (_____________________) ASSIGNOR
(____________________)
Signature:_______________________
Signature:________________________
Date:________________________
Date:____________________________
ASSIGNEE(___________________)
Signature:____________________
Dated:_____________
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EXPLANATION OF DOUBLE (BACK-
TO- BACK) CLOSING
A double close has the following requirements:
-The first half cannot be a short sale.
-The end buyer must be a cash buyer or using hard
money/private lender
-The commitment will say that title is vested in the owner of
record, i.e. the seller in the first transaction. It will also disclose to
the end buyer that two deeds will be recorded and there may be
a delay in recording the second deed as the closing agent must
wait for the deed in the first transaction to be recorded.
-The funds transferred to the first title company must be
disclosed as a line item on the Hud-I.
-The contract from the investor to the end buyer discloses to
the buyer that the seller has a contract to purchase only and is
not the title owner at the time of execution.
If all the above conditions are met and the title is clean &
insurable, then we can conduct a double closing wherein the
middleman need not fund the first transaction.
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My title company puts this EXACT
language in their title commitment
also:
“For Informational purposes only: This is a simultaneous
land flip transaction wherein sellers proceeds will be used
for the purchase of the property from the current title owner
identified on Schedule A and this payment will be reflected
on the HUD-1 at closing. Consequently, there may be a
delay in recording the deed.”
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SAMPLE B-C REAL ESTATE PURCHASE
AND SALE AGREEMENT
PARTIES: SELLER NAME HERE _____________________________________________________________________ (“Seller”),
and BUYER NAME HERE ________________________________________________________________________________________ (“Buyer”),
hereby agree that Seller shall sell and Buyer shall buy the following described
Real Property and Personal Property (collectively “Property”) pursuant to the
terms and conditions of this Contract for Sale and Purchase and any riders and
addenda (“Contract”):
I. DESCRIPTION:
(a) Legal description of the real property located in COUNTY HERE County,
Florida: _____________________________________________________________ ___________________________________________________
LEGAL DESCRIPTION HERE
(b) Street address, city, zip, of the Property: ADDRESS HERE _________________________________________________________
(c) Personal Property includes existing range(s), refrigerator(s), dishwasher(s),
ceiling fan(s), light fixture(s), and window treatment(s) unless specifically
excluded below.
Other items included are: As-Is/Where-Is
________________________________________________________________________________________________________________________
Items of Personal Property (and leased items, if any) excluded are:
As-Is/Where-Is _________________________________________________________________________________________________________
II. PURCHASE PRICE (U.S. currency): ................................................................................................................................... $PRICE___________
PAYMENT:
(a) Deposit held in escrow by (escrow agent) in the amount of (checks subject
to clearance) .......................................................................................................................... $
(b) Additional escrow deposit to be made to Escrow Agent within days
after Effective Date
(see Paragraph III) in the amount of....................................................................................................................................... $
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(c) Financing (see Paragraph IV in the amount of ....................................................................................................................... $
(d) Other Non-Refundable Deposit to TITLE COMPANY NAME HERE ................................................................................ $DEPOSIT
(e) Balance to close by cash, wire transfer of LOCALLY DRAWN cashier’s of
official bank check(s),
subject to adjustments or prorations............................................................................................................................................. $ BALANCE______
III. TIME FOR ACCEPTANCE OF OFFER AND COUNTEROFFERS;
EFFECTIVE DATE:
(a) If this offer is not executed by and delivered to all parties OR FACT OF
EXECUTION communicated in writing between the parties on or before
ACCEPTANCE DATE, the deposit(s) will, At Buyer’s option, be returned and
this offer withdrawn. UNLESS OTHERWISE STATED, THE TIME FOR
ACCEPTANCE OF ANY COUNTEROFFERS SHALL BE 2 DAYS FROM THE
DATE OF THE COUNTEROFFER IS DELIVERED. (b) The date of Contract
(“Effective Date”) will be the date when the last one of the Buyer and Seller has
signed or initialed this offer or the final counteroffer. If such date is not otherwise
set forth in this Contract, then the “Effective Date” shall be the date determined
above for acceptance of this offer or, if applicable, the final counteroffer.
IV. FINANCING:
(a) This is a cash transaction with no contingencies for financing;
(b) This contract is contingent on Buyer obtaining approval of a loan (“Loan
Approval”) within days(if blank, then 30 days) after Effective Date (“Loan
Approval Date”) for (CHECK ONLY ONE): a fixed; an adjustable; or
a fixed of adjustable rate loan, in the principal amount of $ , at an initial interest rate not to exceed %, discount and origination fees not to exceed % of principal amount, and for a term of years. Buyer will make application within days (if blank, then 5 days) after Effective Date. Buyer shall use reasonable diligence to: obtain Loan Approval and notify Seller in writing of Loan
Approval by Loan Approval Date; satisfy terms and conditions of the Loan
Approval; and to close the loan. Loan Approval which requires a condition relate
to the sale of other property shall not be deemed Loan Approval for purposes of
this subparagraph. Buyer shall pay all loan expenses. Buyer does not deliver
written notice to Seller by Loan Approval Date stating Buyer has either obtained
Loan Approval or waived this financing contingency, then wither party may
cancel this Contract by delivering written notice (“Cancellation Notice”) to the
other, not later than seven (7) days prior to Closing. Seller’s Cancellation Notice
must state that Buyer has three (3) days to deliver to Seller written notice waiving
this financing contingency. If Buyer has used due to diligence and has not
obtained Loan Approval before cancellation as provided above. Buyer shall be
refunded the deposit(s). Unless this financing contingency has been waived, this
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Contract shall remain subject to the satisfaction, by Closing, of those conditions
of Loan Approval related to the Property;
(c) Assumption of existing mortgage (see rider for terms); or
(d) Purchase money note and mortgage to Seller (see “AS IS” Standard B and
K are riders; addenda; or special clauses for terms).
V. TITLE EVIDENCE: At least days (if blank, then 5 days) before closing a
title insurance commitment with legible copies of instrument listed as exceptions
attached thereto (“Title Commitment”) and, after Closing, an owner’s policy of title
insurance (see “AS IS” Standard A for terms) shall be obtained by:
(CHECK ONLY ONE): (1) Seller, at Seller’s expense and delivered to
Buyer of Buyer’s attorney; or
(2) Buyer at Buyer’s expense.
(CHECK HERE): If an abstract of title is to be furnished instead of
title insurance, and attach rider for terms.
VI. CLOSING DATE: This transaction shall be closed and the closing
documents delivered on or before CLOSING DATE(“Closing”), unless modified
by other provisions of this Contract. If Buyer is unable to obtain Hazard, Wind,
flood, or Homeowners’ insurance at a reasonable rate due to extreme weather
conditions, Buyer may delay Closing up for 5 days after such coverage becomes
available.
VII. RESTRICTIONS; EASEMENTS; LIMITATIONS: Seller shall convey
marketable title subject to: comprehensive land use plans, zoning restrictions,
prohibitions and other requirements imposed by governmental authority;
restrictions and matters appearing on the plat or otherwise common to the
subdivision; outstanding oil, gas and mineral rights of record without right of
record without right of entry; un platted public utility easements of record (located
contiguous to real property lines and not more than 10 feet in width as to the rear
or front lines and 7½ feet in width as to the side lines); taxes for year of Closing
and subsequent years; and assumed mortgage sand purchase money
mortgages, any (if additional items, see addendum); provided; that there exists at
Closing no violation of the foregoing and none prevent uses of the Property for
Single Family Residential purpose(s).
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VIII. OCCUPANCY: Seller shall deliver occupancy of Property to Buyer at time
of Closing unless otherwise stated herein. If Property intended to be rented or
occupied beyond Closing, the fact and terms thereof and the tenant(s) or
occupants shall be disclosed pursuant “AS IS” Standard F if occupancy beyond
Closing, Buyer assumes all risks of loss to Property from date of occupancy,
shall be responsible and liable for maintenance from that date, and shall be
deemed to have accepted Property in its existing condition as of time of taking
occupancy.
IX. TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or
handwritten provisions, riders and addenda shall control all printed provisions of
the Contract in conflict with them.
X. ASSIGNABILITY: (CHECK ONLY ONE): Buyer may assign and
thereby be releases from any further liability under this Contract;
may assign but not be released from liability under this Contract; or may
not assign this Contract.
XI. DISCLOSURES:
(a) CHECK HERE if the Property is subject to a special assessment lien
imposed by a public body payable in installments which continue beyond
Closing and, if so, specify who shall pay amount due after Closing: Seller
Buyer Other (see addendum).
(b) Radon is a naturally occurring radioactive gas that when accumulated in a
building in sufficient quantities may present health risks to persons who
are exposed to it over time. Levels of radon that exceed federal and state
guidelines have been found in buildings in Florida. Additional information
regarding radon or radon testing may be obtained from your County Public
Health unit.
(c) Mold is naturally occurring and may cause health risks or damage to property.
If Buyer is concerned or desires additional information regarding mold, Buyer
should contact an appropriate professional.
(d) Buyer acknowledges receipt of the Florida Energy-Efficiency Rating
Information Brochure required by Section 553.996 FS.
(e) If the real property included pre-1978 residential housing, then a lead-based
paint rider is mandatory.
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(f) If Seller is a “foreign person” as defined by the Foreign Investment in Real
Property Tax Act, the parties shall comply with that Act.
(g) BUYER SHOULD NOT EXECUTE THIS CONTRACT UNTIL BUYER HAS
RECEIVED AND READ THE HOMEOWNERS’ ASSOCIATION/COMMUNITY
DISCLOSURE.
(h) PROPERTY TAX DISCLOSURE SUMMARY: BUYER SHOULD NOT RELY
ON THE SELLER’S CURRENT PROPERTY TAXES AS THE AMOUNT OF
PROPERTY TAXES THAT THE BUYER MAY BE OBLIGATED TO PAY IN THE
YEAR SUBSEQUENT TO PURCHASE. A CHANGE OF OWNERSHIP OR
PROPERTY IMPROVEMENTS TRIGGERS REASSESSMENTS OF THE
PROPERTY THAT COULD RESULT IN HIGHER PROPERTY TAXES. IF YOU
HAVE ANY QUESTIONS CONCERNING VALUATION, CONTACT THE
COUNTY PROPERTY APPRAISER’S OFFICE FOR INFORMATION.
XII. MAXIMUM REPAIR COSTS: DELETED
XIII. HOME WARRANTY: Seller Buyer N/A will pay for a home
warranty plan issued by at a cost not to exceed
$ .
XIV. INSPECTION PERIOD AND RIGHT TO CANCEL: (a) Buyer shall have 0
days from Effective Date (“inspection Period”) with which to have such
inspections of the Property performed as Buyer shall desire and utilities
service shall be made available by the Seller during the Inspection Period;
(b) Buyer shall be responsible for prompt payment for such inspections
and repair of damage and restoration of the Property resulting from such
inspections; and (c) if buyer determines, in buyer’s sole discretion, that the
condition of the Property is not acceptable to Buyer, Buyer may cancel this
contract by delivering written notice of such election to Seller prior to the
expiration of the Inspection Period. If Buyer timely cancels this Contact,
the deposit(s) paid shall be immediately returned to Buyer; thereupon,
Buyer and Seller shall be released of all further obligations under this
Contract, except as provided in this Paragraph XIV. The above provision
(b) shall survive termination of this Contract.
XV. RIDERS; ADDENDA; SPECIAL CLAUSES; CHECK those riders which are
applicable AND are attached to and made part of this Contract:
CONDOMINIUM VA/FHA HOMEOWNERS’ ASSN. LEAD-BASED
PAINT COASTAL CONSTRUCTION CONTROL LINE INSULATION
Other Comprehensive Rider Provisions Addenda Special Clause(s):
The Seller is (related to) a licensed real estate agent in the state of Florida
and does not represent the Buyer in this transaction. Money listed
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on line 21, section II (d) is a non-refundable down payment paid to TITLE
COMPANY NAME HERE, Should buyer be unable to close by 5:00pm on the
closing date, due to no fault of the seller, buyer authorizes TITLE
COMPANY NAME HERE to immediately disburse entire deposit amount to
Seller without signing a cancellation of contract and release of escrow.
Price is net to seller less any mortgage, liens and prorated property taxes
not yet billed. Closing shall take place at TITLE COMPANY NAME HERE.
Buyer’s down payment is refundable if this contract is unenforceable due
to the fault of the seller or if the seller can not deliver clear title. This
contract is contingent upon SELLERS NAME HERE closing on the subject
property. The word “Seller” on line 217 in section K shall be replaced with
the word “Buyer”. Seller has never occupied the property and is exempt
from providing the buyer with a property disclosure
XVI. “AS IS” STANDARDS FOR REAL ESTATE TRANSACTIONS (“AS IS”
Standards): Buyer and Seller acknowledge receipt of a copy of “AS IS”
Standards A through Z on the reverse side or attached, which are incorporated
as part of this Contract. THIS IS INTENDED TO BE A LEGALLY BINDING
CONTRACT. IF NOT FULLY UNDERSTOOD, SEEK THE ADVICE OF AN
ATTORNEY PRIOR TO SIGNING. THIS “AS IS” FORM HAS BEEN
APPROVED BE THE FLORIDA ASSOCIATION OF REALTOR AND THE
FLORIDA BAR. Approval does not constitute an opinion that any of the terms
and conditions in this Contract should be accepted by the parties in a particular
transaction. Terms and conditions should be negotiated based upon the
respective interests, objectives and bargaining positions of all interested persons.
_________________________________________ ____________ ________________________________________ ___________________
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(BUYER) BUYER NAME HERE (DATE)
(SELLER) SELLER NAME
HERE (DATE)
_________________________________________ ____________ ________________________________________ ___________________
(BUYER) (DATE)
(SELLER) (DATE)
BROKERS: The brokers (including cooperating brokers, if any) named below
are the only brokers entitled to compensation in connection with this Contract.
_______________________________________________________ _____________________________________________________________
Cooperating Broker Listing
Broker
“AS IS” STANDARDS FOR REAL ESTATE
TRANSACTIONS
A. TITLE INSURANCE: The Title Commitment shall be issued by a Florida
licensed title insurer agreeing to issue Buyer, an owner’s policy of title insurance
in the amount of the purchase price, insuring Buyer’s marketable title to the
Real Property, subject only to matters contained in Paragraph VII and those to be
discharged by Seller at or before Closing. Marketable title shall be determined
according to applicable Title Standards adopted by authority of The Florida Bar
and in accordance with law. Buyer shall have 5 days from date of receiving the
Title Commitment to examine it, and if title is found defective, notify Seller in
writing specifying defect(s) which render title unmarketable. Seller shall have 30
days from receipt of notice to remove the defects, failing which Buyer shall, within
5 days after expiration of the 30 day period, deliver written notice to Seller either:
(1) extending the time for a reasonable period not to exceed 120 days within
which Seller shall use diligent effort to remove the defects; or (2) requesting a
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refund of deposit(s) paid which shall be returned to Buyer. If Buyer fails to so
notify Seller, Buyer shall be deemed to have accepted the title as it then is.
Seller shall, if title is found unmarketable, use diligent effort to correct defect(s)
within the time provided. If, after diligent effort, Seller is unable to timely correct
the defects, Buyer shall either waive the Commitment and it is delivered to Buyer
less Than 5 days prior to Closing, Buyer may extend Closing so that Buyer shall
have up to 5 days from date of receipt to examine same in accordance with this
“AS IS” Standard.
B. PURCHASE MONEY MORTGAGE; SECURITY AGREEMENT TO SELLER:
A purchase money mortgage and mortgage note to Seller shall provide for a 30
day grace period in the event of default if a first mortgage and a 15 day grace
period if a second or lesser mortgage; shall provide for right of prepayment in
whole or in part without penalty; shall permit acceleration in event of transfer of
the Real Property; shall require all prior liens and encumbrances to be kept in
good standing; shall forbid modifications of, or future advances under, prior
mortgage(s); shall require Buyer to maintain policies of insurance containing a
standard mortgagee clause covering all improvements located on the Real
Property against fire and all perils included within the term “extended coverage
endorsements” and such other risks and perils as Seller may reasonable
require, in an amount equal to their highest insurable value; and the mortgage,
note and security agreement shall be otherwise in form and content required by
Seller, but Seller may only require clauses and coverage customarily found in
mortgages, mortgage notes and security agreement generally utilized by
savings and loan institutions or state or national banks located in the county
wherein the Real Property is located. All Personal Property and leases being
conveyed or assigned will, at Seller’s option, be subject to the lien of a security
agreement evidenced by recorded or filed financing statements or certificates of
title. If a balloon mortgage, the final payment will exceed the periodic
payments thereon.
C. SURVEY: Buyer, at Buyer’s expense, within time allowed to deliver evidence
of title to examine same, may have the Real Property surveyed and certified by a
registered Florida surveyor. If the survey discloses encroachments on the Real
Property or that improvements located thereon encroach on setback lines,
easements, land of others or violate any restrictions, Contract covenants or
applicable governmental regulations, the same shall constitute a title defect.
D. WOOD DESTROYING ORGANISMS: DELETED
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E. INGRESS AND EGRESS: Seller warrants and represents that there is
ingress and egress to the Real Property sufficient for its intended use as
described in Paragraph VII hereof and title to the Real Property is insurable in
accordance with “AS IS” Standard A without exception for lack of legal right of
access.
F. LEASES: Seller shall at least 10 days before Closing, furnish to Buyer copies
of all written leases and estoppel letters from each tenant specifying the nature
and duration of the tenant’s occupancy, rental rates, advanced rent and
security deposits paid by tenants. If Seller is unable to obtain such letter from
each tenant to confirm such information. If the terms of the leases differ
materially form Seller’s representations, Buyer may terminate this contract by
delivering written notice to Seller at least 5 days prior to Closing. Seller shall, at
Closing, deliver and assign all original leases to Buyer.
G. LIENS: Seller shall furnish to Buyer at time of Closing an affidavit attesting to
the absence, unless otherwise provided for herein, of any financing statement,
claims of lien or potential lienors known to Seller and further attesting that there
have been no improvements or repairs to the Real Property for 90 days
immediately preceding date of Closing. If the Real Property has been
improved or repaired within that time, Seller shall deliver releases or waivers of
construction liens executed by all general contractors, subcontractors, suppliers
and materialmen in addition to Seller’s lien affidavit setting forth the names of all
such general contractors, subcontractors, suppliers and materialmen, further
affirming that all charges for improvements or repairs which could serve as a
basis for a construction lien or a claim for damages have been paid or will be
paid at the Closing of this Contract.
H. PLACE OF CLOSING: Closing shall be held in the county wherein the Real
Property is located at the office of the attorney or other closing agent (“Closing
Agent”) designated by the party paying for title insurance, or, if no title
insurance, designated by Seller.
I. TIME: In computing time periods of less than six (6) days, Saturdays, Sundays
and state or national legal holidays shall be excluded. Any time periods provided
for herein which shall end on a Saturday, Sunday, or a legal holiday shall
extend to 5:00 p.m. of the next business day. Time is the essence in this
Contract.
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bodies as of Closing are to be paid by Seller. Pending liens as of Closing shall
be assumed by Buyer. If the improvement has been substantially completed as
of Effective Date, any pending lien shall be considered certified, confirmed, or
ratified and Seller shall, at Closing, be charged an amount equal to the last
estimate or assessment for the improvement by the public body.
N. INSPECTION AND REPAIR: DELETED
O. RISK OF LOSS: If the Property is damaged by fire or other casualty before
Closing and cost of restoration does not exceed 1.5% of the Purchase Price,
cost of restoration shall be an obligation of Seller and Closing shall proceed
pursuant to the terms of this Contract with restoration costs escrowed at Closing.
If the cost of restoration exceeds 1.5% of the Purchase Price, Buyer shall either
take the Property as is, together with either the 1.5% or any insurance
proceeds payable by virtue of such loss or damage, or receive a refund of
deposit(s), thereby releasing Buyer and Seller from all further obligations under
this Contract.
P. CLOSING PROCEDURE: The deed shall be recorded upon clearance of
funds. If the title agent insures adverse matters pursuant to Section 627.7841,
F.S., as amended, the escrow and closing procedure required by this “AS IS”
Standard shall be waived. Unless waived as set forth above the following closing
procedures shall apply: (1) all closing procedures shall be held in escrow by the
Closing Agent for a period of not more than 5 days after Closing; (2) if Seller’s
title is rendered unmarketable, through no fault of Buyer, Buyer shall, within the 5
day period, notify Seller in writing of the defect and Seller shall have 30 days
from date of receipt of such notification to cure the defect; (3) if Seller’s fails to
timely cure the defect, all deposits and closing funds shall, upon written demand
by Buyer and within 5 days after demand, be returned to Buyer and,
simultaneously with such repayment, Buyer shall return the Personal Property,
vacate the Real Property and reconvey the Property to Seller by special
warranty deed and bill of sale; and (4) if Buyer fails to make timely demand for
refund, Buyer shall take title as is, waiving all rights against Seller as to any
intervening defect as may be available to Buyer by virtue of warranties
contained in the deed or bill of sale.
Q. ESCROW: Any Closing Agent or escrow agent (collectively “Agent”) receiving
funds or equivalent is authorized and agrees by acceptance of them to deposit
them promptly, hold same in escrow and, subject to clearance, disburse them in
accordance with terms and conditions of this Contract. Failure of funds to clear
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shall not excuse Buyer’s performance. If in doubt as to Agent’s duties or
liabilities under the provisions of this Contract, Agent may, at Agent’s option,
continue to hold the subject matter of the escrow until the parties hereto agree to
its disbursement or until a judgment of a court of competent jurisdiction shall
determine the rights of the parties, or Agent may deposit same with the clerk of
the circuit court having jurisdiction of the dispute. An attorney who represents a
party and also acts as Agent may represent such party in such action. Upon
notifying all parties concerned of such action, all liability on the part of Agent
shall fully terminate, except to the extent of accounting for any items previously
delivered out of escrow. If a licensed real estate broker, Agent will comply with
provisions of Chapter 475, F.S., as amended. Any suit between Buyer and Seller
wherein Agent is made a party because of acting as Agent hereunder, or in any
suit wherein Agent interpleads the subject matter of the escrow, Agent shall
recover reasonable attorney’s fees and costs in favor of the prevailing party. The
Agent shall not be liable to any party or person for misdelivery to Buyer or Seller
of items subject to the escrow, unless such misdelivery is due to willful breach of
the provisions of this Contract of gross negligence of Agent.
R. ATTORNEY’S FEES; COSTS: In any litigation, including breach, enforcement
or interpretation, arising out of this Contract, the prevailing party in such litigation,
which, for purposes of this “AS IS” Standard, shall include Seller, Buyer and any
brokers acting in agency or non-agency relationships authorized by Chapter 475,
F.S., as amended, shall be entitled to recover from the non-prevailing party
reasonable attorney’s fees, costs and expenses.
S. FAILURE OF PERFORMANCE: If Buyer fails to perform this Contract within
the time specified, including payment of all deposits, the deposit(s) paid by
Buyer and deposit(s) agreed to be paid, may be recovered and retained by and
for the account of the Seller as agreed upon liquidated damages, consideration
for the execution of this Contract and in full settlement of any claims; whereupon,
Buyer and Seller shall be relieved of all obligations under this Contract; or Seller,
at Seller’s option, may proceed in equity to enforce Seller’s rights under this
Contract. If for any reason other than failure of Seller to make Seller’s title
marketable after diligent effort, Seller fails, neglects or refuses to perform this
Contract, Buyer may seek specific performance or elect to receive the return of
Buyer’s deposit(s) without thereby waiving any action for damages resulting from
Seller’s breach.
T. CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE;
FACSIMILE: Neither this Contract nor any notice of it shall be recorded in any
public records. This Contract shall bind and inure to the benefit of the parties
and their successors in interest. Whenever, the context permits, singular shall
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include plural and one gender shall include all. Notice and delivery given by or
to the attorney or broker representing any party shall be as effective as if given
by or to that party. All notices must be in writing and may be made by mail,
personal delivery or electronic media. A legible facsimile copy of this Contract
and any signatures hereon shall be considered for all purposes as an original.
U. CONVEYANCE: Seller shall convey marketable title to the Real Property by
statutory warranty, trustee’s, personal representative’s, or guardian’s deeds, as
appropriate to the status of Seller, subject only to matters contained in Paragraph
VII and those otherwise accepted by Buyer. Personal Property shall, at the
request of Buyer, be transferred by an absolute bill of sale with warranty of title,
subject only to such matters as may be other- wise provided for herein.
V. OTHER AGREEMENTS: No prior or present agreements or representations
shall be binding upon Buyer and Seller unless included in this Contract. No
modification to or change in this Contract shall be valid or binding upon the
parties unless in writing and executed by the parties intended to be bound by it.
W. SELLER DISCLOSURE: (1) There are no facts known to Seller materially
affecting the value of the Property which are not readily observable by Buyer or
which have not been disclosed to Buyer; (2) Seller extends and Intends no
warranty and makes no representation of any type, either express or
implied, as to the physical condition or history of the Property; and (3)
Seller has received no written or verbal notice from any governmental
entity or agency as to a currently uncorrected building, environmental or
safety code violation.
X. PROPERTY MAINTENANCE; PROPERTY ACCESS; ASSIGNMENT OF
CONTRACT AND WARRANTIES: Seller shall maintain the Property, including,
but not limited to lawn, shrubbery, and pool in the condition existing as of
Effective Date, ordinary wear and tear excepted. Seller shall, upon reasonable
notice, provide utilities service and access to the Property for appraisal and
inspections, including a walk-through prior to Closing, to confirm that all items
Personal Property are on the Real Property and that the Property has been
maintained as required by this “AS IS” Standard. Seller will assign all assignable
repair and treatment contracts and warranties to Buyer at Closing
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Y. 1031 EXCHANGE: If either Seller or Buyer wish to enter into a like-kind
exchange (either simultaneous with Closing or deferred) with respect to the
Property under Section 1031 of the Internal Revenue Code (“Exchange”), the
other party shall cooperate in all reasonable respects to effectuate the Exchange,
including the execution of documents; provided (1) the cooperating party shall
incur no liability or expense related to the Exchange and (2) the Closing shall
not be contingent upon, nor extended or delayed by, such Exchange.
Z. BUYER WAIVER OF CLAIMS: Buyer waives any claims against Seller
and, to the extent permitted by law, against any real estate licensee
involved in the negotiation of the Contract, for any defects or other damage
that may exist at Closing of the Contract and be subsequently discovered
by the Buyer or anyone claiming by, through, under or against the Buyer.
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BUYER SCRIPT
Keep in mind that this script is a roadmap of the type
of conversation you want to have with an end buyer
so that they understand the kind of deal you are
doing. No-one wants to feel like they are being
scammed in any kind of way so you want to make
sure that you represent yourself and the deal
correctly. You don’t need to go into detail regarding
the use of their cash in the closing to fund your deal.
Let your escrow/title company explain that part. After
all, they can explain the legality of the deal and will be
much better suited to answering any questions your
buyer may have regarding the nature of the
transaction and the use of their cash. You simply want
to make sure that the buyer understands that you
have a contract on a bank owned property that you do
not yet own. You also want to let them know that
although their deposit is no-refundable if there is a
problem on your end they get their money back. (See
my addendum in my B to C contract)
Once they are ready to buy:
“I’m glad you are buying this GREAT property. Deals
like this go FAST which is why you were smart to
jump on it. It is a bank owned property that I just put
under contract. I wholesale many bank owned
146
properties in this area because I have established
relationships with the banks agents which is how I
able to sell deals like this. Basically I buy and sell
bank owned properties the same day at small
markups and work on a volume basis. My closing
date is (21) days from now so that would be our
closing date too. Of course my contract with you
depends on me getting clear title from the bank and
closing on time with the bank. I wanted to let you
know this upfront because sometimes there are
delays due to title issues or other problems related to
the foreclosure. If you have any other questions
regarding the transaction, feel free to call (TITLE
AGENT) and he/she can answer any other questions
you may have. I look forward to getting this deal done
with you and doing other deals in the future.”
147
California Information
First of all, for students in California, you
have 3 ways of closing:
write the offer in your own name and at
the bottom of the contract under
"Additional Information" put "Vesting To
Be Determined At Close of
Escrow".Then simply close into your
wholesale buyers entity.
OR
Write the offer like the attached offer
and then close in your wholesale buyers
trust and draw up an amendment to
change trustee at close or Grant Deed
to change the trustee.
148
OR
Do a back-to-back and fund with your
money or borrow the cash for a day
from one of the "one day money"
people.
Escrow companies
Bella Vista Escrow Inc.
(909) 946-9188
750 N Mountain Ave Upland, CA 91786
Len Schaustal, Jr., Owner/Manager
Zemrus Escrow, Inc.
125 West Green Street
149
Pasadena, CA 91105
Phone: (626) 449-1974
Fax: (626) 449-2085
E-Mail: [email protected]
Mary Kendall Escrow Officer Foundation Escrow 2020 Camino Del Rio No. Suite 306 San Diego, CA 92108 Ph: (619) 327-2140 Fax: (619) 327-2144 Email: [email protected]
Attorney Ron Ballard Ballard Law Offic22996 El Toro Road Lake Forest, CA 92630-4961 Phone: 949-597-9596 Fax: 949-597-1649 www.ballardlaw.com [email protected]
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COMMISSION AGREEMENT
__________________, AGREES TO PAY
_________________ A FINDER’S FEE OF
____________ IN CONJUNCTION WITH THE
CLOSING OF:
____________________________________
_______
THIS FINDER’S FEES SHALL BE PAID UPON
CLOSING, WHICH IS SET FOR
____________.
X___________________________________
_DATE:__________
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DISCLOSURE AGREEMENT
Date: _____________________
Be it known on this ___ day of ____________, 20___ , that We/I
________________ ___________________ acknowledge that
______________________ has not in any way received direct monies from the
undersigned in relation to any real estate agreement.
Furthermore, We(I) ___________________________ hold harmless
_____________ _________________ from default, non-performance, or illegal
acts of other interested parties for any real estate agreement we may engage in
whether intentional or non-intentional.
______________________ SS#_____________________
Ph#___________________
(Person Issuing Statement)
______________________ SS#_____________________
Ph#___________________
(Person Issuing Statement)
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End Buyer Down Payment Statement
Money listed on line xxx is a nonrefundable down payment
paid to (Title co).
Should buyer be unable to close by 5:00 PM on the closing
date, due to no
fault of the seller, buyer authorizes (Tile co) to immediately
disburse
entire deposit amount to seller without signing a
cancellation of contract
and release of escrow. Price is net to seller less any
mortgage, liens and
prorated property taxes not yet billed. Closing shall take
place at (Title co)
Buyer's down payment is refundable if this contract is
unenforceable due to
the fault of the seller or if the seller cannot deliver clear
title. This
contract is contingent upon “your name” closing on the
subject
property. Seller has never occupied the property and is
exempt from providing
buyer with a property inspection report, lead certification,
et al.
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Land Contract
This Agreement is made and entered into by and between: _________________________________________________________________________________________ (seller) whose address is: _________________________________________________________________________________________ hereinafter called the Vendor and _________________________________________________________________________________________ (buyer) whose address is: _________________________________________________________________________________________ hereinafter called the Vendee.
Witnesseth: The Vendor, for himself, his heirs and assigns, does hereby agree to sell to the Vendee, their heirs and assigns, the following real estate commonly known as: __________________________________________________________________________________________ and further described; as:
together with all appurtenances, rights, privileges and easements and all buildings and fixtures in their present condition located upon said property.
1. CONTRACT PRICE. METHOD OF PAYMENT, INTEREST RATE:
In consideration whereof, the Vendee agrees to purchase the above described property for the sum of _________________________________________________________________________________ Dollars ($________________), payable as follows:
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The sum of $____________________________________ as down payment at the time of execution of the within Land Contract the receipt of which is hereby acknowledged, leaving principal balance owed by Vendee of $________________________ together with interest on the unpaid balance payable in consecutive monthly installments of $____________________________________ beginning on the ______ day of __________________, 20 ______, and on the _______day of each and every month thereafter until said balance and interest is paid in full, or until the _______day of ________________ 20___ at which time the entire remaining balance plus accrued interest shall become due and payable. The Interest on the unpaid balance due hereon shall be _________________________________________________________________ (______ %) per annum computed monthly, in accordance with a monthly amortization schedule during the life of this Contract.
Payments shall be made to the Vendor at the location above, unless otherwise directed by the Vendor, and such payments shall be credited first to the Interest, and the remainder to the principal or other sums due. The total amount of this obligation, both principal and interest, unpaid after making any such application of payments as herein receipted shall be the interest bearing principal amount of this obligation for the next succeeding interest computation period. If any payment is not received within __________________________ (_____) days of payment date, there shall be a late charge of _________________ (____%) percent assessed. The Vendee may pay the entire balance due under this contract without prepayment penalty.
Page 2 of 3 Land Contract
2. ENCUMBRANCES:
Said real estate is presently subject to a mortgage, and neither Vendor nor Vendee shall place any mortgage on the premises in excess of this Land Contract balance without prior written consent of the other party.
3. REAL ESTATE TAXES:
Real estate taxes shall be the responsibility of the Vendee as of the date of the execution of this agreement. Said taxes shall be escrowed and added to the principal and interest payment required hereunder.
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4. INSURANCE AND MAINTENANCE:
The Vendor agrees to keep the premises insured against fire and other hazard for at least ___________________________________________Dollars ($_______), and shall escrow and add the cost for said insurance premiums to the Vendee's principal and interest obligation herein.
Vendor herein shall have the right to enter the premises at least once per year with twenty-four hours notice to Vendee of his interest to exercise his right.
Vendee shall keep the building in a good state of repair and well painted at the Vendee expense and no additions or alterations shall be made to the building without the Vendor's permission, which shall not be unreasonably withheld. At such time as the Vendor Inspects the premises and finds that repairs are necessary, Vendor shall request that these repairs be made within thirty (30) days at the Vendee's expense.
The Vendee has inspected the premises constituting the subject matter of this Land Contract, and no representations have been made to the Vendee by the Vendor in regard to the condition of said premises; and it is agreed that the said premises are being sold to the Vendee as the same now exists and that the Vendor shall have no obligation to do or furnish anything toward the improvement of said premises, except as may be provided herein.
5. POSSESSION:
The Vendee shall be given possession of the above described premises upon Contract execution, or as otherwise provided herein and shall thereafter have and hold the same subject to the provisions for default hereinafter set forth.
6. ASSIGNMENT:
The Vendee shall not sell, assign, or pledge their interest in this Land Contract without the Vendor's written consent which consent shall not be unreasonably withheld.
7. DELIVERY OF DEED:
Upon full payment of this contract, the Vendee shall receive a General Warranty deed to the property free of all encumbrances except as otherwise set forth.
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8. DEFAULT:
If any installment payment to be made by the Vendee under the terms of this Land Contract is not paid by the Vendee when due or within one (1) Installment thereafter, the entire unpaid balance shall become due and collectable at the election of the Vendor and the Vendor shall be entitled to all the remedies provided for by the laws of this state and/or to do any other remedies and/or relief now or hereafter provided for by law to such Vendor; and in the event of the breach of this contract in any other respect by the Vendee. Vendor shall be entitled to all relief now or hereinafter provided for by the laws of this state.
Page 3 of 3 Land Contract
Failure of Vendee to maintain current the status of all real estate taxes and insurance escrow payments and/or premiums as required herein shall permit Vendor the option to pay any such escrow amounts, premiums, taxes, interest, and/or penalty(ies), and to add same to the next due installment payment or principal amount owing under this contract, or to exercise any remedies available to Vendor.
Waiver by the Vendor of a default or a number of defaults in the performance hereof by the Vendee shall not be construed as a waiver of any default, no matter how similar.
In the event that the Vendor's interests in the property should become compromised or otherwise extinguished for any reason, or should there be an acceleration of any debt secured by the property, the Vendee shall be entitled to a refund of all downpayment monies paid to the Vendor, plus the principal portion of any payments made to date, as follows: Upon notification of such conditions, Vendee agrees to suspend subsequent payments due hereunder, and must continue to occupy the property until required to vacate by judicial order. Vendee further agrees that any refund amounts due hereunder will be reduced by the amount of the missed payments. Both parties agree that this shall constitute the entire liability of the Vendor, and that Vendor shall have no liability to Vendee beyond this amount for any reason whatsoever.
157
9. GENERAL PROVISIONS:
There are no known pending orders issued by any governmental authority with respect to this property other than those spelled out herein prior to closing date for execution of this agreement.
It is agreed that this Land Contract shall be binding upon each of the parties, their administrators, executors, legal representatives, heirs and assigns.
10. SPECIAL PROVISIONS:
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereby set their hands this _________ day of ________________20_____,
WITNESS: ______________________________________________________
________________________________________________________________
VENDOR: _______________________________________________________
________________________________________________________________
VENDEE: _______________________________________________________
158
________________________________________________________________
159
LAND TRUST REVOCABLE TRUST
ARTICLE ONE This trust agreement, executed _____________________, 20______ is between
______________________(AND)_______________________________(OWNER(S)), as Settlor and _________as Trustee. The Settlors has/have transferred or will transfer property to the Trustee, which shall be held, in trust, on the terms set forth in this agreement.
ARTICLE TWO A. Property subject to this instrument is referred to as the Trust Estate and shall be held, administered, and distributed in
accordance with this instrument. B. Other property acceptable to the Trustee may be added to the Trust Estate by any person, by the Will of the Settlor, by the proceeds of any life insurance or otherwise. C. All the property in this trust is the separate property of the Settlor and there is no community, domestic partner, or marital property interest in the Trust Estate.
ARTICLE THREE A. While living, the Settlor reserves the right to amend or revoke
this trust, in whole or in part, to withdraw property from it, and to make gifts from it at any time or times during the Settlor's lifetime. B. On the death of the Settlor the trust created by this Declaration shall become irrevocable and not subject to amendment. C. In this instrument, the terms “incompetent” and “disabled” shall refer to a physical or mental inability to carry out one's
usual business affairs, whether or not such person is legally determined to be incompetent or in need of a Conservator. To
160
prove a change of Trustee based on incapacity, a Successor Trustee may rely upon a written declaration to determine the
incompetence of the Settlor made by, in order of priority, 1) (PERSON 1), or 2) (PERSON 2). Any action taken by a Successor Trustee pursuant to such declaration shall be binding on all persons interested in the trust. No statement of incapacity from any physician shall be required to prove a change of Trustee as it is the Settlor's specific intention that physicians and courts not be involved in the determination of incapacity for any purpose. No third party shall incur any liability for relying on such declaration to prove a
change of Trustee.
ARTICLE FOUR During the life of the Settlor, the Trustee shall pay to or apply for the benefit of the Settlor monthly or as received all of the net income of the Trust Estate. If the Trustee considers the net income insufficient, the Trustee shall pay to the Settlor as much of the principal of the Trust Estate as is necessary, in the Trustee's discretion.
ARTICLE FIVE
In the event of the death of the Settlor, the Trustee, in the Trustee's discretion, shall receive monthly payments for the
transfer of beneficial interest and pay out of such payments to lender or mortgage holder the remaining mortgage of the Trust Estate. These payments shall be paid from the portion of the Trust Estate described in Article Six without charge against any beneficiary of the Trust Estate.
ARTICLE SIX Upon the death of the Settlor, _______, the Trustee, after making payments provided in Article Five, shall distribute the residue of the Trust Estate, free of trust, to the following beneficiaries in the percentages stated: 100% to (PURCHASER
161
OF BENEFICIAL INTEREST OF TRUST OR SURVIVORS THEREOF).
If any of the above beneficiaries do not survive the Settlor by 30 days then the share that the beneficiary would have taken shall be divided among the survivors of the Beneficiary herein designated as named in the Last Will and Testament of the Beneficiary. If the Settlor is not survived by any survivors, then the residue of the Trust Estate shall be distributed, free of trust, according to the terms as declared in the Last Will and Testament of the
Beneficiary.
ARTICLE SEVEN
A. If the individual Trustee named in Article One ____________, shall for any reason cease to act or be incompetent to act, then there shall be, in order of priority, 1) an attorney so designated by Beneficiary or beneficiaries estate, 2) other Trustee as so shall designated by Beneficiary or estate thereof; to assume the position of Trustee of this Trust. B. Any Trustee appointed as provided in this Declaration shall on appointment being made, immediately succeed to all title of the Trustee to the Trust Estate and to all powers, rights, discretions, obligations, and immunities of the Trustee under this Declaration with the same effect as though such successor were originally named as Trustee in this Declaration. C. Any Trustee may resign without need of court approval by giving written notice to a Trustee who accepts the trust. A Trustee may be selected by a resigning Trustee if the Settlor has not provided for one in this declaration. Under no circumstances shall a corporate Trustee serve as Trustee of any trust created under this instrument. A Trustee shall not be removed as a Trustee solely because they are also a beneficiary. D. No bond shall be required of any person named in this instrument as Trustee, or of any person appointed as the Trustee in the manner specified here, for the faithful performance of his or her duties as Trustee.
162
ARTICLE EIGHT
In order to carry out the provisions of the Trusts created by this instrument, the Trustee shall have these powers in addition to those now or hereafter conferred by law: (1) To continue to hold any property of and to operate at the risk of the Trust Estate, any business that the Trustee receives or acquires under the Trust as long as the Trustee deems advisable upon and with the consent of the Beneficiary. (2) To manage, control, grant options on, sell (for cash or on deferred payments), convey, exchange, divide, improve, and
repair Trust property. (3) To rent and or lease Trust property for terms within the terms of the Trust. (4) The Trustee shall have the power to release or to restrict the scope of any power that he or she may hold in connection with the Trust created under this instrument, whether said power is expressly granted in this instrument or implied by law. (5) To take any action and to make any election, in the Trustee's discretion, to minimize the tax liabilities of this Trust and its beneficiaries, and it shall have the power to allocate the benefits among the various beneficiaries, and the Trustee shall
have the power to make adjustments in the rights of any beneficiaries, or between the income and principal accounts, to compensate for the consequences of any tax election or any investment or administrative decision that the Trustee believes has had the effect of directly or indirectly preferring one beneficiary or group of beneficiaries over others. (6) To encumber Trust property by mortgage, deed of trust, pledge, assignment of beneficiary interest or otherwise. (7) To commence or defend, at the expense of the Trust, such litigation with respect to the Trust or any property of the Trust Estate as the Trustee may deem advisable, and to compromise or otherwise adjust any claims or litigation against or in favor of the Trust. (8) To carry insurance of such kinds and in such amounts as the Trustee deems advisable, at the expense of the Trust, to protect the Trust Estate and the Trustee personally against any hazard. (9) To withhold from distribution, in the Trustee's discretion, at the time for distribution of any property in this Trust, without the
163
payment of interest, all or any part of the property, as long as the Trustee shall determine, in the Trustee's discretion, that
such property may be subject to conflicting claims, to tax deficiencies, or to liabilities, contingent or otherwise properly incurred in the administration of the estate. (10) To partition, allot, and distribute the Trust Estate, on any division or partial distribution or final distribution of the Trust Estate, in undivided interests or in kind, or partly in money and partly in kind, at valuations determined by the Trustee, and to sell such property as the Trustee may deem necessary to make division or distribution. In making any division or distribution of the Trust Estate, the Trustee shall be under no obligation to
make a pro rata division, or to distribute the same assets to beneficiaries similarly situated. The Trustee may, in the Trustee's discretion, make a non-pro rata division between Trusts or shares and non-pro rata distributions to such beneficiaries, as long as the respective assets allocated to separate trusts or shares, or distributed to such beneficiaries, have equivalent or proportionate fair market value and income tax basis. (11) Each Trustee shall have the power to employ any custodian, attorney, accountant, financial planner, investment advisor or any other agent to assist the Trustee in the administration of this Trust and to rely on the advice given
by these agents and to compensate such agents with the receipts and undistributed cash assets of the Trust Estate. (12) Subject to any limitations expressly set forth in this Declaration and the faithful performance of fiduciary obligations, to do all such acts, take all such proceedings, and exercise all such rights and privileges as could be done, taken, or exercised by an absolute owner of the Trust property. (13) The Trustee shall be entitled to pay him or herself reasonable compensation for services rendered to the Trust without prior court approval, not to exceed five percent per year of the trust's asset value.
ARTICLE NINE A. The Trustee shall provide an accounting at the request of any current or remainder beneficiary if the Settlor is not acting as Trustee in which case accountings are waived. B. The validity of this trust for real property shall be governed by
164
the law of the state of its situs. The construction, interpretation and administration of this trust shall be governed by the laws of
the state of Illinois regardless of its situs or the domicile of the Trustee with regard to all other matters. This choice of law provision is based in part on the legal authority stated in the Illinois Code. This choice of law provision is intended to be exclusive. C. A contestant shall be considered to have predeceased the Settlor without surviving issue. In this instrument, “contestant” means any person other than the Settlor who, directly or indirectly, voluntarily participates in any proceeding or action which seeks to void or set aside any provision of this trust or any
provision of the Settlor's will. The term contest shall include, but not be limited to, the filing of a creditor's claim or prosecution of an action based upon it, an action or proceeding to determine the character, title or ownership of property held in the trust, to challenge the choice of law provision of the trust, or a challenge to the validity of an instrument, contract, agreement, or a beneficiary designation to which the Settlor was a party. D. If any provision of this trust document is unenforceable, the remaining provisions shall remain in full force and effect. This trust shall be known as the ___________________________________ REVOCABLE TRUST.
Executed at
__________________,
__________
on
_____________,
20____.
(City) (State) (Date)
__________________________________________________
(signature)
State of
}
ss.
County of
On this ______ day of __________________, 20__, before me,
the undersigned Notary Public, personally appeared _______________________________ (name of document
165
signer), proved to me through satisfactorily evidence of identification, which were _______________________________
(description of satisfactory evidence relied on), to be the person whose name is signed on the preceding or attached document and acknowledged to me that he/she signed it voluntarily for its stated purpose. _______________________________ (official signature and seal of Notary)
166
ProbateLetter September 31, 2005
Blanch and Roy Day
403 E. Westbrook
Brandon, FL 33511
Dear Mr. and Mrs. Day,
May I offer my condolences on the passing of your loved
one, Roy Day.
The reason I am contacting you is I understand the property
located at 716 Sunlit Ct. in Brandon may be available to
purchase. I am looking for property in this area and would
be interested in making an offer if it is going to be sold. Of
course, I’m sure at this time the property may not be a
priority for the family, but if in the future the heirs decide
to sell, please call me and give me the chance to make an
offer.
I will purchase the property in it’s “As-Is” condition and
pay all cash with no contingencies for financing. I can
close the sale within 14 days or less. This will save the
estate time and extra estate/sale fees. I hope you
understand you do not have to wait until this probate is
completed to sell the property. You can sell now outside of
most of the court red tape and cash out the asset with very
little trouble at all.
If the property is going to be sold, there is no reason to go
through the entire court confirmation process, run up extra
attorney and miscellaneous fees, and pay a 6% real estate
167
commission. If you wish to discuss this further, I can be
reached at (555) 555-5555.
In any event, I wish the best for your family in their time of
loss.
Sincerely,
J. Edgar Hoover
108 Moody Ave S #2
Tampa, FL 33609
Cc: Judy Gay
Wayne Hancock
Glenda Fahey
168
Probate Tracking Sheet
Date ___________
Case No. –
Name of Deceased: ___________________
Property address:
__________________________________________
Property Value: ____________________
Attorney for Personal Representative:
Name: ________________________
Address:
____________________________________________________
____
Phone: ________________________
169
Personal Representative #1
Name: _____________________________
Address:_____________________________________________
___________________
Phone / Email:
____________________________________________________
_______
Beneficiary #1:
Name: _____________________________
Address:
____________________________________________________
____________
Phone / Email:
____________________________________________________
_______
Beneficiary #2:
Name: _____________________________
Address:
____________________________________________________
____________
170
Phone / Email:
____________________________________________________
_______
Beneficiary #3:
Name: _____________________________
Address:
____________________________________________________
____________
Phone / Email:
____________________________________________________
_______
Beneficiary #4:
Name: _____________________________
Address:
____________________________________________________
____________
Beneficiary #5
Name: _____________________________
Address:
____________________________________________________
____________
171
Phone / Email:
____________________________________________________
_______
172
PROPERTY APPRAISAL “QUICK ANALYSIS”
Special Note: This document is for personal use and not intended to be legal
tender document. In addition, the person assimilating this information does not
warrant the below listed information.
Property Address
Seller’s Name
Date:
Tax Role Info:
Square Footage
Assessed Value
Year Built
* have this info complete if possible before meeting seller
Comparable Sales Info:
a) 1st Comp Address
Date Sold
Amount Sold For
Square Footage
b) 2nd
Comp Address
Date Sold
Amount Sold For
Square Footage
c) 3rd Comp Address
Date Sold
173
Amount Sold For
Square Footage
Total Sum of Amounts Sold of A-C
Total Square Footage of Comps A-C
Average Square Footage Price of Comps
(Divide total sum of amounts sold of comps a-c by total square footage
price of comps)
Estimated Retail Value of Subject Property
(Multiply the average square footage price of comps by square footage
of subject property)
Average Retail Value __________________________
(Fill in from express.realquest.com)
Note: Try to get the comparable information about the subject property if you can
before you visit the seller. Sometimes the situation may call for you to make an
offer right then and there, and you want to be prepared.
Exterior of Property
Type of Exterior and Condition (Brick, Siding, Stone, etc).
Roofing and Condition (Wood Composite or Regular Shingles).
174
General Landscaping Appearance (Fence Condition, Shrubs, Plants, Foundation
Status).
Interior Features
Number of Rooms to be Painted
Kitchen To Be Replaced: YES NO If Yes, # of cabinets
Comments:
# of Bathrooms ____________to be Renovated?
Comments
Carpeting & Other Flooring (Condition and # of Rooms to Replace)
Other Features to Consider Condition and Possible Replacement (Windows,
Lighting Fixtures, Ceiling, Doors, etc..)
175
House Operating Systems:
Condition of Air Conditioning (Central Air Conditioning/Evaporative/Window
Units?)
Condition of Heating Units (Floor Furnace, Central Heat, Wall-Mount Heaters)
Condition of Plumbing (Noticeable Leaks, Exposed Pipes, Properly Working
Faucets)
Condition of Electrical (Light Fixtures, Breaker Box, Exposed Wall Plugs)
Miscellaneous Items To Evaluate (Stove, Dishwasher, Microwave, Dish
Washer/Dryer Included?)
General Comments:
176
177
REAL ESTATE CONTRACT FOR THE
SALE & PURCHASE OF REAL ESTATE -
GENERIC
PARTIES:
____________________________________________________
__ their heir(s), successors, administrators and assigns, as Seller who’s address is:
______________________________________________________and_______________
___________________________________________ _______________________their
heirs, successors, administrators and assigns, as Buyer, whose mailing address is
__________________________________________.
WITNESSETH: That Seller, in consideration of the payments, covenants, agreements and conditions herein contained which on the part of the Buyer are to be made, done and performed, has this day sold, upon the conditions hereinafter recited, to the Buyer the real property legally described as:
SUBJECT PROPERTY:
_____________________________________________
___________, hereinafter the property,
LEGAL DESCRIPTION:
_____________________________________________
__________________________
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____________________________________________________
_____________________________________________
SALE PRICE:
$________________________
SUBJECT TO:
_____________________________________________
____ $________________________
____________________________________________________
_________________
EQUITY:
$________________________
PAYABLE: This is a CASH transaction. Buyer pays ALL closing costs.
Purchase price is NET.
EXISTING MORTGAGE (S): Existing financing on subject property
will be current in all payments of principal, interest, late charges and escrow
amounts required by the mortgagee. Escrow balance has been calculated into
the price and will transfer to the Buyer along with title. Buyer will take title
subject to his debt.
EXPENSES: Buyer pays all closing costs.
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INSURANCE: As consideration for this purchase the Seller will assign all
insurance policies on the property to the Buyer and Seller will grant a limited
power of attorney to the Buyer to deal with the lender(s) and insurance
provider(s).
RISK OF LOSS: If subject property is damaged prior to transfer of title,
Buyer has the option of accepting any insurance proceeds with title to the
property in “as is” condition or of canceling this contract and accepting the
return of the deposit.
PRORATIONS: Real property taxes will be prorated based on the
current year’s tax without allowance for discounts, including homestead or
other exemptions. Rents will be current and be prorated as of the date title
transfers.
DEFECTS: Seller warrants subject property to be free from hazardous
substances and from violation of any zoning, environmental, building, health
or other governmental codes or ordinances. Seller further warrants that there
is no material or other known defects or facts regarding this property, which
would adversely affect the value of said property.
NO JUDGMENTS: Seller warrants that there are no judgments
threatening the equity in subject property, and that there is no bankruptcy
pending or contemplated by any titleholder. Seller will not further encumber
the property and an affidavit may be recorded at Buyer’s expense putting the
public on notice that the closing of this contract will extinguish liens and
encumbrances hereafter recorded.
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RADON GAS & LEAD PAINT: Lead based paint and Radon, a
naturally occurring radioactive gas that may present health risks to persons
who are exposed to it over time, may exist in this property. Buyer may obtain
a risk assessment of “the property” by licensed inspectors. Dangerous
circumstances and the conditions, which caused said circumstances will be
corrected at the Seller’s expense before title transfers.
LICENSURE: The trustee of the above-mentioned Buyer’s Trust may or
may not hold an inactive real estate license.
POSSESSION: Possession of the property and occupancy (tenants
excepted), with all keys and garage door openers, will be delivered to the
Buyer when title transfers. Leases and security deposit will transfer to the
Buyer with title.
INSPECTIONS: This contract is contingent upon the Buyer’s inspection
and approval of the property prior to transfer of title. Seller agrees to provide
access to the Buyer’s representatives prior to transfer of title for inspection,
repairs and to market the property.
ACCEPTANCE: This instrument will become a binding contract when
accepted by the Seller and signed by both Buyer and Seller. If it is not
accepted and signed by the Seller prior to _________________, this contract
shall be void.
DEPOSIT: Upon acceptance Buyer will place in escrow an earnest money
deposit of $ ____________ with title company which will be part of the cash
paid to the Seller when title transfers. This deposit will be returned to the
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Buyer if title does not transfer in accordance with this agreement and said title
company will close this transaction.
SELLER: Agrees that the buyer may place signs and show the property
immediately upon acceptance of this contract by both parties.
CLOSING: Closing will take place on or before: _____________ at
________________________________________Subject to a 90 day period in
which the buyer/seller shall be permitted to clear any title problems.
OTHER AGREEMENTS: This is a CASH transaction. Buyer pays ALL
closing costs. Purchase price is NET.
TIME IS OF THE ESSENCE with this agreement. Each
contingency contained herein shall be satisfied according to its terms by the
closing date or this contract extends to provide time for satisfaction of said
contingencies. Each party shall diligently pursue the completion of this
transaction. Each warranty herein made survives the closing of this
transaction.
PROHIBITION: This agreement establishes a prohibition against
transfer, conveyance or encumbrance to the property.
____________________________ _______
_____________________________ ______
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Seller Date Buyer
Date
_______________________________ ________
_________________________________ _______
Seller Date Buyer
Date
STATE: ________
COUNTY: ________________________
The foregoing instrument was acknowledged
before me this _________ day of
_________________, 200_, by
________________________________ and
__________________________, who have
provided driver’s license as identification and
who did not take an oath.
_____
_______________________________________
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Claimant hereby releases the Property owner, the
Property and all properties referenced therein from the
Affidavit and Memorandum of Purchase and Sale Agreement
and from all claims and liens and equitable interests held by
Claimant against the Property and the Property’s owner in
consideration of TEN AND NO/100 DOLLARS ($10.00) and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged.
_____________
_____________
_____________
_
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STATE OF ______________ §
COUNTY OF ____________ §
This instrument was acknowledged before me on
, 2006, by ___________
Notary Public,
State of Texas
STATE OF _____________ §
COUNTY OF ___________ §
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This instrument was acknowledged before me on
, 2006, by _______________, as the President
of ___________________, a Texas corporation, on behalf of
said corporation.
Notary Public,
State of Texas
My commission
expires:
_____________
_________
AFTER RECORDING RETURN TO:
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REAL ESTATE AFFIDAVIT AND
MEMORANDUM OF AGREEMENT FOR
PURCHASE AND SALE - SIMPLE
State of STATE NAME HERE
County of
BEFORE ME, the undersigned authority, on this day
personally appeared
YOUR NAME HERE, who being first duly sworn, deposes and
says
that:
1 An agreement for the Purchase and Sale of the
real property described in the attached Exhibit “A” was entered
into by and between the Affiant,
________________________as (Buyer/Seller), and
, as (Buyer/Seller), on the
th day of , 20 .
2. The closing of the purchase and sale of the said
real property, per the terms of the Agreement, is to take place
on or before the day of ,20
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3. A copy of the agreement for the purchase and
sale of said real property may be obtained by contacting YOUR
NAME HERE, whose mailing address is YOUR MAILING
ADDRESS HERE, and whose telephone number is YOUR
TELEPHONE NUMBER HERE
Dated this th day of ,20 .
FURTHER AFFIANT SAYETH NOT.
Signed, sealed and delivered in the presence of:
WITNESS AFFIANT
WITNESS
Sworn to and described before me this th day of
,20 .
(Seal)
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NOTARY PUBLIC STATE OF STATE NAME
HERE
My commission expires
This instrument was prepared by:
DESCRIPTION OF REAL PROPERTY
Exhibit A
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REALTOR SCRIPT
Keep in mind that this script is a roadmap of the type of
conversation you want to have with a Realtor on the phone.
You already have the introduction E-mail to use when E-
mailing agents for the first time. Keep in mind that not all
REO agents will want to meet you for lunch straight away
or ever. The most important part is that you come across
friendly, sincere and confident and give them the security
that you are a real buyer when you are speaking to them.
What you want to establish with these REO agents is a
rapport where you are a recognizable name and not just
another offer. Like every relationship, they get stronger
over time, but using this kind of language will speed up this
process for you in building relationships with the top REO
agents in your area!
“Hi, my name is YOUR NAME HERE. I am calling you
because I have done my research and you are one of the
heavy hitters in REO’s in this area. This is the reason I
want to do business with you direct because winners hang
out with winners and you are obviously at the top of your
industry. Myself and my partners have been investing in
Real Estate for a long time but not in REO’s. We have
seen the market change and realize that REO agents like
you hold the keys to the best deals in town. I know that we
have never done business with you before but I am looking
forward to getting some deals done with you. I want you
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working on my side which is why I will never take any of
your commission on a deal. When I close my first deal
with you, you will see how I do business. In fact, I am
going to bet you right now that within a couple months, I
will be your biggest client because you will enjoy working
with me. I know you are real busy so if you have any
properties that you could send me that are coming up in the
near future I will look at them and let you know what I can
offer so you have a solid offer in hand before you list the
property. Let’s grab lunch sometime in the next few days
and we chat more about this. I would like to meet you in
person so you know I am real buyer. I look forward to
getting our first deal done”
Common questions/objections from REO agents
Agent - What kind of houses do you buy?
Answer – I buy investment homes that would make great
flips or rentals.
Agent - I currently work with a couple investors already
Answer – I figured you were because you are so well
established, but I also know that not everyone has a 100%
batting and you could always do with a solid investor like
me around that is a guaranteed close.
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Agent – What other agents do you deal with?
Answer – Myself and my partners have been investing in
Real Estate for a long time but not in REO’s. I am only
working with a couple other of the Top REO Agents like
(have their names ready) that are big players like you.
Agent – I’m too busy to meet you for lunch right now
Answer – I know you are very busy so maybe after we
close our first deal, I’ll buy you lunch.
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Resources – Books
You may order any of these books at any time. You will
need a PDF reader to read them. A popular PDF reader is
Adobe. (Adobe.com)
Please go to FindingFlippingFixing.com to order.
Real Estate Investing: Tips, Myths and Realities
Flipping Your Way to Financial Freedom
Think and Grow Rich
Success Secrets of Self-Made Millionaires
Conquering Your Life Goals
Automatic Reverse Marketing Systems – about real estate
marketing
Flipping Fortune: Making Big Money Wholesaling Real
Estate
How to Buy a Wholesale Deal without Taking a Bath
Mentor for Life – Insider Secrets to Real Estate
Wholesaling
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Getting Started with Wholesaling
Real Estate Investing Simplified
Monster Wholesale Profit System
FreedomSoft Outsourcing Guide – creating a virtual real
estate office
12 Issues to Discuss with Your Real Estate Partners
The Property Manager – Your Wealth Is In His Hands
Quit Your J.O.B. in 19 Weeks or Less