Archive for November 2013

Recently we were working a short sale through Nationstar who requested that the Seller sign a document allowing Nationstar’s affiliate, Auction.com, to sell our short sale.  Yes, you heard me correctly!  We already had a buyer, submitted all the financials to Lender, and had the BPO (Broker Price Opinion). However, they hadn’t countered the buyer yet.  The form that my agent and her Seller signed stated that Auction.com was allowed to hold an auction on the property and should my agent be a dual agent on both sides, that she would not get paid more than 3% commission.  First off, I want all Brokers to be aware that agents do not have the right to sign away commission unless the Brokers previously allowed this right, nor do they have the right to sign away the Broker’s Exclusive Listing Agreement terms and conditions.

I was furious as Auction.com was advertising this house illegally and unethically to the public.  They were advertising as Bank Short Sale Approved!  Well, if it was approved, I would have already had the approval letter for my existing buyer that had been waiting during this short sale process.  In addition, how can a Seller back out of my Buyer’s contract and enter into a contract with the winning bidder’s contract without having some legal ramifications?  The winning bidder was to pay 5% to Auction.com for acting as auctioneer, place a deposit immediately with Auction.com plus all the forms that they had to sign which gave away all their rights for inspection with clauses saying that they would have to pay money to Auction.com for cancelling the contract.  The highest bid was $80,000 plus $4,000 over and above to the auctioneer for conducting this auction.  They forced the Listing Agent to hold their own open house but then reduced our commission as Listing Agent. Read More→

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Negotiate Like A Pro

Posted on October 30, 2013 by

Have you ever made a great offer, had it accepted and then for some reason it just fell apart? This is an all too common occurrence in the real estate business. The most common reason for this is an improper negotiation prior to the acceptance of an agreement. If you view a real estate negotiation as “win/lose” situation, then you probably got the buyer or seller to agree to something that they really weren’t comfortable with. They said “yes” in the heat of the moment, to relieve themselves of the pressure of the negotiation but then had second thoughts when they went home and thought about it. A good negotiation creates value for both sides. This is the best way to get both parties to honor the agreement all the way to a closing. Here are some tips for your next negotiation.

Gather Data! Gather Data! Gather Data! This is so important it’s probably worth mentioning again. Try to find out what the real interests of the other side are. Why is someone selling? Are they burned out? Do they need to have all cash? Are they in a hurry to close? How motivated are they to sell? Read More→

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This article is the second in a two-part discussion about contractor’s liens, specifically called mechanic’s and materialman’s liens in legal terminology.  In last month’s article, I pledged to discuss two important items in more detail: (1) the requirements when filing a lien and (2) the requirement to file suit to enforce a lien.

First, the law demands several precise requirements in order to find that a contractor’s lien is enforceable.  Because these requirements are technical and many, I have only highlighted some of the requirements below – those which are frequently omitted or incorrectly completed.  Therefore, the contractor’s lien must:

  • Be filed in the office of the clerk of the superior court in the county where the property is located within 90 days after substantial completion of the work or professional services;[1]
  • Include a notice that the owner has the right to contest the lien;
  • Contain an adequate description of the property;
  • State, in at least 12 point bold font, that the lien expires 395 days from the date of filing if no notice of commencement of lien action is filed;[2] and  
  • A copy of the claim of lien must be sent to the owner of the property within two business days.[3]   Read More→
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Sally and Julie grew up together and have decided to invest in real estate. They both have regular jobs, but figure they can find a property, fix it up and rent it out in their spare time. They find a good property which takes most of their savings as a down payment. They figure that over the next few months, they can get the repairs done with money earned on their regular jobs.

They decide that with contractors on the property and tenants once it is fixed, they need to have a liability shield to protect them personally. They set up a Limited Liability Company and purchase the house in it.

Sally and Julie are so excited and anxious to get the rehab done that they neglect to have an organizational meeting nor do they have any subsequent meetings. They figure it is no big deal since they are close friends and talk every day anyway. They also want to save money and decide not to set up a bank account for the LLC. Julie agrees to use her account to run all the expenses through with Sally putting in half the costs. Julie then agrees to put the utilities in her name.

They also failed to get a Tax Identification Number (TIN) from the IRS. If they had opened a bank account, they would at least have gotten the TIN since banks would require it. They figured they would just work out the expenses later. Read More→

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As a regular writer for the Atlanta REIA and Tampa REIA, I look forward to sharing with readers current, timely concepts and ideas regarding the valuation of real estate in many markets. Perhaps even better than sharing in these articles, is knowing REIAComps helps to quickly see how the location of your market impacts the profit of a deal year to year and in some cases, month to month.

Each month, I will share facts on local real estate statistics, market trends and provide useful tips for buyers and sellers. Additionally, I sometimes will discuss the lending process, real estate appraisals and other topics residential real estate investors can benefit from.

Now, in most cases nearly all investors are familiar with the “age old rule” concerning real estate: “Location, location, location.” Many times, the high importance of location is overlooked when examining broader national or even regional real estate trends.

In your own market, property values and selling trends will frequently differ vastly between counties, subdivisions, school districts and neighborhoods. Often there is a huge difference in home values between streets within even assumed stable neighborhoods. To prove out this point, consider the three-mile radius around your very own home. Note the variables impacting its value either positively or negatively. Some examples include the home’s proximity to traffic congestion, a school, amenities, places of worship or a busy commercial district. Read More→

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Do You Need Help with Reports?

Posted on October 30, 2013 by

It is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Know how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. It is our intention to do this by you the members submitting questions to Karen@SmallBusinessAdvisor.biz, and getting answers here in this column.

Q: P&L report does not match with Sales Report – how do I fix this?

A: An apparent discrepancy between P&L and Sales Reports can trace to one or more of several issues, including, but not limited:

  1. The accounting bases of the reports do not match.
  2. Sales items point to incorrect sales accounts
  3. The P&L report includes transactions that do not use items (e.g. The Expense Tab on a bill or a journal entry).
  4. List or transaction damage in the company data file. Read More→
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Welcome back! In Part 1 of this article, we covered how crucial it is to have a website if you want to sell/educate/entertain/enlighten/etc. just about anything to anyone in the world in the current century.  We also discussed HOW to actually get a FREE, performing website up & running quickly.

Having a free website is great! You get to put some content up for the world to see. You start to learn how to add images, videos, etc. to your site. You can get people to add comments to your site. And you can quickly gain confidence on how all this internet “stuff” works.

This is particularly an attractive option IF you don’t run a “real” business, or if you’re only concerned with sharing your thoughts or ideas with the world. So if you’re happy with that, great! You can stop reading now.

However, if you DO run a legitimate business, or if you’re interested in making money or being perceived as legitimate… or if you want to learn how a true website is made these days, then keep reading! Read More→

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Recently I was talking to several of my students who each said they wanted to buy 100 houses next year. These students had listened to one of the gurus who had bought and sold over one hundred houses in one year and is now teaching people how to duplicate what he had done. I listened closely to these bright eyed, inexperienced students tell me they wanted to do the same as the guru, which frightened me to death. Later over dinner, I mentioned what I had just heard to my wife. She encouraged me to tell my tale of woe about the years of agony we experienced because I got too big for my britches and against my wife’s better judgment I had tried to do the same thing myself.

What the students were thinking about doing frightened me because several years before I thought I knew enough about buying and selling houses that I could easily buy 100 houses in a year. I thought it was a noble goal and I clearly believed I could create my fortune in months, not years. At the time the market was right to be able to buy houses at the rate of 100 houses per year. That is why I want to tell my story so every overzealous beginning investor will think before they set about to try to do the same. Read More→

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