WHAT IS A FORECLOSURE?

A foreclosure is like any other repossession in which a buyer defaults on their payments. Everyone hits hard times once in a while, but those who are unable to make their monthly mortgage payment may be forced to give up their property to the lender.

At any given time, between 4 and 5% of residential property loans are in default. The Mortgage Bankers Association of America prepares annual reports about the state of housing loans, and out of approximately 20 million mortgages, one million properties are considered delinquent. This can present a tremendous opportunity for potential investments.

There are three main types of foreclosure purchases.
Any of the following methods can help you obtain a bargain:

Buying At Foreclosure Sale
A foreclosure sale is done through a court auction process where the highest bidder wins title of the property. You are allowed access to the property to inspect it prior to the auction. The property is delivered "as is," and is free of any liens.

Buying a Preforeclosure
A preforeclosure occurs after a homeowner has defaulted on their property, but before it has been sold at auction. You negotiate with the owner of the property before it is sold at the auction, and you take on the mortgage and any other outstanding debts on the property.

Buying From A Lender After A Foreclosure Sale -
REO (Real Estate Owned) By The Lender
This procedure is done by dealing with the lender that has repossessed a foreclosed property. Lenders are banks, and are not in the real estate business. Therefore, they are often willing to sell this property at a mutually agreed upon price.

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HOW FORECLOSURES BENEFIT YOU

By purchasing foreclosed properties, you have the potential to make an investment in real estate at a low cost. Then, theoretically, you can turn around and sell that property, earning a large profit.

WHERE TO FIND FORECLOSURES

When a foreclosure auction takes place, a notice must be published in a periodical of general circulation in the county where the property is located.

Most foreclosure notices will contain the following:

1. The type of sell
2. The address of the property
3. Adescription of trust including the balance, interest rate, and date
4. The deed book and page that describe the trust, obtained from land records
5. The location and date of the sale.
6. A legal description of the property, and the book and page that contain the street address
7. The terms and conditions of the sale- foreclosure properties are sold "as is."
8. The names of the trustees
9. The primary contact information for the foreclosing attorney.

You can contact the foreclosing attorney if you want or need more information about bidding on a property that is being foreclosed.

On the Internet, you can subscribe to a service that will provide you with listings of foreclosed properties in your area. However, you can pay up to several hundred dollars for these services, and with a little grunt work, this information is available for free.

Your county clerk's office is your number one resource in identifying foreclosures. An attorney begins the foreclosure process by filing with a county clerks office. Most of the time, the office will release a list of these properties on a weekly basis.

Do some checking around. Often, government properties are offered by agencies like the Veteran's Administration (VA) for little or no money down. Even a non-vet can take advantage of these investment properties, and many of these agencies offer attractive financing with very little down at closing. If you are looking for a way to jump-start your real estate investing career, contact a real estate agent and ask about VA foreclosures or visit their online list of properties available in you state.

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The Housing and Urban Development Agency also offers repossessed homes. HUD Homes are initially offered on a priority basis to owner occupant purchasers (people who are buying the home as their primary residence). Following the priority period, unsold properties are then available to all buyers, including investors. Select cities near where you live or that you are interested in.

The Federal Deposit Insurance Corporation (FDIC), Government Services Agency (GSA) and even the Internal Revenue Service also offer foreclosed homes.

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FORECLOSURE AUCTIONS

JUDICIAL VS. NON-JUDICIAL PROCEDURES

There are two primary types of foreclosure procedures: judicial and non-judicial. Judicial procedures are followed by states that use mortgages as the security instrument for property loans. Non-judicial procedures are used by states that use deeds of trust as the security instrument.

JUDICIAL PROCEDURES

Foreclosures based on mortgages are known as judicial because court action is required. There are five steps of judicial foreclosure.

Default: When an owner misses a mortgage payment, they are said to be in default. The lender will usually send a letter asking for payment as well as assessing a late fee. If another payment is missed, the lender will send a more urgent letter and turn the case over to its collections department. The homeowner is given a time period in which to make their back payments- usually 15 to 30 days, and then the lender will begin foreclosure- typically after three months of default. If the loan is FHA or VA, they'll typically wait six months.

Court Action: Once a lender has exhausted its attempts to resolve the default, they will hire an attorney to pursue court action. The attorney files an action with the court that gives notice to the public that there is a case against the homeowner. The purpose of this is to provide evidence of a default and to get the court's approval to initiate foreclosure. This action could take up to 30 days.

Notification: Once the court issues a positive ruling, the attorney files a Notice of Default with the county clerk's office. The notice is sent to the homeowner by certified mail, as well as to any junior mortgage holders, who may hold second or third loans. The notice specifies the amount of the default and the date by which the amount is due. It essentially grants the homeowner a period of time during which he can bring his payments up to date without incurring any additional penalties. This is known as the reinstatement period.

Advertising: If the mortgagor does not cure the default, the attorney will prepare a Notice of Sale. It must be advertised in accordance with the requirements of each state, usually satisfied by advertising the auction in a local newspaper, affixing it to the property, or posting it near the courthouse.

Sale: If the homeowner is unable to reinstate the loan by this time, the property is sold by public auction. Once the property is sold to the highest bidder, the attorney collects the deposit and issues a certificate of sale. The proceeds are applied to the debts associated with the property in order of priority. If there is no high bidder, the property reverts to the lender. Some states have a redemption period in which the buyer may buy back the property.

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NON-JUDICIAL PROCEDURES

Foreclosures based on deeds of trust are known as non-judicial foreclosures. This is because deeds of trust contain a power of sale clause that enables the trustee to initiate foreclosure without going to court. That's the basic difference in the process between judicial and non-judicial.

BIDDING AT AN AUCTION:

If an investor would like purchase a foreclosure that goes to the Public Trustee sale, they must pay cash. Buyers may not use the property as collateral for a loan. Any party who would like to bid on the foreclosed property must bid $50 over the lender's bid, which is read aloud at the time of sale.

Remember, the public trustee does not guarantee anything on the property. If you think you want to purchase a property, you must check the title, get a true value for the property if it is sold on the open market and allow for sales costs, fix up cost etc., when deciding to bid.

If you win an auction, you do not become the owner of the property. You get a "Certificate of Purchase." This certificate entitles you to receive interest money, at the rate of the first mortgage. However, a Certificate of Purchase is subject to redemption by the owner or by junior creditors.

More often than not, the successful bidder at a Public Trustee auction does not get the property. If you make a successful bid, you should expect only to gain the money that will be paid to you in interest, which will be at a rate approximate to what you could get with a CD or mutual fund account.

AFTER THE SALE

Once a Certificate of Purchase has been issued, you must then present cash or certified funds in the exact amount of your bid. A duplicate Certificate of Purchase is recorded with the County Clerk and Recorder.

If you receive a Certificate of Purchase, keep it in a safe place. If you lose it, you must replace is with a bond at 1 1/2 times the dollar amount listed on the certificate of purchase.

The Public Trustee will then obtain a redemption amount, which will be for the amount that the property was sold for at sale, per diem interest at the default rate of the note, and any other expenses allowed by law. If an owner wants to keep their property, they must pay the redemption amount in cash or certified funds to the Public Trustee by the close of business on the final day of redemption.

The present owner still owns the property until their redemption period ends. That period is normally 75 days (or six months for agricultural property), during which time they can pay off the Certificate of Purchase amount, plus interest and fees. In this case, no Public Trustee's Deed is issued.

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During the owner's redemption period, any junior lienors, or creditors, with a recorded interest in the property can also file their "Notice of Intent to Redeem." The junior lienors who file these Intents have specific time periods (after the end of the owner's redemption period) in which they're allowed to redeem if the owner does not.

If there is an Internal Revenue Service (IRS) lien against the property, the IRS must file an intent to redeem and must follow the junior lienholder redemption process outlined in the state statutes. The IRS also has a 120-day federal redemption right, which begins on the last day of the owner redemption period. If the IRS redeems under federal law, the Public Trustee's office is not involved in this redemption (i.e., issuing a certificate of redemption). If the United States Government has a lien on the property (Small Business Administration or U.S. Treasury-not IRS), then the U.S. government is granted a one-year redemption period and does not have to file an intent to redeem with the Office of the Public Trustee.

If no one redeems and the redemption periods expire, the Certificate of Purchase holder (potentially you) can be issued a confirming Public Trustee's Deed. In this case, the title vests free and clear of all liens and encumbrances junior to the foreclosed lien, except omitted parties, or parties that were not notified of the foreclosure but who have an interest in the property.

With VA and FHA loans, the U.S. government is ultimately responsible for purchasing the property back. With conventional loans, a mortgage company or lender is responsible.

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PREFORECLOSURE

A preforeclosure sale is a procedure in which a lender allows a mortgagor to avoid foreclosure by selling the property for less than outstanding balance of the loan.

The advantages to buying properties from homeowners in default can only be measured by the individual investor. Some do not see enough of a reward; some think it's too risky, while moral issues plague others. Are you helping the troubled homeowner or taking advantage of his misfortune?

Both the lender and the homeowner lose in a foreclosure action. Neither wants it to happen. Both parties are motivated to resolve the situation. Motivated parties are key to the process.

The investing window of opportunity opens the day the Lis Pendens, the notice that a legal action is pending, is filed. The window closes the day the property is sold at auction. The time between these two events enables an investor to work with the homeowner and lender to create a workout strategy or a purchase of the property from the homeowner before the sale date.

The amount of time the window remains open depends solely on state and local laws, as well as the behavior of the property owner. Some states sell properties within 90-120 days from the first notice of default. In New York, the process can take a year or more.

For most investors, the best time to buy is during the preforeclosure period. That is the time between the published notices and the actual auction sale. In order to buy during this period, you first have to make a deal with the homeowner. Then you'll be responsible for making up the back payments owed to the lender, as well as any accrued foreclosure costs (these range from $500 to $2000.)

For novice investors, buying at a foreclosure auction is very risky. It involves a significant amount of money, and you're usually bidding against experts. The preforeclosure period is a more ideal situation for getting started.

As for the moral question, keep in mind that by dealing with a homeowner in default, you not only help him, you generally rescue the loan and maintain the value of the property (and surrounding properties) as well. If there is enough equity in the property, there is the potential to work out an arrangement that satisfies all parties and allows for a handsome profit. That's what preforeclosure investing is all about: buying the equity in the property, working out an arrangement with the lender and the homeowner, and then selling the property for a profit.

There are two important points to remember before you invest in a preforeclosure.

1. All of the debt on the property remains on the property. Only a foreclosure auction can erase the
mortgage and other debts attached to the property.
2. Only the parties listed on the title can sell the property.

If you give the homeowner money before you check both of these points, you could lose some or all of your money.

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You must verify all of the debts that have been recorded against the property. This includes mortgages or deeds of trust as well as liens- property tax liens, mechanics' liens, IRS liens, and judgments. You'll need to ask the owner of the property about the debts against it. You can do your own title search by going to the county's land records department and asking the clerk to explain the system. You can also have a title company or an attorney conduct the search.

Once you've identified all of the recorded mortgages and liens, you should analyze your data to see if it's worth your while to buy the property before it goes to auction. If there are significant junior debts, you can contact those lenders to see if they will sell you the loan at a steep discount. Otherwise, the investment may not be worth your money.

You must identify every person who is on the deed and find out if they're willing to sell the property. You must have consent from all persons listed on the deed. Be aware that often, owners are not candid about this information. It is important that you check the deed with the county clerk's office. Without the signatures of everyone on the deed, your contract will be worthless.

BASIC GUIDELINES

Locate loans in default
The Lis Pendens is the first public notice (document) that announces a loan in default, so it makes sense to start there. Access these notices at the county courthouse, newspapers that routinely advertise these notices or through a reputable Foreclosure Service Provider.

Evaluate choices and narrow selections
You know the default amount from the legal notices or service provider's information. Now you must estimate the property's market value. Subtract the default amount from the estimated market value to determine the gross equity in the property. This figure also reflects your gross profit potential. If there is little or no difference in the amount of debt and the market value, move on to another property. If there is a big difference, there may be enough equity in the property to make a sizeable profit.

Contact THE homeowner
This is easier said then done. The homeowner is probably being bombarded with letters and calls from attorneys and bill collectors and has creditors showing up at his door. The only way to contact the homeowner is by phone, mail or in person, and chances are you will have a difficult time getting in touch with him.

Start with mailings. Indicate in your letter that you are a private investor and that you may be able to help him with his financial problems. Demonstrating an understanding of the homeowner's dilemma will help your efforts. Indicate in your letter that you may be able to stop the foreclosure, save his credit rating and provide cash for use in paying his bills and/or for relocating.
Be professional and gracious in your correspondence. Invite the homeowner to call you at his convenience. If you don't hear from him in a reasonable amount of time, say in three or four weeks follow up with another letter, perhaps worded a bit more urgently. As you get closer to the auction date you may want to send two or more letters per month.

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Follow up with phone calls if you can. Be courteous, never pushy. Never interview the owner on the phone. Merely state that in order to determine whether or not you can help him, you will need to meet with him at the property. Make sure he understands that the meeting will be more productive and less time consuming if he will have the loan, mortgage and insurance documents available, as well as the foreclosure notices.

If you feel comfortable with it, you can visit the property in person, but be prepared: you may find yourself confronted by an angry homeowner. Be polite and leave if you are asked to. Never, under any circumstance, snoop around, inspect or generally trespass unlawfully on somebody's property.

Use common sense and dress appropriately, something casual but not sloppy. Be sympathetic. Does the homeowner need cash? Is he waiting for a bailout? Will he go bankrupt? Find out. Review the loan and mortgage documents. Verify the loan amount, monthly payments, interest rates, taxes, etc. Review the insurance policies as well. Get all the pertinent information you can. Ask the owner if there are any other liens or judgments he may be aware of.
Inspect the property with the homeowner. Only comment on the physical condition of the property. Point out the obvious defects or items in need of major repair.

Inspect property and loan documents
Use an inspection checklist and record your information and estimated costs of repair.
Make no promises at this point. Make no offer or give the homeowner any money, but make an appointment to meet with him again if you think you want the property.

CREATE YOUR OFFER

If you are going to make an offer on the property, you must have the loan, ownership, and debt or lien information. You must also assess the condition of the property and the property owner. Combined with the market value and the default amount, you have all the ingredients necessary to formulate your offer.

Determine the net equity in the property. This is the difference between the market value and the default amount plus liens and repair amounts.

Negotiate with the lien holder. You may offer to satisfy the lien for 20% of the amount. Chances are the lien holder will lose everything when the property sells at auction. Buying out the lien puts more equity in the property and more money in your pocket.

Remember to include closing costs in your calculations for the purchase and sale if you intend to flip the property. Also include the carrying costs, the mortgage payments and taxes and insurances, while you hold, repair, and then resell. Also include a seller's commission if you use a broker.

Calculate every legitimate expense associated with buying, repairing, carrying and selling the property. If a large enough figure remains, you may have a very nice deal. This bottom line figure has to pay the homeowner for his property and produce a profit for you.
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How much do you offer the homeowner? Some investors itemize every expense, show their calculations to the owner and offer to split the profits. Some itemize the expenses and pay the owner the remainder on the bottom line. The investor then earns his profits by the reduction in lien amounts as negotiated, savings in repairs by doing them himself, negotiating a lower seller's commission, or selling the property himself. Others still make offers based on the bottom line, and negotiate from there.

SETTLE THE CONTRACT

When the owner decides to sell, you will both need to sign an Equity Purchase or Real Estate Purchase and Sale Agreement. All parties recognized in the mortgage contract must sign.

Check with your attorney before signing any contract and make sure he is knowledgeable in real estate equity purchases.

Investing experts agree that the terms of the agreement must be clearly stated in the contract. Leave nothing to verbal understandings. Your best defense against future problems is the manner in which you present your evidence. It is imperative to have everything documented properly.

Make sure to include the following in your purchase agreement:

1. A "Subject to" clause that allows you to bow out of the deal if something is not as originally agreed upon.
This could be for unknown damages, general condition of the property or loans, termite damage, etc.
2. A statement that allows you to show the property.
3. A statement indicating that the property has to appraise at a certain value.
4. The property must be vacant, with all tenants and possessions out by the specified date.
5. An agreement between buyer and seller that the payments for the current loans equal "X."
6. A statement indicating the sale is subject to the condition of the loan and/or encumbrances against the title.
7. A statement indicating the buyer shall pay all closing costs.
8. A statement indicating the seller shall:
o Deed the property to the buyer
o Authorize the buyer to record said deed at the appropriate time
o Be aware that the buyer may resell the property
o Be aware that the purchase price may be below market value
o Leave the premises in good condition and pay for damages incurred after
the contract has been signed and before the seller has left
o Agree to pay for any damages or repairs necessary as discovered by termite
and roof inspections
o Vacate the premises on the date specified.

9. A statement indicating all net proceeds paid to seller will be paid at closing.
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CLOSING

Inform your attorney that you have a signed contract and that you need representation at closing. Have him prepare a Release of Lien, to be recorded at or just prior to closing, if you have negotiated a settlement with a lien holder. If you take advantage of our $3,000 back program inform your attorney that you already have a title company you'd like to use.

Arrange your financing. If you assume the loan and have been in contact with the lender, make sure the foreclosure process is stopped before the sale date.

Order your certified appraisals and inspections as required before closing. Order the termite and roof inspections as well. Verify from a title search that there are no other lien holders against the property.

If all goes well, you probably just bought real estate well below market value.

TIPS FOR SUCCESS

Savvy investors can recognize a good deal-and a bad one. Although you may be anxious to get started, follow these tips for success:

Don't over pay. It's a good rule of thumb to never pay more than 85% of a property's value. And while you're sure to be enthusiastic about making a deal, there's no reason to make a bad investment. If you're lucky, you may pay less. But recognize that not all deals are sweet. Be honest about your analysis.

Always inspect before buying. You would never consider buying a home or a car sight unseen. Don't think about purchasing an investment property without inspecting it. You can hire a contractor to view the property and give you a more honest assessment of any significant damages that will need to be repaired.

Analyze the deal. Don't take any shortcuts, or you may end up losing money. The analysis process is an integral part of making a good investment.

Treat the property well once you own it. Nothing will turn off a potential buyer or renter if your property is in bad condition. Second-rate repair work will cost you much more than it saves you.

We recommend taking advantage of our $3,000 back program when buying real estate because this will add to you profit margin. Whether you're buying a home found on ForeclosureTimes.com or you've found a home through another source we can put money back in your pocket.

By using one or all of the buyer services offered by ForeclosureTimes.com you can earn up to three thousand dollars back.Click here for more details
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REO'S

BANK FORECLOSURES

REO is an acronym that stands for Real Estate Owned. This type of property has come back into the bank's portfolio through the foreclosure process.

REOs are different from preforeclosures. Because preforeclosures haven't gone through the foreclosure process, they cannot be purchased from anyone other than the current homeowner. However, an REO has been repossessed from the homeowner and is now owned by the bank.

A bank's sole purpose in foreclosing on a property is to gain possession of that property. They need to recover the principle loan balance, accrued interest, late fees, penalties, taxes paid on behalf of the property owner, court costs and attorneys' fees. When filing their suit, the lender will also add in every legitimate expense when foreclosing-the total amount the lender claims the property owner still owes. In most states, this is the maximum amount the lender can collect. The laws are written this way to protect owners from unfair practices.

Many people believe that a bank (or any other lender) must sell a repossessed property for the same amount it cost to gain possession of it, and that they therefore cannot make a profit. This is NOT true. If the foreclosing lender is the successful bidder at the auction, they will take possession of the property. The lender now legally owns the property and can do anything they want with it-rent it, keep it, or sell it.

Purchasing directly from the bank is the most popular way to buy foreclosures. It's fairly easy, and less of a headache than other investing methods because it involves less complications and risks.

THE BACKSTORY

When a lender, typically the senior lien holder, places a winning bid at auction, it wipes out all junior lien holders or judgments in the process. Some buyers worry when purchasing foreclosures that there may be liens or judgments clouding the title, but this is completely untrue.

If the foreclosing lender does not bid at a sheriff's sale or auction, it probably doesn't want the property. This may be due to excessive superior liens, such as IRS or tax liens. If the lender doesn't bid for the property at auction, you probably shouldn't either.

The lender, in an effort to recoup its losses, will bid on the property, wipe out other lienholders, and then pay the balance of outstanding property taxes to secure the property's clear title. No lender will go through the time, effort and expense of foreclosing, only to lose the property for a few thousand in back taxes. Having absorbed these costs, the lender generally adds them to the asking price and will sell the property with clear title.
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THE THINGS YOU NEED TO KNOW

The purchase of a REO property is much different than conventional homes. Most REO properties are sold "as is," with the seller making no repairs. The buyer still has the right and contingencies of inspections, but the bank isn't likely to make any improvements to the property. The seller does not provide a sellers disclosure statement, since they have no information on how the former owner was maintaining the property other than what is evidenced by the home's current condition. Furthermore, the Seller, Listing Agent, or Title Company is not responsible for the ordering of a survey, termite report or home inspection. This is the responsibility of the buyer.

It is important that the buyer realizes that a REO property is owned by a corporation and replies to that offer may take anywhere from 2-5 business days. Many times the offer process has to go through different levels of management for a counter proposal or acceptance and the buyer must be patient throughout the corporation process.

It is extremely important to be pre-qualified or pre-approved by a financial institution before making an offer on a REO property. In most cases the seller will not even respond to an offer without verification of the buyer's ability to procure financing. Most sellers will not hold second mortgage or allow preoccupancy, but in some cases the seller will offer special financing incentives. Some sellers may require that the buyer be pre-qualified by one of the seller's loan representatives to give them the assurance that financing will not be an issue.

THE WAY BANKS WORK

Lender practices and procedures vary greatly. Some widely market their inventory of REO's, while others practically hide them. Some banks advertise foreclosures in daily newspapers, while others demand that you maintain an account with them (or better yet, become a stockholder) just to get their list of properties.

Brokers may have several investors lined up just waiting for a good property to turn up. Brokers can also assist the lender in determining market prices, suggest marketing strategies, recommend appraisers or contractors, etc.

Some lenders establish a set price for the property and will not allow the sales agent to consider offers for less. Many lenders dispose of their own properties. Depending on the size and complexity of its REO inventory, the lender may have one part-time clerk or a staff of special asset managers handling property sales.

Lenders with larger inventories often have a staff dedicated to analyzing and managing the properties, while at the same time coordinating and managing the brokers retained to market the properties. The lender determines the strategy and the broker markets the properties accordingly.

In many cases, REO properties will receive several offers on a property, and the seller will instruct the listing agent to inform all potential buyers that there is a multiple offer situation, and will request that all buyers present their final and best offers within 24 hours and will then decide on which offer they will work with. The seller is not obligated to accept any of the offers if none meet their requirements for the property and may counter offer if they feel it has the most merit. Usually, the seller will require the listing agent to keep the property on the market for acceptable back-up offers if there are any problems encountered with the first position contract, so as not to lose marketing time.
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GETTING STARTED

Sign up for our FREE trial at www.foreclosuretimes.com/trial.php to locate foreclosure properties. You can also contact a realtor through our$3,000 back program, we always recommend taking advantage of our $3,000 back programwhen buying real estate because it will add to you profit margin. Whether you're buying a home found on ForeclosureTimes.com or you've found a home through another source we can put money back in your pocket.

By using one or all of the buyer services offered by ForeclosureTimes.com you can earn up to three thousand dollars back.Click here for more details.

Find properties that meet your investing criteria, those that are in your area, price range, size and style. Decide whether you are buying to resell or to secure a residence for yourself. Determine if the property is a bargain by deducting the lender's asking price from the average market price of very similar properties in the immediate area.

As a homebuyer, you want to buy below market value with a low down payment, low interest rate and reduced closing costs. Your goal as an investor is to realize a tidy profit. You can buy property at a 15-20% discount and earn a 35-40% return.

Contact the lender or the broker and meet him at the property so you can inspect it. Record any damages and deduct the repair estimates from your price. Use a good property inspection checklist.

MAKING AN OFFER

Investors must deduct all expenses associated with buying, repairing, borrowing, holding and closing from the price they think they can get.

After all this, if you still like the numbers and the property, proceed with a written offer containing the following:

A statement indicating your intent to purchase the real estate.
The physical address of the property.
The legal description of the property.
Your price.
Your down payment terms.
Your financing terms.
Your desired closing date.
Any contingencies.
Your deposit information.
Your name, address and phone number.

Depending on the property and several other variables, your goal is to buy a property at least 15%-25% below market value. Start your offers accordingly.
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Unrealistic offers will be rejected quickly. Learn to work with the banks. Homebuyers can negotiate around the four discount factors: price, down payment, interest rate and closing costs. The bank, being a lender, can negotiate all these items. Just stay within reasonable boundaries if you want to succeed.

When the bank accepts your offer, close as quickly as possible. Avoid delays and complications from competitive offers.

Most financial institutions require a 30-day closing period and if the buyer is not able to close on the date specified in the contract, the seller will normally have a clause in the contract that if the buyer requests a closing date extension, then the buyer will be required to pay a per diem penalty as a condition of an extension. If the per diem penalty is $50.00 a day then that amount is multiplied by the number of days past the original closing date and the buyer will have to pay that amount at the time of closing. Example: $50.00 a day per diem multiplied by a 10-day extension would be a $500.00 penalty paid by buyer at closing.

NOTE - CONSIDER A BUYER'S AGENT TO WORK FOR YOU

When dealing with a bank or the broker representing the bank that owns the property, it can oftentimes be in your best interest to work with a Buyer's Agent that specializes in the foreclosure market and can help you navigate putting together a good and competitive offer. A Buyer's Agent's fee is paid by the owner of the property, not you and the commission costs of the Buyer's Agent is already factored into the property costs.

Foreclosuretimes.com has an excellent Buyer's Agent program that puts retail shopping dollars into your pocket when you've completed the purchase of your home. If you are interested in learning more about our Buyer's Agent Referral Program and how it can help you, gotohttp://www.foreclosuretimes.com/home_buyers.php

Advantages

The advantages to buying REOs are many. There are no liens or judgments to contend with, no homeowners or tenants to evict, no back taxes due, and accessing the property for evaluation or inspections is easy. The fact that the property has officially changed hands means that the lender has done all the work. With all the legal work completed, the complications of buying and the associated risks are removed. Lower down payments, better interest rates, reduced closing costs and a discount off the market value of the property, taken all together, make for a better than average home purchase. A properly structured deal will give you a low down payment, low monthly payments, and a low total price. For those looking to save money buying their first home, this is usually the way to go.

Disadvantages

In this industry the rewards follow the risks. Therefore, the payoff from this investing method is typically lower than that of buying pre-foreclosures or buying at auction. An REO investor should have no problems achieving 10%-20% discount from the market value of comparable properties. Savings of 25%-35% are hardertofind, and 40%-60% are possible, but rare.
Other disadvantages include: the lender that moves at a snail's pace; a lender selling the property "as is," with no cooperation in making reparations or allowances; and the very rare, but always possible problem of evicting a tenant or homeowner.

Overall, it is up to you to decide what option works best!
Page 15 | PART ONE: FORECLOSURES-THE ULTIMATE REAL ESTATE INVESMENT
PART TWO:
General Advice For Homebuyers
GENERAL ADVICE ON BUYING PROPERTY

Buying a home can be one of the most exciting and stressful times in your life. You may be looking forward to a new beginning or a new locale or even all the new decorating possibilities within your new space. At the same time, you find yourself worrying if you can really afford to buy a home. Concerns about how to finance, how to negotiate with a seller, where to find movers, the schools in your new area, et cetera, can all add to your anxiety. RELAX! With some research and effort you will feel confident throughout the buying process.

First off, there are some things to avoid prior to purchasing a home. Buying a home is an enormous financial commitment. You want to make sure you do everything right. Consider the following guidelines:

Don't make any major purchases of any kind before buying a new home. This includes a new car, electronic equipment, expensive jewelry, vacations, et cetera. You want to be able to funnel all of your financial resources towards creating a new home for you and your family. After all is said and done, when you've determined how much your home will cost you, any surplus can be used any way you see fit.

Don't move money around. When you apply for a home mortgage, it is the lender's responsibility to run a slew of background checks documenting your ability to pay back the loan. Bank statements from the past three months will usually be requested as well as statements for all assets. If you move funds around, it can make it more difficult for the lender to approve your loan. The simpler you keep your finances in the months prior to buying a home, the better. Also don't make any sudden changes in banks or brokerage services.

Don't change jobs. If at all possible, try not to change employers while you are awaiting a loan approval to buy a home. Lenders like to see continuity and stability when considering a mortgage approval. Job variables such as commissions, bonuses, and job security can come into play and decrease your credibility to the lender.

BECOMING A HOMEOWNER

As soon as you make the decision to buy a home, you need to take a close look at your financial situation. Moving is a costly venture-you will need cash for a down payment and closing costs (which usually comprise approximately 5% of the home's price). Furthermore, your monthly mortgage payments are often higher than what you may pay as a renter. In order to secure a mortgage, a lender will need to know that you are making adequate income to meet your monthly payment. In addition, they will also need to check your credit history.
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Now that you're sure that you can afford to purchase a home, you'll be happy to learn that there are a number of major advantages to buying. Here are a few of the factors to consider:

1) Long-term Investment: Buying a home is a long-term investment on your part. Generally, your monthly mortgage payments will remain the same as your property value goes up. Homes typically appreciate an average of 5% a year. Of course, this number can vary significantly depending on the region, the neighborhood, et cetera. Still, every monthly payment brings you a little bit closer to owning your very own home in full. Keep in mind that the initial mortgage payments pay mostly for the interest on the loan, while subsequent payments pay a greater part of the principle.

2) Tax Benefits: Homeowners are entitled to a number of tax benefits. As a homeowner, the IRS allows you to deduct all mortgage interest, providing you with a significant reduction on your annual tax bill. Further, you may use your home equity to procure interest-deductible loans for home improvements, to finance a college education, or if you plan on retiring or purchasing a new home. If you decide to sell your home, you may even qualify for a capital gains tax exemption, which means you might not have to pay taxes on the sale. (There will be more on taxes later.)

In effect, the government helps to subsidize your purchase of a home.

3) Stable Monthly Housing Costs: Buying a home also affords you the comfort of stable monthly housing costs. While rents are often unpredictable and erratic, your mortgage is not. Particularly with a fixed rate mortgage, you are guaranteed one monthly amount for fifteen to thirty years. When you consider how costly rents will probably be in thirty years, the choice seems obvious!

HOW MUCH CAN I AFFORD TO SPEND?

Before you even begin looking at homes, it is in your best interest to first establish how large a loan you qualify for. This way, you will know the price range you should be looking in and will not be disappointed if you fall in love with a home you simply cannot afford.

Lenders will look at your total household income as well as your net worth - your total assets minus total liabilities. The higher your net worth, the larger the loan you will qualify for. In addition, both your down payment and interest rates will be lower. Assuming you put a down payment of 20% on the home, one way to estimate how much you can afford is to multiply your total annual income (your gross) by three.

DEBT-TO-INCOME RATIOS

To actually determine your maximum mortgage amount, lenders use guidelines called debt-to-income ratios. This is simply the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts. Because there are two calculations, there is a "front" ratio and a "back" ratio and they are generally written in the following format: 33/38.
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The front ration is the percentage of your monthly gross income that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance, and any homeowner's association fees. The back ratio is the same thing plus your monthly consumer debt. Consumer debt includes car payments, credit card debt, and any installment loans. Automobile and life insurance are not included.

As shown above, the common guideline for debt-to-income ratios is 33/38. In this case, a borrower's housing costs take up 33% of their monthly income. If you add in their monthly consumer debt to the aforementioned housing costs, the total should not exceed 38% of their monthly income.

Of course, these guidelines are flexible and subject to change. The smaller the amount of your down payment or the more dubious your credit, the more rigid they become. However, if you have impeccable credit or are putting down a large down payment, they are far more flexible. Most FHA (Federal Housing Authority) guidelines will accept up to a 29/41 debt-to-income ratio.

YOUR DOWN PAYMENT

A typical down payment on a home is 10%. In some cases, you can put down less (as low as 0%), but be aware that if you do so lenders will often make you take out private mortgage insurance (PMI) to protect them against any defaults in payment. You can cancel the PMI when your equity reaches 20% of the value of the home.

It may sound tempting to offer a larger down payment. However, this is not a good idea in most instances. Yes, it is true that you will need to borrow less, lowering your interest payments in the process. However, it also reduces the amount of interest deducted from your taxes. Therefore, you are left with less expendable cash that you may need to fix up the house, pay moving costs, tuition bills, et cetera. Please note that you cannot take out a loan for your down payment. If you are planning to use a gift from relatives to assist you, make sure to deposit it into your back account at least six months prior to filling out a mortgage application - lenders will usually go through your bank statements for the last six months.

In addition to your down payment, moving also requires setting up an escrow account that contains up to 14 months of prepaid taxes, utilities, and insurance, until you own 20% equity in your home. Finally, you will need to pay closing costs (all the fees for surveying, appraising, escrowing, attorneys, and et cetera.).

As mentioned above, lenders will be meticulously checking your credit history. It is extremely important that you have paid off as many of your debts as possible (such as credit cards, car payments, student loans). You may want to request a copy of your credit report to ensure that it's accurate. It includes important information about your employment, credit cards, bank accounts, and debts. Make sure that any bounced check charges or back taxes have been taken care of and are removed from your record.

Pre-qualifying for a loan is simply estimating the size mortgage you can afford. You do not need any official documentation. When looking at potential homes, you want to know that you have been pre-approvedfor a mortgage. A pre-approval is an underwriter's official guarantee of a specified loan amount. This certified pre-approval can serve as a powerful negotiating tool once you have decided on a house you want to buy. The seller knows that you are serious in your intentions and that you can afford the property. An added bonus: it helps speed up the mortgage application process once you've made your offer.
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To make this process easier we have included a buyer's pre-qualification form and contact information for a nationwide discount mortgage broker within this guide. Just fill out the pre-qualification form and submit it you YourLoanHelper.com so they can get you approved for a mortgage as quickly as possible.

The following company is a nationwide discount Mortgage Broker that can assist you with pre-qualifying yourself for a mortgage that best suits your needs. They will also provide you with a home buying specialist that will answer all of the questions you may have.

You can visit their website by going to the following URL: www.YourLoanHelper.com

Or you may call their offices toll free at 1-800-516-5524.

FINDING THE RIGHT HOME

There are countless reasons why you might want to become a homeowner - a recent marriage, a new baby, a better school district, or a new job, to name a few. Your goal is to find a home in your price range that best suits your needs and desires. Once you've determined exactly what you're looking for, you should try to limit your search to those properties that meet your criteria.

Expanding on that notion, there are a number of things to consider, especially if you are attempting to buy a home with good resale value (which obviously makes the most financial sense).

1) Location, Location, Location - Although it seems clichéd, there is no more important factor when it comes to buying a home. Clearly, there are many things you can change when it comes to your home's appearance. However, one thing that will always remain the same is the location. When considering resale in particular, location is critical. Always keep this in mind as you look. Remember that just because you don't mind the noisy bus stop across the street or the adjacent shopping center doesn't mean somebody else won't. Don't put yourself in a situation where you are forced to compromise the price of your home in the future because of negative influences you didn't consider at the time you bought the home.

Take note of everything around the home you are considering. What is the neighborhood like - local stores, parks, schools, etc.? Are there any noisy highways or streets nearby that may deter others? Is there a high association fee that people may not want to pay?

Consider all these factors and anything else you can think of. You can even make a pros and cons list for your own reference.

2) Economic Stability - When choosing a community, it only makes sense to select something in a city or town with a viable and stable economy. You want to know, or at least reasonable estimate, that in 5, 10, 15 years, when you want to sell your home, the location you've selected is still a desirable one. Look for telltale signs such as community organizations or neighborhood activities. You may also want to look into the surrounding commercial area. Are there reputable companies doing business in the area? This can translate into local jobs as well as money to maintain the community.
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3) Local Government Services - Another important factor when looking at homes is the local government. You may want to check out the local branch of the library or the post office. Do they appear safe and clean? Also look into local crime statistics and compare them to the national average. What about community features? Are there recreation centers, youth programs, and parks? There are so many factors that need to be considered.

4) Schools - One of the mostimportant factors for many parents are the local school systems. If you do not have children, this may not seem of consequence to you. However, keep in mind that if you ever intend to sell the home, it may be a sticking point, so proceed with caution. Inquire to find out more about the schools. Find out how they are rated as compared to other local schools. Is there the option of going to a different public school other than the one for which the address is zoned, or are the zoning laws strict? Are the schools overcrowded? Much of this information can be found free of charge on the Internet.

5) Property Taxes - For many people, this is an oft-overlooked factor. However, when buying a home, property taxes are nearly as important an issue as the selling price of the home! Some cities have property taxes in upwards of $20,000 that may not only hinder you as the buyer, but also will most likely draw concerns when you attempt to sell your home.

To simplify your research you can use the following link, www.ForSaleByOwner.com/Reports this link will give you several types of reports including, city profiles and comparisons, school reports, city demographics, crime and weather statistics and more.

ADDITIONAL TIPS

Once you've pre-qualified for your mortgage and can approximate how much you can spend, some further steps you can take now are to conduct specific research on the neighborhoods you might want to live in. Safety is also an important factor. Does the neighborhood appear to be safe to you? Check to see if there are bars on the windows or if you hear alarms going off. Don't forget to ask the local police department about crime statistics in the area. Make sure to visit the neighborhood at night. After all, you want to know that you and your family will feel safe walking the streets even when it's dark outside. Next, you may want to consider the character of the neighborhood. Are there many families around or is it mainly senior citizens? You may want to know the religious and/or ethnic composition of the community. Talk to the neighbors and inquire about the churches, temples, and schools. This will help you gauge the people in your area and learn valuable information at the same time.

You should take the time to examine real estate records to see how high the property value is. Always remember that location is the single most important factor when valuing a home. If the home you are interested in is more expensive than others in the neighborhood, it may not retain its resale value. Other factors to consider include your proximity to shops, parks, libraries, highways and other forms of transportation. If you have children (or even if not, as explained above), you will want to research the school districts. Remember that homes in better school districts may have higher taxes, but they have higher property values as well. In short, take the time to really think about your personal priorities and look for a home that suits your needs accordingly.
disrepair.

After entry, pay careful attention to the condition of the interior of the house.
Page 20 | PART TWO: GENERAL ADVICE FOR HOMEBUYERS

Now that you've narrowed the playing field, you're ready to begin seriously looking at homes. Obviously, you should always keep an eye out for any defects or damages. Take notes so you can review them later and make comparisons to other homes you will be viewing. Write down the room measurements and draft the layout so you can figure out how your furniture can best be arranged. Make sure to ask plenty of questions.After all, the current owners know more about the house than anyone. If you are interested, arrange for another visit and bring a list of questions about the property and the neighborhood. Pay close attention to the manner in which the seller answers your questions - is he/she acting defensive or trying to hide something? You'll be amazed at how much you can learn from body language or how the seller responds.

THINGS TO LOOK OUT FOR

Once you have found your dream home and put down an offer, you will most likely have a professional appraiser examine the home. However, before you even reach this point, there are some problems or defects that you can look for yourself. Upon arrival, take careful note of the exterior of the home.

o Loose bricks or corroded mortar joints can indicate a problem with the foundation.
o If there are bulges in the siding of the house, this too, may be a sign of foundation or moisture problems.
o Be sure to inspect all the doors and windows. If they are difficult to open, it could be due to anything from poor installation to a poor foundation. Leaky sealants and broken springs are some commonplace problems.
o It is very important that you carefully inspect the roof. If the shingles are ragged, you may experience leakage, which may be very costly to repair.
o Pay attention to the landscaping of the home. If the backyard resembles an overgrown jungle, chances are, the owner doesn't take pride in the home. In all likelihood, other sections of the home may be in
o Verify that the crawl space in the home is at least 80% covered with plastic. This helps to prevent dry rot and standing water that can result in structural problems as well as mold and mildew buildup. Also check the attic for water leaks.
o Check that the ceilings are not uneven or discolored. This may be another indication of structural damage.
o Take note that the home has proper insulation to prevent heat loss. If the insulation is not installed correctly, you could end up wasting thousands on energy bills to heat your home.
o Although a pest inspection is usually part of the general home inspection, look for obvious signs that the home may be infested such as wood damage by termites. The majority of real estate agreements include a clause that holds the seller responsible for up to 3% of the purchase price for remedying the problem.
o Air conditioning and heating are also essential to take note of. Find out what source of energy the house uses (i.e. gas, electric, oil, etc.). Note the location of all the vents and make sure they are in good working condition.
o Look for any leaks or plumbing problems. Check the water pressure by flushing the toilet and running the sink simultaneously. Also test the water heater by running the shower or tub for 15 minutes.
o Lastly, pay attention to the actual layout of the house. Is the kitchen convenient to the dining area? How far away are the bedrooms from the bathroom? Once you move in, you'll quickly learn how important it is to have a foyer where the kids can leave their dirty shoes rather than ruining the beige living room carpet!
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As you view potential homes, you may find yourself in contact with sellers and lenders who seem reluctant to work with you. If you suspect the reason to be of racial or ethnic origin, you may be protected under the Fair Housing Law. This law serves to prevent discrimination in the real estate market. The law says that you cannot be denied the right to buy based on your race, color, nationality, religion, gender, or disability. If you feel this applies to you, record each instance where you may have been discriminated and maintain a detailed account of the incident.

Also keep any applications, receipts, and other pertinent documents related to your case. If problems persist, you can write or call the national, state, or local fair-housing enforcement agency. The toll-free number is 800-669-9777.

NEGOTIATING WITH THE SELLER

Congratulations! You've narrowed it down to the one house you really want. The next step is to make an offer. Take into consideration what you are willing and able to pay. Typically, a seller will pad their asking price about 10-15%, well aware that they won't get the full price. Still, an offer of anything less than 85% may insult the seller and make him disinclined to work with you. Sometimes a seller may remain firm on the asking price, but be willing to negotiate elsewhere, such as with appliances, repairs, or closing costs. Always keep in mind that EVERYTHING is negotiable!

The length of time a house has been on the market can greatly affect your negotiating position. In a seller's market, a well priced home may receive numerous bids in the span of a couple of weeks. In this case, you probably don't have much leverage in terms of negotiation. If you aren't willing to pay the asking price, it is likely that someone else will. On the other hand, if a home has been on the market for several months, the seller is probably quite eager to sell and willing to make allowances.

When making an offer, the first step in determining a fair number is to look at the recent sales of similar homes. These are known as "comparable sales." Specifically, you want to compare prices of homes that are similar in square footage, number of bedrooms and bathrooms, garage size, and lot size. If the home you are interested in is part of a housing community or a tract of homes, you can probably even compare with exact model matches.

The best way to obtain these sales figures is in the public record. When a property is bought or sold, the deed is recorded at the local county recorder's office. They combine sales data with information already known about the property so they can properly assess property taxes. Provided there have been no additions made to the property, the information available from the public record is usually correct with regards to sale price, square footage, and number of rooms. You can try to access this data through a title insurance company, since the general public is usually not privy to it. Keep in mind that one problem with the public record is that it tends to run six to eight weeks behind.

Another critical factor is motivation, both yours and the sellers. Always attempt to conceal your motivation, but try to determine the seller's. For example, if your lease is up on your apartment and you need to move within the next few months, do NOT divulge this information to the seller. They will realize that your time frame is quite inflexible and try to pressure you into a higher selling price. However, if the seller has already purchased a new home and has plans to move in within 60 days, this is very valuable information to know. Since the seller is eager to unload the home, you are in a strong position to negotiate. Oftentimes, this can be the case since nobody wants to pay two mortgages at one time!
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Now that you're prepared to make an official offer, it's time to seriously consider hiring an attorney that specializes in real estate. This can cost anywhere from a couple of hundred to over a thousand dollars. Although it may seem expensive, your attorney can provide you with valuable advice that will help you to avoid costly mistakes or miscommunication. They will usually draft or review the sales agreement and closing documents, negotiate amendments, and act as a liaison in case of any disputes.

Your Offer to Purchase Real Estate form should outline the specific terms of the sale. These include:

1. The designated amount due upon signing the sales agreement and the total purchase price.
2. The fact that the sale is dependent on satisfactory appraisal and inspection of the home.
3. A timetable for the buyer to: obtain a mortgage, inspect the home, make a sales agreement,
and close on the home.
4. The going interest rates at the time and the maximum rate you can afford to pay.

In the case that any or all of the contingencies are not met, you have the option to withdraw your offer completely, have the issue rectified, or adjust the price accordingly. Next, to prove your interest is sincere, you should accompany your offer with a good faith deposit. This is generally a percent of the property's total price. The money is usually placed in escrow and refunded after a specified period of time if the offer expires or if you decide to withdraw. On the check, you should write "Trustee" or "Fiduciary Agent," after the seller's name.

To put yourself ahead of other potential bidders, you have the option of making an offer higher than the asking price or offer to cover owner fees such as the appraisal or title search. Other options include being flexible with the closing date or showing documented proof of prequalification.

Now it is up to the seller. They may choose to accept your offer, decline it, or submit a counter offer. Usually, they will opt to negotiate on the selling price. As a buyer, it is in your best interest to secure the lowest possible price. Conversely, the seller is trying to get the most for their home. This tends to require some haggling and amendments such as keeping the appliances, satellite dish, et cetera. Remember the more concessions you request as a buyer, the more reluctant a seller will be to sell to you.

THE SALES AGREEMENT

At long last, you and the seller have agreed on the purchase price. It is now time to draw up a sales agreement. To protect the rights of both the buyer and the seller, you should each have your respective attorneys review it.

The sales agreement should cover a number of topics. It should include the purchase price, the amount of the deposit, the mortgage interest rate, and estimated closing costs. Contingency clauses are also important because they specifically outline which inspections must be performed, by whom, dates by which they must be completed, and consequences if the home does not pass. Lastly, the sales agreement should list the tentative closing date or date the contract expires. This is usually 30 to 90 days.
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Before the loan application is processed, you want to have the home appraised and inspected to ensure you are paying a fair price and there are no hidden defects on the property. The appraiser you choose should be state-certified and MAI approved. The buyer usually covers the appraisal fee, which can range from $200 to $350. An inspection, which is paid for by the seller, typically costs between $150 and $300. The inspector must be certified by the National Institute of Building Inspectors or the American Society of Home Inspectors.

Another expense that is covered by the seller is the title search. This step is required by the lender in order to approve the loan application for the buyer. The title company searches all public records for outstanding taxes, judgments, or liens. It also looks for third party claims from an ex-spouse, heir, or business partner. If there are any blemishes in the record, it's probably in your best interest to either withdraw the offer or insist they are cleared.

As a buyer, you should be aware of environmental concerns such as lead paint poisoning or dangerous radon levels in the home you are considering. Federal Law requires sellers of homes built before 1978 to inform potential buyers about any lead-based paint used on the property. In many states, sellers are also required to disclose information regarding asbestos and pest infestation. Furthermore, any knowledge of unhealthy radon levels must also be divulged to the buyer prior to sale.

Prior to the purchase, look into all the factors that may impact the cost of ownership, such as taxes, utilities, and insurance. Some areas maintain unusually high property taxes, which may make them unaffordable. You will need to find out specific rates from the seller and local tax assessor. Also look into the average cost of utilities. If the house uses oil, it can be very expensive. Obtain old energy bills and factor them into your final monthly costs. Insurance is another often overlooked consideration. Some form of homeowner's insurance must be purchased prior to settlement. The policy should be dated as of the settlement date and the mortgage lender named the beneficiary. Ranging from state to state, additional insurance may be required, including flood, hurricane, or earthquake insurance. If you are looking for the lowest rates possible, your best bet is to take on a deductible. Similar to automobile insurance, this means you will pay up to a given amount out-of-pocket before your policy coverage begins.

In addition to the expenses listed above, some neighborhoods or developments charge mandatory "association fees." The fees often go to cover public amenities, such as a pool, Jacuzzi, or tennis courts. Sometimes they may simply pay for the landscaping in the area or a security patrol. These fees can run anywhere from $100 to $500 a month. Tacked onto your mortgage, this could be a substantial expense.

Barring any of the above issues, the following step would be to obtain a letter of commitment from the lender that guarantees that you have been approved to buy the home. Be sure to read the letter carefully or have your attorney take a look. There are a number of terms and loan conditions you need to be aware of and understand. If everything looks satisfactory, sign the letter and return it to the lender, after making a few copies for yourself.

Federal Law gives you the right to see a Uniform Settlement Statement just prior to settlement. This document simply lists all costs associated with the purchase of the house. Again, if everything checks out, you and the seller may take your final walk-through of the house. At this point, you're merely checking to make sure everything is in order. The house should be in the same condition as when you first saw it, and all repairs should be completed. Ideally, try and schedule this walk-through during daylight hours where you can clearly notice details.
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DISCLOSURES

Although you have extensively toured the property, looked at the walls and ceiling, turned on the faucets, and played with the light switches, remember that you have not actually livedin this home. The seller has years of background knowledge about his or her home that may be of interest to you. For this reason, you should require a Seller's Disclosure Statement. Basically, you want the seller to disclose any adverse conditions that may have a substantial impact on your decision to purchase his or her home. This would include anything from the home being located on an earthquake fault zone to faulty plumbing. In this way, you can protect yourself from any unknowns that may come back to haunt you in the future. A few other things you may want to consider include:

Official Home Inspection - Aside from the appraisal process and the termite inspection, you may also want to have a professional check out the house and identify any potential problems. Of course, you have already inspected the home on your own, but a professional will be able to notice certain things with a trained eye. These issues may not even fall under the responsibility of the seller to repair or replace, but at least you will have the foreknowledge of them just in case.

Final Walk-Through Inspection - Just prior to closing, be sure to revisit the property one last time to make sure everything is in order. Make sure that you retain this right as part of the Sales Agreement.

FINANCING YOUR NEW HOME

How Financing Details Will Affect Your Offer

Since chances are you will probably make your offer contingent upon obtaining a mortgage, the seller has the right to be informed of these financing plans in order to evaluate your credibility as a homebuyer. For this reason, financing details will be included in your offer. Two of the things that you should pay particular attention to are:

Your Down Payment - As part of your offer, you will need to disclose the size of your down payment. This allows the seller to evaluate your likelihood of being approved for your mortgage. Clearly, it will be easier to secure a mortgage when you are making a larger sum down payment. The underwriting guidelines will be less strict.

Interest Rate - Typical interest rates should also be included as part of your offer, mainly for your benefit. In the instance that interest rates suddenly become volatile and rise quickly, your mortgage payment could be substantially higher than you anticipated. You may not be able to afford the increase and be forced to nullify the contract. By putting a maximum acceptable rate clause into the Sales Agreement, you can protect yourself by allowing for this loophole.
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Obtaining the Loan
Since very few buyers can actually pay for a home in cash, the chances are very good that you have to take out a home loan. As soon as you and the seller sign the sales agreement, you should submit a loan application. You will need to provide the lender with bank statements (usually from the last six months), income tax returns, pay stubs, and other proof of income and assets. The lender will explain loan origination fees, typically 1% of the loan, which must be paid prior to approval. In addition, you should be given an estimate of closing costs and learn how long the interest rate is valid and if and when it can be locked in. Finally, a lender can help you determine if you need private mortgage insurance or other kinds of special insurance.

These are some of the items you should have prepared when applying for a loan to expedite the process:

* W2 Forms for the past two years
* Recent pay stubs (for the past two months)
* Federal Tax Returns (1040's) for the last two years if:
-you are self-employed
-earn regular income from capital gains
-own rental property
-earn more than 25% of your income from bonus or commissions
-earn sizable interest income
* Year-to-Date Profit and Loss Statement (for self-employed individuals)
* Pension Award Letter (for retired individuals)
* Social Security Award Letters (for those individuals on Social Security)
* Bank statements (for the past two months)
* Statements for stocks, mutual funds, bonds, etc. (for the past two months)
* Copy of latest 401K statement
* Explanations for any large deposits and source of those funds
* Explanations for any negative items on your credit report
* Copy of bankruptcy papers (if you have filed for bankruptcy within the past seven years)
* Landlord's name, address, and phone number (for rental verification purposes
* Gift Letter (if sizable funds come as a gift from a family member)

Take note: "Gifts" may also require further documentations including verification of the donor's ability to make the gift, a copy of the check used to make the gift, and a copy of the deposit slip showing the funds deposited to your account.

Before you settle on a type of mortgage, diligently compare the various mortgages available. This can help you lower your monthly payments and may even save you thousands of dollars over the course of your loan.

There are four main types of mortgage lenders. The most common of these are large banks. They have the strictest requirements, but they usually offer the lowest interest rates. Credit unions and local banks are another option. Many of these institutions are more flexible than the larger banks. They will examine your financial history as well as your current ability to make payments. You may also want to consider a mortgage broker. Mortgage brokers charge a fee to match the borrower with an appropriate lending institution. They represent banks, organizations, and private individuals with money to lend.
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A less conventional alternative is to go through government agencies such as the Federal Housing Authority (FHA) or the Veteran's Administration (VA). These are not traditional lenders; they act as insurers who guarantee your loan in case you default. You must qualify in order to obtain a FHA loan. One advantage is that your down payment can be as low as 5%. VA mortgages are only available to qualifying veterans. With this type of loan, you do not even need a down payment. You might also want to look into whether your state has financing agencies that offer low-interest home financing through mortgage revenue bonds. These Housing and Urban Development (HUD) programs require that applicants have not owned a home in the last three years.

You are free to choose a mortgage with fixed or variable interest rates and payment periods. It is important to remember that only the APR (Annual Percentage Rate) factors in all costs incurred when borrowing money with a fixed rate loan, including the interest rates, points, and closing fees. The Federal Law requires that the lender supply you with a "Truth in Lending Disclosure" estimate, which includes APR, three days after applying for a loan. Some other considerations include early and late payment terms and refinancing options.

The four primary types of mortgages include:

1. Fixed rate mortgageshave a set interest rate and fixed monthly payments, usually over a 30-year time period. This type of mortgage is often most appealing to buyers because it features a fixed, regular payment schedule. This makes it easier for buyers when planning their monthly budget. If you qualify, you may also want to consider a 15 or 20-year loan, which will increase your monthly payments by about 15%-25%. This option could save you upwards of 50% in total interest throughout the life of the mortgage.

2. Adjustable rate mortgages(ARMs) provide a preliminary interest rate of at least one or two points lower than a conventional mortgage. This rate is linked to a market index and fluctuates regularly. If you opt for this type of loan, be sure to insist on an interest rate cap. This safeguard will limit your rate increase to two percentage points per year and five to six points over the course of the mortgage. This mortgage carries more risk since interest rates can be unpredictable. A number of ARMs afford you the option to lock in a low interest rate or refinance after a specified time period. Of course, you will have to pay a fee for this.

3. Balloon mortgagesdemand that you pay large lump sums at fixed intervals in addition to regular monthly payments. These large payments can decrease the life of the loan substantially. However, most people are unable to make an additional lump payment to do this.

4. Graduated payment mortgages(GPMs) start off with a low monthly payment, but then gradually increase. This permits buyers to buy a more expensive home than they can currently afford, with the assumption of increased income in the future. The danger with this kind of loan is known as negative amortization. In this scenario, if the buyer is forced to sell after only a few years, you still owe interest and have not even made a dent in the principal.

For some buyers it may be extremely difficult to procure a mortgage. This is especially true for first-time buyers or those who have had credit problems in the past. There are some unconventional options that you may want to consider. In some cases, the seller may be willing to hold onto the deed and receive payments directly from you. This is known as seller assisted financing. In essence, the seller becomes your lender. If you should default, the seller reserves the right to foreclose on the home.
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If you are reluctant to commit, lease option buying may be right for you. Here you basically rent the home on a temporary basis with an option to buy in the relatively near future (usually six months to two years). As a buyer, you have the opportunity to become comfortable with the home as well as postpone your mortgage application. In terms of payment obligations, you will most likely have to pay between 3% and 5% of the selling price as well as a small monthly payment.

Moroever, co-signing is a good way to increase your odds of securing a mortgage loan. If your credit is less than perfect, perhaps you can convince friends or family to act as a guarantor on your loan. This means that they will accept responsibility for the payments if you default.

Lastly, you may opt to borrow from your pension or profit-sharing plan. The law permits you to borrow up to one-half of the vested amount or $50,000, whichever is the lesser amount. If the loan is to buy a primary residence, there is no term limit imposed on the loan. Similarly, you can also borrow against your life insurance policy. Most policies allow you to borrow up to 95%, with no time restraints. Keep in mind that your coverage is reduced by the amount you choose to borrow.

The following company is a nationwide discount Mortgage Broker that can assist you with pre-qualifying yourself for a mortgage that best suits your needs. They will also provide you with a home buying specialist that will answer all of the questions you may have.

You can visit their website by going to the following URL: www.YourLoanHelper.com

Or you may call their offices toll free at 1-800-516-5524.

TAX OPTIONS FOR THE HOMEOWNER

As most people have undoubtedly told you, owning a home is a great tax shelter. As a homeowner, you can use your loan interest as a tax deduction, as well as closing costs and use of a home office. You may be interested in hiring a tax lawyer or accountant so you can be sure that you are maximizing your tax savings. Federal tax laws (including possible exemptions) are complicated in nature and vary considerably from state to state.

The interest payments that you make on your principal residence can be deducted from your gross annual income each year. This can mean big savings for you, especially at the beginning of the mortgage when the majority of your payments go towards the interest. To gain a better understanding of how much of your monthly payments go towards the interest, consider the following:

If you take out a $100,000 loan with a 30-year term at 8%, nearly $8,000 of your $8,800 will go towards paying your interest. That comes to over 90% of the total!

Your property taxes are also deductible from your taxable income each year. This holds true even if the home is not your principal residence.

By the time you reach settlement, your finances will be virtually depleted. The good news is that you are able to deduct all closing costs from your gross income. This results in paying lower taxes! Overall, you can save over 3% of your home's price.
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If you are one of the many homeowners who use their home for business, you are probably eligible to write off a portion of your home expenses. Estimate the percentage (in square feet) of the section of your home used for business. Use that percent of your yearly mortgage bill to determine your write-off amount.

Additional Tax Deductions

Generally speaking, there are numerous tax advantages associated with the purchase of a home. A homeowner can deduct points used to obtain a mortgage when buying a home, mortgage interest paid during the year, as well as property taxes. Now the specifics as to what it all means to you.

Points - You've probably heard of points when it comes to real estate and wondered what exactly they are. Basically, when you obtain a mortgage, certain costs are associated with that mortgage. One of these costs is called the loan origination fee, which is typically expressed as "points."

For example, one "point" on a $150,000 loan would be $1500. Similarly, 2 points on a $150,000 loan would be $3000. On most loans, points are often broken down into two categories: the loan origination fee (which is usually one point) and discount points (which are also a percentage of the loan balance). Both of these are deductible. However, keep in mind that the loan origination fee must be expressed in points in order for it to be tax deductible.

Deducting Points - When buying a home, points are deductible for the year in which they are paid, providing they meet certain conditions. The main condition is that the mortgage is secured by the home you primarily live in.

Also in the case that the seller pays part of these points on behalf of the buyer (as part of a previously agreed upon condition), the buyer can still deduct the amount from their taxes. The only catch is that the seller must relinquish the right to do so as well. The amount cannot be deducted twice.

A last exception to the above deductions is if you make too much money. While we may wonder if such a thing is possible, the IRS has deemed that people earning an adjusted gross income of $128,950 are limited in terms of what they can deduct on their taxes. For married couples filing separately, the figure is half of that.

CLOSING COSTS

When you talk to a lender, they will usually prepare a "Good Faith Estimate" of your expected closing costs. They are usually required to provide this estimate to you within three business days of your loan application. Buyers typically assume that since your lender is the one providing you with this estimate, the costs listed are all associated with the lending institution. This is not the case. The lender is simply the one preparing this estimate for you based on his or her past experience. It is an educated guess on their part to assist you in planning your budgets. The following pages are a detailed list of costs that you may incur when buying a home. They are broken down by costs associated with your lender and other additional costs. Also keep in mindthat these costs are all non-recurring costs, which means that they are paid one time only. Recurring costs include such items as property taxes and homeowner's insurance, which are paid regularly.
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LENDER FEES

Loan Origination Fee - The loan origination fee is often referred to in terms of "points." One point is equal to one percent of the loan amount. As a rule, if you are willing to pay more in points, you can secure a lower interest rate. On a VA or FHA loan, the loan origination fee is always one point. Anything in excess of this one point on government loans is referred to as "discount points."

Appraisal Fee - Since the home you are looking to buy must serve as collateral for your mortgage, lenders want to be certain of the value. As a result, they will usually require an appraisal to determine if the price you are paying is comparable to recent sales of similar properties. The fee can vary depending on the value of the home. More unique and expensive homes will usually require a more substantial appraisal fee.

Credit Report - As part of your underwriting review, your mortgage lender will require a credit report. The report can run from as little as $7 to $60 depending on the specific type of report required from one of three national credit agencies.

Lender's Inspection Fee - This fee is typically found on new construction and associated with what is called a 442 inspection. Since the property is not finished when the initial appraisal is completed, the 442 inspection verifies that construction is complete with carpeting and flooring installed.

Tax Service Fee - During the life of your mortgage loan, you will be making property tax payments. These can be made either on your own or through your impound account with your lender. Since property tax liens can sometimes take priority over a first mortgage, it may be in your lender's interest to pay an independent service to monitor your property tax payments. The fee for this typically ranges between $75 and $85.

Flood Certification Fee - Your lender has the right to determine whether or not your property is located in a federally designated flood zone. This fee will be charged by an independent service contractor.

ADDITIONAL COSTS

Closing/Escrow/Settlement Fee - The specific methods of closing a real estate transaction vary greatly from region to region as do the fees. Check with your local lender.

Title Insurance - The purpose of title insurance is to ensure the homeowner that they have clear title to the property. The lender may also require it to insure that their new mortgage loan will be in first position. The cost can vary significantly here too. Once again, check with your lender.

Notary Fees - Most sets of loan papers will be in triplicate and require notarization. Usually your escrow agent can arrange for you to sign these forms and charge a fee in the neighborhood of $40.

Recording Fees - Certain documents must be filed away with the County Recorder's Office. Fees for this also range by region, but tend to run between $40 and $80.
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Recording Fees - Certain documents must be filed away with the County Recorder's Office. Fees for this also range by region, but tend to run between $40 and $80.

Pest Inspection - This is sometimes referred to as a Termite Inspection. The inspection checks for everything from actual pest infestation to items such as wood rot and water damage. The inspection usually costs about $75 and may be paid for by the seller. If repairs are in order, the bill is something to be negotiated by the buyer and the seller.

Home Inspection - A thorough inspection of the home is highly recommended by the lender. However, since the choice is left up to the homebuyer, the cost is usually not included as part of the Good Faith Estimate.

Loan Tie-in Fee - Although this sounds like a cost levied by the lender, it is not. If charged, it is usually by a settlement agent (escrow agent, attorney, etc.) to compensate themselves for services rendered in dealing with the purchase of the home.

Sub-Escrow Fee - This fee may be charged by the title insurance company to compensate for activities in coordinating with the settlement agent (escrow agent, attorney, etc.)

Homeowner's Association Transfer Fee - If you are buying a home that is part of a Homeowner's Association or condominium unit, the governing association will usually charge a fee to transfer all of the ownership documents to your name.

CLOSING THE DEAL

The final step involved in buying your new home is referred to as closing or settlement. Specifically, this entails the formal transfer of the title and the signing of all final legal documents. Each party has their own responsibilities. The seller must bring with them the deed or title to the home, along with inspection papers, transferable bills, and the bill of sale. As a buyer, you are required to have your down payment for the lender, the tax deposit and insurance to the escrow agent, and all fees, including those for the attorney, the survey, the tax transfer, and the title search. Be sure to review with your attorney all documents before signing them as they are legally binding.

One of the documents you will be asked to sign is a mortgage note. This document secures your loan and outlines the specific terms. It includes repayment terms, which you should make careful note of. Upon signing, you grant the lender a lien on the property. Both the mortgage and a deed of trust should be recorded in the County Recorder's Office or the Registry of Deeds.

Lastly, the buyer and seller are usually required to sign an affidavit swearing the property is free of liens, judgments, assessments, or other encumbrances.

Now you can finally move in! Don't forget to mail or fax a Change of Address Notice (available at the post office) to all your friends and family. Try and give at least two weeks advance notice.
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Next, take an inventory of all your possessions to calculate moving costs. Most moving companies will charge per hundred pounds. Only move what you feel you will use in your new home. Now is a good time to weed out things you no longer use. Holding a garage sale might be a good idea! Before committing to a mover, be sure to get at least three estimates. Find out what their insurance policy covers and if there is a deductible. Usually, the movers must be paid in cash. Finally, ensure that all of your utilities will be turned on and transferred to your name.

Congratulations - you've successfully purchased your own home!
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PART THREE:
General Advice For Sellers
So now you've made the commitment to sell your home on your own. You're probably asking yourself, "Now what?" Just remember, as overwhelming as it may sometime seem, there are many sources you can turn to for assistance, ranging from attorneys to escrow and loan officers, among others. You may even know people who have sold their home themselves in the past and can offer valuable guidance. There is a wealth of information available to you.

ASSEMBLING YOUR TEAM

Just because you've decided to sell your home on your own doesn't mean you won't need help. Even without enlisting the help of a real estate agent, you simply can't do everything by yourself! You will need two or three key people to assist you: your mortgage banker or lendera realestate attorney and/or title company. Depending on where you're located in the country the number of professionals needed may vary. Generally speaking, east of the Mississippi it's usually a real estate attorney that handles the contracts, escrow, hiring of a title agent and closing process. Again generally speaking, west of the Mississippi it's usually a title company that handles the majority of the real estate transaction and closing process: Of course, you have the right to have an attorney no matter where you're located. You also have to be the leader of your team of professionals. It will be yourprimary responsibility to market your house (with considerable help from ForSaleByOwner.com), find a buyer, and negotiate the terms of the sale contract.

Now let's take a look at what your new team members can do for you:

Mortgage Banker/Lender -The job of this team member is twofold:

* They can pre-qualify any interested buyers for you. This way, you can quickly determine the buyers who canget approved for a loan and weed out those that are financially incapable of buying your home.

* They can prepare financing breakdowns on your house to go along with your "Highlights" sheet. The sheets can provide potential buyers with concrete figures as to how much they will need for a down payment, monthly payments, et cetera, in order to buy your home.

The following company is a nationwide discount Mortgage Broker that can assist you with pre-qualifying potential buyers of your home and the preparation of financing breakdowns on your house. They will also provide you with a home selling specialist that will answer all of the questions you may have.

You can visit their website by going to the following URL: www.YourLoanHelper.com

Or you may call their offices toll free at 1-800-516-5524
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Real Estate Attorney and/or Title Company - If you have a trusted attorney, this is the time to enlist his or her help. If not, consult with friends, family, or neighbors to refer you to a competent professional to handle the legal aspects of selling your own home: You can also use the ForSaleByOwner.com service provider database this will help you find service providers, which include title companies, lawyers and more! You can use this free service by going to www.ForSaleByOwner.com/provider

* Real estate attorneys/title companies can help you in preparing the sales contract once you have found a buyer. In addition, they can help you draft or revise your disclosure documents or other necessary documents pertaining to the sale of the home.

KEY FACTORS TO CONSIDER

Before you proceed any further, there are some important factors to keep in mind when selling your house. It is imperative that you intimately understand these issues and always act accordingly.

1) You have decided to sell a house - NOT your home.
The first major obstacle you must overcome is the notion that you are selling your "home sweet home." You must put your personal feelings about the house aside. Of course, this is easier said than done. Perhaps this is the first home you have ever owned or the one where you grew up as a child. There may be countless memories associated with the property. Of course, it is perfectly normal to have these sentimental feelings about the place that you have been living in. However, these feelings are NOT what are going to sell your house. No potential buyer is looking to purchase your home. On the contrary, they are looking for a housethat they can make their home.

In keeping with this principle, you will have to set aside your emotions and view your house as objectively as possible. Consider advertising, preparing, and presenting your house to look and feel like a house that anybody can easily move into and create into their "home sweet home."

2) Understand the marketplace
Just as with any product that a person may market and sell to the general public, it is critical to know what is going on in the surrounding marketplace. Conduct research on the town and state that you are selling in. Most importantly, consider your neighborhood and what sets it apart from the others. It is a general rule that the successful sale of any product is dependent on and directly related to the quality of the market research conducted. Real estate is no different.

Speak with others who may be able to lend some insight about important factors affecting the sale of your home. Find out what their experiences have been. Also try contacting some agents to discuss the general climate of the current market. You will be astounded at all of the free information available at your fingertips if you only bother to ask!

3) Timing is everything!
One of the most important questions to ask yourself at this point is "How much time do I have to sell?" The answer to this all-important question will dictate much of your course of action, including the asking price and how aggressively you need to market the house. Timing, coupled with current market conditions, is probably the two most critical factors to consider.
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The quicker you need to sell your house, the less flexible you can afford to be. After all, you don't have the time to wait around for your asking price. Conversely, if you have an ample amount of time, you can sit back and wait for that perfect buyer to come along. Also, the simple rules of supply and demand apply here. If the market is tight and demand exceeds supply, prices go up and you're in good shape. However, if a lot of people are selling and supply exceeds demand, prices will go down and there is some negotiating to be done.

Of course, the market works in a cyclical fashion. Slow periods are usually immediately followed by faster sales and higher prices. If the current market is especially slow and you are in no rush to sell, it is probably a good idea to ride it out and wait for an upswing.

4) Cleanliness is crucial
In today's competitive real estate market, there are few things that will set a house apart from all the others like neatness and cleanliness. It is a well-established fact in the real estate world that the appearance of a well kept home adds value and enables a house to be sold quickly and at a higher profit.

Make sure your home is in the best possible condition prior to showing it. It really does make a difference!

PRICING YOUR HOME

One of the first things you'll need to do is determine your asking price. An important factor to consider when choosing a price is your time frame. If you are looking for a quick sale, you will probably need to consider a lower asking price. However, if your time frame is more flexible, you can adjust the price accordingly.

A good starting point once you determine your time frame is to research the current market and choose a fair price that will both benefit you and attract the largest pool of buyers. If your price is substantially higher than the going price for neighboring homes, you will detract buyer interest and have a difficult time making a sale. On the other hand, if your asking price is too low, you risk losing money. Most savvy buyers tend to familiarize themselves with the market and may be wary of a home that is selling for below market value. We all know if something sounds too good to be true, it probably is!

Here are some links to help you with your research:

www.ForSaleByOwner.com/HomeSalePrices This link will display a list of homes that have recently sold with it's sales price in a area that you specify.

www.ForSaleByOwner.com/Appraisals This link will do an enhanced version of the above link and will actually give you and estimated value of your home.

www.ForSaleByOwner.com/Reports This link will give you several types of reports, city profiles and comparisons, School reports, city demographics, crime and weather statistics and more.

Also keep in mind that your first priority is to sell a house, not to realize a huge profit. Of course, you want to net the most you possibly can for your home. That is why you are choosing to sell without an agent in the first place. However, the biggest mistake sellers tend to make is to overprice their home, purely hoping for a large return. By asking for a price that is considerably higher than comparable homes, you deter potential buyers from making an offer. Buyers are fully aware that selling your home yourself eliminates the broker's commission (which averages between 5-7%) and therefore expect somewhat of a better deal.
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Some strategic planning is required on your part. Ideally, your asking price should take a number of things into account. Since prospective buyers are aware of the fact that you are selling FSBO, they will know that there is no broker's commission involved. Most buyers will usually opt to buy FSBO because they feel like they are getting a better deal. For example, if the going price for homes similar to yours in your area is $300,000, which is NOT the price you should be asking. A home selling for $300,000 through a broker will net the owner (after an average 6% commission) $282,000. $18,000 would go to pay the broker's fee. Therefore, if you are able to secure a price of $282,000 on your own, you will be breaking even. In fact, if you were in a rush to sell your home you'd be ahead of the game, because your home would most likely have sold quicker giving you something greater than substantial profit - peace of mind. Your best bet is to determine a price somewhere between the average listing price and the amount netted through a broker sale. For an example, a safe bet would be to price the home around $295,000, because if you manage to get an offer of $290,000 to $295,000, you are still netting between $8,000 and $13,000 more than if you'd used a broker. Not a bad deal for a novice salesman!

When trying to determine the true value of your home, you should think about hiring a certified appraiser to evaluate the property. For starters, the appraiser can identify potential problems or defects with the house that may need repair. Next, they will prepare a detailed written report outlining the estimated price of the house as well as pictures of your home, pictures of comparable homes, measurements, and comparable sales. A clear-cut advantage to an official appraisal is that it provides irrefutable evidence backing up your asking price. All prospective buyers can see the appraisal price of your home as arrived at by a professional, certified appraiser. Moreover, a written appraisal can confirm that you are asking a fair price, based on current market conditions. Most certified appraisers charge between $250 and $350 to perform a full appraisal. A less costly alternative is to utilize some of the online tools mentioned above; using the following link www.ForSaleByOwner.com/Appraisals will enable you to purchase a list of comparable sales with an estimated online appraisal using comparable data and other variables to determine a fair asking price. This type of appraisal is less comprehensive; no pictures or measurements are taken. This service usually runs anywhere from $5 to $30. However, with this type of search, no one physically inspects your home.

When looking to hire an appraiser to come and physically inspect your home, be sure to question their experience. Inquire how long they've been in the business, how familiar they are with your area, and how frequently they conduct appraisals. It's important to find someone who you can trust and who can render a fair and impartial assessment of your home.

ADVERTISING

The Internet is emerging as the leading medium for selling real estate. Currently 70% of all homebuyers start their search online (and this number continues to grow). The Internet is a fast and cost effective way to reach millions of buyers, and it's for these reasons that your home should be online.

When choosing a website it's very important that you find a website that gets an enormous amount of traffic, because there's no point in having your home online if no one is going to see it. ForSaleByOwner.com is the number 1 ranked For Sale By Owner website in the world, based on traffic, and one of the top real estate sites in the country. When you list with ForSaleByOwner.com your home will also be added to SaleByOwner.com, ByOwnerSales.com, yahoo.com and more. So listing your home on ForSaleByOwner.com ensures that your home gets maximum exposure. Plus ForSaleByOwner.com offers a wide array of free services to help you throughout the home selling process.
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Luring perspective buyers to your home does not have to be a challenging task. There are always going to be people looking to move. It is your job to spread the word that you have a fabulous home on the market and differentiate your home from the others for sale in your area. Above all, your task is to advertise your home as quickly and as cost-efficiently as possible.

One of the easiest things to do is place a "for sale by owner" sign in the front of your property. This will let everyone in the area know that you need to sell your home. Make sure your sign can be easily seen from a distance (after all, you want those drivers to be able to write down your phone number from the car). If you want to kill two birds with one stone you can list your property on ForSaleByOwner.com and choose a package that includes professional yard signs. One of the advantages of using ForSaleByOwner.com yard signs is that potential homebuyers will realize they can visit ForSaleByOwner.com to see photos and an in-depth description of your home and this will deter people from ringing your doorbell at all hours. It's also important to leave an effective answering machine or voicemail message for when you are not around. This message should include the fact that your home is for sale, whether or not it is still available, your asking price, and the size. You may also include any additional information you see fit, but be sure not to overwhelm the listener, we recommend giving your listing ID # for your online ad so even when your not home, buyers are getting the information they want. Obviously, your tone should remain cordial and friendly to entice people to come and view the home.

Another good marketing tool is a "Highlights sheet"outlining the various selling points of your home. You can include features such as square footage, number of bedrooms/bathrooms, and any amenities such as a pool, deck, spa, etc. Always include a photo, a color one if possible. Again if you use ForSaleByOwner.com you will have a printable flyer feature that converts you online ad into a flyer so you can easily print them out and distribute them to visiting buyers as well as local shopping centers, libraries, grocery stores, and on community bulletin boards. Also leave some copies by your sign in front of the house and be sure to replenish them as needed. This way, when potential buyers see your sign, they can take an information sheet with them. After seeing a number of homes, yours will stand out! Make a point of keeping these sheets with you at all times, since you never know when you might encounter a buyer.

Holding an Open House is an excellent way to showcase your home. It provides a non- threatening situation where buyers can take a look and see if your home fits their needs. Try to have a sign-in sheet to keep track of everyone who passes through. This way, you have the option to follow up with any potential buyers at a later date. Best of all, this type of advertising is completely free! Nice touches include offering tours of the home rather than a simple walk through or even preparing some baked goods or hors d'oeuvres for people to snack on. Be sure to keep your leaflets handy so prospective buyers will have something to refer to when considering your home. You might even want to obtain qualification forms as you may encounter interested buyers eager to start the process. Ask your local real estate board or county Board of Realtors for these forms.

It's a good idea to think about all the people you come in contact with over the course of a week - the bank teller, the checkout girl at the grocery store, your dentist, to name a few. By spreading the word that your house is up for sale, you automatically expand your potential buying base. Each of these people knows other people and may bring you one step closer to finding the right buyer.

A common form of effective advertising is through local publications. The most obvious example is placing a classified ad in your local newspaper. Other options include specialty real estate magazines or direct mail circulars. The downside to this option is that it can be prohibitively expensive. However, it does provide widespread exposure. Your ad should include the fact that you are selling FSBO (For Sale By Owner), your asking price, the location, size (number of bedrooms/bathrooms), and phone number. Depending on the size of your ad and how much you are willing to spend, you can also include special features such as a pool or incentives such as "Motivated Seller."
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Be sure to capitalize on the most positive feature of your home. For example, if the location is ideal (within walking distance to stores and/or situated in a prestigious neighborhood), your ad should highlight that fact.

LOCATION, LOCATION, LOCATION!!
4BR, 2 1?2 Bath, located in the lovely Alpharetta
area. Convenient to all, asking only $235,000.
Contact John at (555) 555-1212.

A word of caution: Make sure to have a number of different ads run in rotation. If a buyer sees the same ad for a prolonged period of time, they get the impression that there must be some reason why your home is not selling. You want to consistently maintain and generate interest in your home and keep it "fresh."

With the prevalence of the Internet, it is to your advantage to advertise online. The Internet is a fast way to reach millions of people from all over. For a nominal fee websites such as ForSaleByOwner.com allow you to advertise online, and you can include color photos and even floor plans. This cost-effective and comprehensive mode of advertising is an excellent option for selling your home. Make sure to mention your web listing in your ads and leaflet so that serious buyers can further research your home.

SNAGGING A BUYER: SECRETS TO WRITING A SUCCESSFUL CLASSIFIED AD

What's the secret to writing a killer classified ad? It's simple-telling the buyer what they want to hear. In addition, your goal should be to make the buyer curious enough to want to learn more about your property. Most buyers will immediately want to know three things: the price, the location, and the number of bedrooms in the house. Keep in mind that you do not want to give so much information that the qualified buyers are immediately able to eliminate your home from consideration (i.e. an ad that mentions "needs repairs" will probably be crossed off the list of a potential buyer). Many times, prospective buyers will end up purchasing a property quite different from what they have in mind. Therefore, your ad needs to draw them in enough to take a look at what you have to offer!

A good classified ad is direct and to-the-point. Leading with the price will immediately attract serious buyers to your ad. Here is where you would mention if the price is negotiable or if financing is available. The words "Financing Available" will appeal to potential buyers, as this is often a confusing or difficult part of the buying process. It's reassuring to know that the seller is already taking steps towards pre-qualifying prospective buyers. If you happen to be working with a lender who is willing to pre-qualify potential buyers (especially one who can get them good rates), make sure to include this information as well (one lender that is willing to provide this service for free is YourLoanHelper.com). In fact, highlight this point by stating "Excellent Financing" or "Affordable Financing" is available. Everyone wants a deal and they will certainly be interested in good financing options!

Working with a lender is also helpful if you receive phone calls from buyers only interested in low down payment options. You can send them directly to your lender, explaining that you are only showing the home after they have met with the lender. Though some potential buyers may not be willing to do this, it will enable you to work with serious, qualified buyers who are truly ready to purchase your home. For those buyers who claim to have already been pre-qualified, take down the name of their lender and verify it before taking any further steps. Of course, you do not have to include financing options if you do not wish to--your ad will still be effective, attracting a number of interested buyers.
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In addition to the price and terms, this first line should include the location. As many buyers only skim through classified ads, it's important that you are accurate, yet not too specific in naming your area (the exception to this rule is, of course, those neighborhoods that are so desirable that its name alone will have your phone ringing). For example, if your home is in Allston Hills, you should just state the location as "Allston" to appeal to more buyers. You do not want a potential buyer to eliminate your house because they (possibly mistakenly) believe that Allston Hills is too far from the train station. The key is to get them to come see the house for themselves. Some sellers are wary of mentioning the price or area so early in their ad. It is important to remember that, in most circumstances, buyers will only look at houses within their price range and location. Again, you are ensuring that you are attracting only serious buyers.

The next phase of your ad is the descriptive qualities of the house itself. First, you should state how many bedrooms the house has. Next, make note of any garages, a backyard, a fence, or a quiet street. Also be sure to include anything that has been newly renovated or remodeled. This always appeals to potential buyers who like the idea of getting a new kitchen or bathroom, for example. Other nice features to mention are a patio or a fireplace. These amenities will further increase buyer interest in your property.

Do not state every feature you believe is wonderful about your home. What you think is great may not appeal someone else. For example, a home that is close to stores may be great for you, but it might signal a noisy neighborhood to some of your buyers. The last thing you want to do is clutter your ad space with information that will make buyers look past your ad to the next one! Your job is to get them to call. They will see all the fabulous features your home has to offer soon enough.

The most effective ads are those that are short, simple, and non-threatening. They fulfill the most important job of all-telling the buyer what they want to hear. Here are examples of strong classified ads:

$250,000, BRIGHTON, affordable financing available, beautiful 4 bedroom home, fireplace, garage, by owner. Call 555-2374 or view listing #XXXXXXXX at ForSaleByOwner.com.

$300,000, PINE RIDGE, lovely 3 bedroom house, new kitchen, garage, quiet street, by owner. Call 555-7931 or view listing #XXXXXXXX at ForSaleByOwner.com.

$125,000, FRESH MEADOWS, excellent financing available, GORGEOUS 3 bedroom home, private backyard, garage, great area, by owner. Call 555-6979 or view listing #XXXXXXXX at ForSaleByOwner.com.

These ads tell the buyer the necessary information they need, without giving reason to eliminate the house from consideration. As the above examples indicate, start with price followed by the location either bolded or in all caps. The idea is to appeal to serious buyers who will be interested in finding out more about your house. Classified ads are effective, and if you follow the advice above, your phone will be ringing off the hook. Good luck!
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PREPARING YOUR HOME - Make Your Home Shine!

One of the first things you should do when getting your home ready for sale is to depersonalize it. Purchasing real estate is a largely emotional decision and you want to do your best to make your house evoke feelings of "home" to potential buyers. Of course, this is usually much easier said than done. The fact of the matter is that it is not theirhome (yet!) - it's yours. Most likely, it has been yours for a long time, which means that there's probably great deal of sentimental value attached to every aspect of the property--from the faded height marks in the doorway to the romantic gazebo out back. However, these things will not hold any meaning for potential buyers. Therefore, it is important to showcase your home as a clean slate where a new family can begin to create their own memories.

Try not to have an abundance of family photos displayed around the house, as well as sports trophies, collectible items, and souvenirs. If at all possible, remove some of these items from view. Try not to stuff them haphazardly into the attic or the garage. Savvy buyers will be eager to view these out-of-the- way spots to assess the available storage space in the house and will not look kindly upon your feeble attempts at straightening up.

The next important step is to unclutter the house. This is often the hardest part for most people since there is an emotional attachment to everything in the house. Unfortunately, potential buyers will not have the same sentimentality attached to their buying decision. They may view the clutter as reflective of an unkempt house or worse. The best way to begin uncluttering your home is to seek the advice of a trusted friend or family member, since it is often hard to be objective when it comes to your own things. Ask them what their feelings are and what would detract from the house if they were the potential buyer. The following are some of the things you may want to look out for:

Kitchen Clutter - The kitchen is a great place to start removing clutter, since it is one of the first rooms buyers will see and often serves as the centerpiece of a home. Make sure to clear the countertops as much as possible. Empty out overstuffed drawers and throw out those knick-knacks you never get around to using. The idea is to create open space so as to foster the feeling that there is plenty of room for all of the buyer's stuff to go.

Closet Clutter - The similar idea here is to create openness. No matter how large the closet really is, if it appears crammed full of "stuff," a buyer may get the perception that space is limited. On the contrary, if clothes and shoes are neatly arranged, the buyer will be impressed by how organized their closet space can be!

Storage Clutter - The ultimate culprit when it comes to clutter always tends to be the "storage rooms," such as the basement, the garage, or the attic. "That's what they're meant for," we reason with ourselves. However, when selling a home, it is essential to leave these areas as empty as possible so the buyers can envision what they would do with the space. A garage sale is a great way to rid yourself and potential buyers of unsightly junk.

Furniture Clutter - This is the most overlooked form of clutter, namely too much furniture in not enough space! When you fit several pieces of furniture in one room for your personal living needs, it tends to shrink the size of the room. From an aesthetic standpoint, the room appears small and cramped. The less furniture you keep, the more appealing your home will tend to be to potential homebuyers. This is the time to throw out old pieces of furniture that you don't intend on taking with you when you move. Again, consider a garage sale to rid yourself of unnecessary pieces.
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The Rest of the Home's Interior

Plumbing and Fixtures - Take stock of all sink fixtures throughout the house. They should all look shiny and new. A good silver polish should work wonders. If this doesn't work, you'll have to invest some money and replace the worn ones. This should be fairly inexpensive and easy to do. Also look out for leaky faucets. A simple washer replacement should do the trick. Also check your water pressure. Savvy homebuyers will try running the shower or flushing the toilets to check water pressure gauge.

Carpet and Flooring - Unless your carpet appears especially old or worn, a good carpet cleaning should be all you need. If there are noticeable stains or wear however, you may want to consider replacement. Choose something in a light, neutral hue that is fairly inexpensive and expands the size of the home visually. Light colors will always tend to enlarge spaces.

Ceilings, Walls, and Paint - Check your ceilings for water stains. If you have any, be sure to paint over them. If any leaks exist, you will have to have them repaired as well. Also examine the walls for stains or paint cracks. These, too, should be fixed and are inexpensive ways to improve the appearance of your home. In fact, an overall fresh paint job is probably your best investment when selling your home. For no more than a few hundred dollars, you can give your home a brand-new look! Remember to choose a light, neutral hue to maximize the space and light available in your house.

Windows and Doors - Check all windows and doors to make sure they open and close easily. If there are squeaks, a spray of WD40 should help. If there are any cracked or broken windowpanes, be sure to have them replaced prior to showing your home.

Odors - Smokers and pet owners should take special care to remove any odors that may linger in the house prior to showing. If you are a smoker, try to make a conscious effort to smoke outside of the home or in the backyard while your home is on the market. You can also use one of the air freshener sprays that help neutralize odors without disguising them. Pet owners can do the same. Also try carpet fresheners, potpourri, or scented candles.

The Exterior of the House

Maintaining the exterior of your home is probably the most important part of showcasing your home altogether. Always remember that it is the first thing a potential homebuyer will see from their car andthe deciding factor as to whether or not they wish to see more. As such, it is critical that it reflects the beauty and grace of your home as much as humanly possible.

Consider the following factors when assessing the street appeal of your home.

Landscaping - Take a look at your landscaping out front. Is it at least on par with the surrounding neighbors? If not, visit your local nursery and buy a few matured flowers or bushes to decorate the front yard. Be sure to buy only matured greenery. Although the immature trees and bulbs are cheaper, you cannot afford to wait until they are grown while patches of brown earth occupy the front of your home. Also rake up all the loose leaves and grass cuttings and make sure the lawn is regularly mown.
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Front Door and Entryway - The front door of the house should be especially attractive to visitors. It is the first part of the home that potential buyers will be directly exposed to up close.

Polish the door fixture until it gleams and repaint or sand the door if necessary. If there is any personalization on the doorbell or welcome mat, remove it. Remember that you are trying to depersonalize your home as much as possible to make it appealing to the new owners. Lastly, make sure the lock and key work smoothly and easily.

Backyard - Make sure the backyard is kept tidy and neat. If you own a pool or Jacuzzi, keep it freshly maintained and clean. If there is a garden or flowerbeds, tend to them on a regular basis so they don't appear overgrown and unkempt. Also make sure the grass on the lawn is neatly mown at all times.

OVERVIEW

With the word out and prospective buyers lining up to see your home, now is the time to make sure your house looks its best. Never underestimate the power of a first impression! Once you've attracted prospective buyers to view your home, it is critical to put your best foot forward. Similar to first impressions when meeting new people, the initial impression your home makes is long lasting and usually hard to erase. Since this is the case, it is in your best interest to display your home in the best possible light. Although we all know that it is unwise to make snap judgments that is exactly what buyers tend to do. They will inevitably notice the paint cracks in the walls rather than the beautifully finished wood floors. Therefore, it is imperative that you take notice of the imperfections in your home and take steps to correct them.

On the other extreme, some sellers make the mistake of investing a great deal into their home prior to selling in the hope of substantially increasing their selling price. Unfortunately, spending $5,000 to install a new patio in the backyard does NOT translate to a $5,000 increase in your selling price. Sure, the buyer may love the fact that the house now comes complete with a brand-new mahogany deck, but they certainly don't want to pay an extra penny for it!

Remember -- your goal is to maximize the attractiveness of your home, not entirely redo it. A thorough cosmetic overhaul is usually all that's necessary to make your home more desirable. Below is a quick list of inexpensive improvements that can greatly increase the curb appeal of your home:

o Maintain a well-manicured front yard. The lawn should be neatly trimmed and free of weeds. Flowerbeds should appear well kept and attractive. Also make sure that any shrubs and bushes up front are also trimmed.
o Check that windows and screens are free of cracks or tears and replace them if necessary. Be sure that the windows are sparkling clean and redo any chipped paint.
o Your front door and entranceway should be in immaculate condition. Consider a coat of fresh paint or lacquer. Ensure that the doorbell and entryway light are in good working condition.
o To increase visual appeal, you may want to plant flowers outside and place floral arrangements throughout the house.
o One of the most effective, yet inexpensive tactics, to improve the look of your home is a coat of fresh paint! You'd be amazed at the difference a paint job can have, from brightening a room to making it appear more spacious.
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o Perform a thorough clean up of your home. Shampoo the rugs, mop and wax the floors, and dust everywhere! Don't underestimate the impact this can have, as potential buyers WILL be able to spot those dusty bookshelves or those coffee stains in the rug!
o Rid yourself of all unnecessary clutter. This will help buyers better visualize how they will redecorate your home to suit their taste. As a bonus, the neater your home, the more spacious and appealing it will appear to a prospective buyer.
o Thoroughly clean all walls to make sure there are no fingerprints or smudges. Check wallpaper for nicks and tears.
o Have all doorknobs tightened and hinges oiled. This would be a good time to take care of that door that endlessly squeaks.
o Make sure that all bathrooms in the house are spotless! People immediately tend to notice its condition and every care should be taken to ensure it remains fresh, clean, and sanitary. Remember to replace any leaky faucets and re-caulk the tiles.

Although you may have grown accustomed to the small imperfections in your home, prospective buyers notice EVERYTHING and it will weigh heavily when they make their final decision. By taking the time to make these minor improvements, you automatically make your home more marketable and can increase your selling price.

HOW TO BE A SUCCESSFUL NEGOTIATOR

Just as you have a selling price in mind, so does the buyer. Often, there is a disparity between these two prices. Clearly, the seller is looking to make as much profit as possible while the buyer is trying to garner the best deal. Some negotiating is required to ensure that everyone walks away from the transaction satisfied. Negotiations are highly dependent on accurate calculations on your part as well as a certain degree of finesse and people skills. There are a number of things to keep in mind to that end.

A crucial sticking point in negotiation is separating the emotional aspect of the sale from the financial one. It's easy to let personal feelings or emotions get in the way of trying to negotiate a fair price. As a seller however, you need to realize that the buyer can't possibly understand all the memorable times shared in your home or the milestones celebrated there. Accordingly, they don't perceive the value of the house in the same way that you do. Yet it is essential not to take this the wrong way. If they have made an offer, they are clearly interested in purchasing the home and should be considered on their merit. You do NOT want to do anything that might cause the buyer to reconsider their offer. Remember, you don't need to like the buyer or develop a close relationship with them. Chances are good that you won't ever see them again.

Financially speaking, another important aspect to keep in mind is your "net" profit. Instead of focusing on the actual sale price of the home, calculate which deal will leave you with the most cash in your pocket. Individual offers will almost always represent different "nets" depending on the various clauses and agreements decided upon. For example, an offer of $6,000 less than your initial asking price may net you more than a second offer of only $2,000 less than the asking price. This could hold true if the second offer required you to pay the buyer's closing costs as well, which could be in excess of $10,000. If the numbers seem difficult or you are not financially inclined, consult a real estate banker or your attorney.
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Although it may appear obvious, you need to make sure your buyer is financially capable of purchasing your home. Many For-Sale-By-Owners waste precious time by having an unqualified buyer tie up their house with a contract that will never close. All pertinent information about a buyer's income, debts, credit rating, and available funds should be stringently researched prior to going to contract. If a buyer is not prequalified for a mortgage and makes an acceptable offer on your home, be sure to have it put in writing that they must speak to your banker prior to drawing up a contract.

This may go without saying but you should always consider all reasonable offers made on your home. When fielding an offer, you can either choose to accept it, reject it, or make a counteroffer and negotiate the price. Typically, counter offers go back and forth a few times before a reasonable compromise is reached. These negotiations demonstrate to the buyer that you are willing to be flexible, but will not simply give your home away. Before accepting any offers in writing, be certain that you understand all the financial ramifications of the transactions.

When negotiating your price, never divulge your lowest price to anyone. Simply tell all potential buyers to make you an offer. By revealing to anyone how low you are willing to go, you are giving them the opportunity to start negotiating there and try to bring you down even further. When we say not to tell anyone that includes friends and family! This kind of information has a way of getting out, especially when a friend of a friend happens to be interested. Protect yourself from being low-balled!

Most importantly, always be sure to abide by the State and Federal Fair Housing Laws. It is illegal to discriminate against any buyer on the basis of race, religion, sex, family status, national origin, etc. These are national laws and apply to any and all marketing efforts and selling practices. If in doubt, always consult with your real estate attorney. Any and all violations of Fair Housing Law carry stiff legal consequences.

WRITING THE SALES AGREEMENT

In order to secure a buyer, you must draft a sales agreement that acts as a receipt for a deposit and states the terms of the sale. To avoid potential future litigation, the terms of the sales agreement must be clearly laid out and meticulously completed. Any error could severely set back the entire transaction.

Due to the potential pitfalls involved in drafting a sales agreement, it may be wise to enlist the help of an attorney and or title company that specializes in real estate. This holds especially true if this is your first experience selling FSBO (For Sale By Owner). If you do decide to use an attorney, your best bet is to find someone prior to finding a buyer and work out an arrangement. Once you and the buyer have agreed to the negotiated terms, the attorney will draw up the sales agreement. The buyer is free to retain an attorney of his/her own to review the agreement. When both parties are satisfied, the agreement is signed.

Another advantage to hiring an attorney is the peace of mind it may provide for the buyer. Many buyers are wary of signing anything written by the seller or directly handing over a deposit check. Without the benefit of a formal agreement, the seller is free to spend the check as they want and the buyer is left with no legal recourse. The real estate attorney can act as a third party for the buyer. There is a greater sense of security and trust when legal counsel drafts an official agreement. Also, the buyer may opt to hand the deposit over to the attorney, who then acts as an escrow holder. Another option is to turn the money over to an independent escrow company.
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To facilitate the drafting of the sales agreement, it may be useful for the buyer and seller to write out an unofficial list or worksheet outlining the basic terms of the sale. This worksheet is not signed and is in no way binding. It simply serves as a negotiating tool and includes the sales price, amount of the deposit and mortgage, and terms.

You may want to consider putting an "Under Contract" rider on your "For Sale" sign. This provides an "understudy" of sorts in case the contract does not close. Basically, you will have a back-up to take the place of the current buyer if necessary. This is NOT the same as having two contracts since the "understudy" buyer understands that they will only be considered if the first contract falls through. Always consult with your attorney about the proper wording for a "back-up" contract.

DISCLOSURES

As a seller, you are legally bound to disclose any and all defects in your home prior to selling. Unlike years ago, the seller is now held accountable. Buyers can sue for damages and conceivably force the seller to reclaim the house. Though this is highly unlikely, it has been known to happen. To try and minimize the possibility of such lawsuits from taking place, many states now have mandatory disclosure laws. Sellers must make sure that the buyer is aware of any defects on the property, from water damage to structural problems and everything in between. Do not be afraid that these disclosures will scare away buyers. An interested buyer will accept some defects - after all, perfection is hard to find! In some cases, the buyer will use your disclosure to further negotiate the price. Moreover, the buyer will appreciate your honesty upfront rather than discovering problems after moving in.

As a seller, you are also held accountable for unknown defects that may cause the buyer problems in the future. Now, you may be asking yourself, "How do I know if I found all the defects in my home?" You must protect yourself by investigating any potential problems and taking the steps necessary to try and fix them. This can be accomplished simply by hiring a competent inspector to check the house thoroughly before the sale. Even an inspector may not find absolutely everything; however, this shows how much effort you put into your disclosure statement.

Note: Many buyers often have their own inspector search for defects. Therefore, you get your house inspected without having to pay a cent!

As mentioned before, your disclosure statement can serve as a negotiating tool. For example, if the buyer wants you to fix the faulty wiring that will cost you upwards of $2,000, you can offer to lower the price by $1,000. They can put the money towards fixing the wiring and you save the money and time involved in fixing the problem yourself - everyone is satisfied.

While walking prospective buyers through your home, you should disclose any problems that you are aware of. Furthermore, when this is finished, it is imperative that you and the buyer take the time to write out and SIGN a disclosure statement. Without this, you have no protection from a buyer who claims they were never made aware of defects that you know were previously disclosed. If no official disclosure statement exists in your state, have your attorney write one up. You should give the disclosure statement to the buyer as soon as the deal is made.

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MORTGAGE BASICS

Almost everyone needs financing to buy a house. It is the rare buyer (and the very lucky seller!) that is able to buy a house outright with cash. Chances are, whoever buys your house will need a mortgage and, though it may ultimately be the buyer's responsibility, they will look to you for guidance on financing options. Don't be frightened by this. You do not have to be a mortgage expert to learn how to qualify a buyer or explain the various loans that are available.

When you at last find a buyer and have agreed on price and terms, the next step is to find out whether they have good credit, earn adequate income, and have enough money in the bank to purchase your home. Remember that an unqualified buyer can cost you precious time and money. If it turns out they are unable to acquire financing and you proceed with the sale, you will have tied up your house for months and lost potential buyers. Therefore, if at all possible, you should try and pre-qualify the buyer prior to having your attorney draft the sales agreement.

Most buyers probably won't be too eager to share their financial and credit history with you. If it is negative, they may be embarrassed or fearful that it may disqualify them. Even if it is positive, they may feel that you might try and use this information as leverage in negotiations. Often, a buyer may simply feel it is none of your business. However, it is your job to tactfully obtain this information. Once you are fairly certain you have an interested buyer, the most effective approach would be to mention approximate payment amounts. For example, if your selling price were $300,000, the typical 10% down payment would come to $30,000. That leaves a remaining balance of $270,000. Depending on the current interest rates and mortgage length, you can give the buyer an estimated monthly figure. You can often gauge by a buyer's initial reaction to this information whether your figure seems acceptable to them.

To make this process easier we have included a buyer's pre-qualification form within this guide. You can have all potential buyers fill in the one page form and then submit the form to YourLoanHelper.com for processing, YourLoanHelper.com will then asses the buyer's ability to obtain financing.

As a seller, you are trusting that the buyer will be able to follow up on purchasing your home. Accordingly, it's essential that they share vital information with you. For you to take your home off the market, you must know that the buyer will qualify for the mortgage they need. There are two ways this can be accomplished.

The best option is to refer the buyer directly to a lender that may qualify them. Again you can just have them fill out the pre-qualification form and submit it to YourLoanHelper.com so that YourLoanHelper.com can get the buyer approved for a mortgage as quickly as possible. After you submit the form, if you want, you can give the potential buyer a suitable time frame to bring you a preliminary loan approval letter. Although this may seem to be the easier option, keep in mind that during this time frame, your house will be off the market. It is also more expensive since you will need to work with your attorney in drafting a sales agreement. If it turns out the buyer doesn't qualify, you will have spent a considerable amount and still have not sold your home.

Another option is to qualify the buyer on your own. As previously discussed, the pitfall here is that buyers may be reluctant to share their financial history with you. Again, remember to be diplomatic in your questioning. You will need to know the buyer's monthly gross income, their various monthly debt payments (i.e. car payments, credit cards, loans, etc.), credit history, and down payment source.
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In order to acquire a mortgage for 80% of the sale price (subtracting the 20% down payment amount), the total of the buyer's monthly mortgage payment cannot exceed a third of their monthly income. For example, if the buyer earns a monthly gross income of $4,500, their monthly payment must be less than or equal to $1,500 (one third of $4,500). Also taken into consideration are your total monthly payments on long-term debt. Using the above example, the buyer needed to be earning $4,500 to qualify. Yet, if they carry a total of $1,000 in various monthly payments, then in reality they need to make $5,500 each month to qualify for the mortgage. For those buyers who do not want to itemize their monthly expenses for you, ask for a grand total. They are much more likely to share this information with you and it is all you need to figure out this simple calculation.

One obstacle you may encounter is a buyer with a foreclosure and bankruptcy history. This does not automatically disqualify them from obtaining a mortgage. Often, there may be valid reasons for this. However, if the buyer cannot provide a viable explanation, there may be cause for concern as there is a good chance the buyer will not qualify for the mortgage. Other complications are delinquent loan payments and credit problems. Again, be sure to find out the causes for the delinquency. There are valid reasons for late payment such as acute illness. If the buyer's credit history has been clean for the past few years, it's not likely that they will be turned down for the mortgage.

As far as a down payment is concerned, always inquire as to where the money is coming from. Ideally, it should be sitting in the buyer's bank account or personal CD. Other options include gifts from friends or relatives. If this is the case, the money should be transferred to the buyer's account six months prior to buying a home, since the lender will usually request bank records that far back. What you do NOT want is borrowed money of any sort to be used as the down payment.

After the down payment is accounted for, the next step is to explore various financing options.

Generally, the two major options are cash-to-loan and seller-assisted financing. Cash-to-loan simply means that a buyer takes out a mortgage from a large bank, credit union, mortgage broker, or small savings and loan institution for a portion of the sales price. This is typically 80-90% of the total cost. For a buyer, this is usually ideal since they get all cash for their home (the cash down payment from the buyer as well as the lump sum of the mortgage from the lender).

One important consideration with cash-to-loan financing is the LTV, or loan-to-value ratio. Basically, what this means is the ratio between how much you're putting down and the loan amount. For example, on a $200,000 home, the typical LTV is 80% of the price, or $160,000. The important thing to note is that the lower the LTV, the easier it will be all around to secure financing for your home. A buyer who is capable of making a down payment of 30% or $60,000 on that same $200,000 home will have a LTV of only 70%, thus leaving them in a better negotiating position than the buyer who has the typical 80% LTV. All else being equal, always opt for the buyer with the lowest LTV. It will make your life a lot easier!

Seller-assisted financing is just as it sounds - since very few buyers have the cash to make the requisite 20% down payment, you as the seller may need to assist them with the down payment. As the seller, you hold the deed and receive payments from the buyer. In case of default, you reserve the right to foreclose on the home. Although you incur the risk of irregular payments and default on the loan, there are also many advantages. Seller-assisted financing helps you to expand your buying pool as well as potentially wield more negotiating power and expedite the sale of your home.

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TAX PLANNING

Once you have sold your home, a whole new set of rules apply when it comes to paying the taxes. Assuming you meet the criteria, you can exclude a large portion of your profit from taxes if the home is your principal residence. If you are eligible, you can pocket the money without paying taxes on it. No, this is not a joke! Of course, you need to qualify to receive this tax break.

Please note that tax laws consistently change and you should always consult a tax professional.

According to the Taxpayers Relief Act of 1997, you do not have to pay taxes up to $250,000 per person (or $500,000 for a married couple filing jointly) on the sale of a primary residence. For example, assume your capital gain on the sale of your home is $300,000. As a single person, the first $250,000 profit is tax exempt. However, you will need to pay taxes on the remaining $50,000. A married couple would be exempt from paying taxes on the entire profit since their net is lower than $500,000. In order for this rule to apply, you must have lived in your primary residence for at least two years. However, there is no limit to the number of times you may claim this exclusion when selling your home. Furthermore, you are not required to invest this money into another home. You can spend it as you see it fit - on anything from a Caribbean cruise to an extravagant shopping spree!

Remember that this exclusion is contingent upon whether or not the home you are selling qualifies as your principal residence. To qualify, the residence must be where you spend the majority of your time. In the case of property that you rent, only where you actually reside is considered your principal residence. The portion of the home that you rent is considered investment property and is therefore taxable.

It is important to note that this exclusion also applies only to your capital gain. This may vary depending on factors such as home improvements and/or property appreciation. For example, any upgrades made on the house are subtracted from your capital gain, while property value appreciation will be added. Your best bet is to take advantage of the services of a CPA to accurately calculate your precise capital gain.

Time frame is also essential. If you haven't lived in your home for at least two years but your capital gain will be minimal, it may be fine to sell without waiting. On the other hand, if your capital gain will be substantial, you're probably better off waiting until the two years have expired and you can take advantage of the tax break.

Always remember to look into your local and state tax laws. Although some states have reworked their tax codes to match the Federal Law, some maintain laws that vary. It is possible that you may still be responsible for taxes at the state or local level. Once again, consult your accountant to double check.
Page 48 | PART THREE: GENERAL ADVICE FOR SELLERS
CLOSING - AT LAST!

Once you have found a buyer and signed a sales agreement, it may take anywhere from 30 to 90 days to officially "close" the deal. By this, we mean the actual point at which you transfer the title of the home over to the new buyer and you receive the selling price for your home. A number of issues need to be resolved before this final step can take place.

The following is a condensed list of the steps that must take place before closing:

1. The buyer must apply for a mortgage through a lender.
2. If approved, the buyer must provide you with a preliminary loan approval letter.
3. You and the buyer must then sign the sales agreement drafted and reviewed by your attorneys.
4. An escrow account must be opened to retain the buyer's deposit.
5. The house must undergo a full inspection.
6. Any and all work that is deemed necessary must be performed.
7. You must clear any title issues.
8. The buyer must receive final approval on their mortgage application.
9. The buyer and seller do a final walk-through of the property to make sure that everything is in order.
10. All the final papers and contracts are signed, including the loan documents and the title to the house
.

As you can see, there are a number of things that can go wrong, delaying or even halting the closing process entirely. If the buyer is not approved for the loan, the transaction is void. Likewise, if there is a title problem, the entire process must be put on hold until the issue is resolved. The important thing is to be meticulous in completing each step of the deal. Otherwise, that "small" issue with the title is likely to cause big problems down the line.

Clearly, the most critical factor to the sale is the mortgage loan. Be sure that the buyer applies for the loan as soon as they make the decision to purchase your home. Although you cannot force the buyer to expedite this process, you can include a clause in the sales agreement that requires the buyer to provide you with a preliminary approval form. A number of exceptions may pop up at this point, disqualifying the buyer, such as considerable child-support payments or bankruptcy history in another state. It is better to find out now. If you have not received this letter within your designated time frame (which you will specify within the contract), it may be wise to return the buyer's deposit and look elsewhere. Of course, this preliminary loan approval is not a guarantee that the buyer will qualify for the mortgage. It is simply an educated guess on the part of the loan officer. Still, it is the best you have to go by at this point.

After you have received the preliminary loan approval from your buyer, the next step involves "opening escrow." This simply means opening an escrow account (or holding account) to keep the buyer's deposit. As a buyer, you take your signed sales agreement to the escrow officer and they will issue you an escrow number. At this point, the escrow company acts as an independent third party between the buyer and the seller, performing a number of important functions. They begin a title search to ensure you are truly the owner of the property for sale. This ensures that you are in a position to give the buyer clear title to purchase your home. The escrow company also draws up all the necessary documents, with the exception of the loan documents. All these steps can take a considerable amount of time, so it is advised that you open escrow as soon as possible after signing the sales agreement.
Page 49 | PART THREE: GENERAL ADVICE FOR SELLERS
Next, as the seller, you are required to obtain a preliminary title report. This document will reveal any potential problems you might have on your title. While you may be certain your title is spotless, you could be in for a surprise. Sometimes a home can have an outstanding lien on it that the owner is completely unaware of. Other issues include an encumbrance or easement that could prevent you from receiving a clear title. Whatever the problem, it is your responsibility as the seller to resolve it and move forward with the sale.

Your next task is to have the house fully inspected. These inspections can range from a termite inspection to a roofing inspection, in addition to a general house inspection. After passing, you are ready to take the final steps towards closing. However, if the inspections turn up a problem with the house, you will have to take steps to repair the problem before continuing. However, it is probably in your best interest to wait until your buyer receives final approval on their loan to initiate any repairs.

Once the buyer has received final loan approval (usually three to four weeks after they file the initial application), you should authorize any repair work that was deemed necessary. The reason for waiting is that once the work is ordered, you are responsible for paying for it -- whether or not the sale goes through.

After all the above steps have been completed, the lender should be prepared to fund the loan. Usually, the buyer will take a final walk through the home to ensure that the condition has not changed for the worse. Then if all goes well, the last and final step involves going to the escrow officer and signing all the loan documents and deposit the cash down payment and closing costs. You must now sign the deed of the house over to the new owner.

Congratulations! You've just sold your own home

Page 50 | PART THREE: GENERAL ADVICE FOR SELLERS
PART FOUR:
Sample Forms
SALES CONTRACT
ESCROW AGREEMENT
NET TO SELLER WORKSHEET
BUYER PRE-QUALIFICATION FORM
SELLER'S PROPERTY DISCLOSURE STATEMENT
HOMEOWNER'S ASSOCIATION DISCLOSURE STATEMENT
Page 51 | PART THREE: SAMPLE FORMS
SALES CONTRACT

WARNING:
CONSULT WITH A QUALIFIED ATTORNEY BEFORE SIGNING ANY CONTRACT. THIS FORM DOES NOT ADDRESS MANY KEY ISSUES
THAT MAY BE RELEVANT TO YOUR SITUATION. SEVERAL STATES HAVE REQUIRED CONTRACT PROVISIONS OR FORMS OF RESIDENTIAL
REAL ESTATE CONTRACTS. THIS FORM IS NOT INTENDED TO REPLACE SUCH CONTRACTS.

DATE _______ / _______ / ___________

1. PURCHASE AND SALE.
The undersigned buyer (hereinafter referred as "Buyer") agrees to buy and the undersigned seller (hereinafter referred to as "Seller") agrees to sell the property described below under the terms and conditions hereinafter set forth, which shall include the principles for real estate transactions set forth within this contract.

LOCATION OF PROPERTY:
ADDRESS ___________________________________________________________ CITY__________________________________ STATE _________
TAX MAP DESIGNATION ___________________________________________________________

TOGETHER WITH Seller's ownership rights, if any, to land lying in the bed of any street opened or proposed adjacent to the Property or to land up to the high water mark regarding land adjacent to bodies of water, including the rights of Seller to any unpaid condemnation or similar award and Seller will deliver to Buyer any documentation reasonably required to evidence the foregoing.

Included as part of the sale are all fixtures and articles of personal property now attached or appurtenant to the Property, unless excluded below, but not including any articles of personal property or household furnishings which are not affixed or appurtenant to the Property, unless included below.

FIXTURES EXCLUDED FROM THE SALE: _____________________________________________________________________________________________PERSONAL PROPERTY OR HOUSEHOLD FURNISHINGS INCLUDED IN THE SALE: _________________________________________________________________________________________________________________________________________________________________________________________

2. PURCHASE PRICE AND PAYMENT METHOD.
The final purchase price to be paid by the Buyer at closing is:
______________________________________________________________________________________Dollars, $ ______________________________.

This agreement is made conditioned upon Buyer's ability to secure a mortgage loan in the principal amount of
$_______________________________________________________________________ An earnest money deposit of $ _____________________ is to be held in escrow by ____________________________________. Buyer warrants that at closing Buyer will have the remaining sum of $ ________________________, to complete the purchase.

If Buyer is assuming an existing mortgage or Seller is providing Buyer with a purchase money mortgage add appropriate language. All money payable under this Agreement at Closing (as hereinafter provided) in excess of $1,000.00 shall be in certified funds or official bank check.
PLEASE WRITE OUT THE AMOUNT HERE
SALES CONTRACT FORM | Page 1
3. PRORATIONS . Buyer and Seller agree to prorate taxes, insurance, interest, rents, and other expenses and revenue of said property as of the closing date.
4. RESTRICTIONS, EASEMENTS, LIMITATIONS. The Buyer shall take title subject to: (1) Zoning restrictions and similar requirements imposed by government authority provided the same are not violated by existing structures, (2) Public utility easements of record, provided the same are not interfered with by existing structures, (3) Consents for the erection of any structures on, under or above any streets on which the Property abuts; (4) Encroachments of stoops, steps, trim, cornices and the like upon any street to which the Property abuts (5) Restrictions and limitations appearing on the official records of any subdivision of which the Property is a part, (4) Taxes that are a lien upon the Property but are not yet due and payable and (5) Other matters set forth in a Rider attached to this Agreement and signed by the parties.

5. DEFAULT BY BUYER. Default by Buyer. Exclusive of the Buyer being unable to secure financing, any default on the part of the Buyer entitles the Seller to retain all earnest monies tendered except as otherwise provided in this Agreement or a Rider signed by the parties.

6. DEFAULT BY SELLER. Seller shall comply with all notices of violations of law or regulations or governmental requirements delivered to Seller or made part of the public record in accordance with law on or before the Closing. If required, Seller will furnish Buyer with any authorizations necessary to search the public records. Seller represents and warrants to Buyer that (1) the Property abuts or has access to a public street; (2) Seller is the sole owner of the Property and has the full right and authority to transfer title in accordance with this Agreement, (3) Seller is not a "foreign person" as defined in the Internal Revenue Code requiring withholding of proceeds of the sale of real property, (4) the Property is not affected by any abatement or exemption from taxes which expires upon the transfer of title or a fixed number of years less than ten, (5) the Seller has not been known by any other name for the past ten years except:

All of Seller's representations, warranties and covenants set forth in this Agreement shall be as of the date of this Agreement and as of Closing; provided, however, except as set forth in this Agreement or in a Rider signed by the parties, none of such representations, warranties or covenants shall survive the Closing. If the Seller fails to perform under this contract, the deposit paid by the Buyer, at the option of the Buyer, shall be returned to the Buyer on demand.

7. GENERAL INSPECTION. The Buyer or his agent may inspect the Property within ___days following this Agreement. To the extent that such inspection uncovers defects in the structures, appliances, utility systems, fixtures or machinery included in the sale or evidence of live termite or other wood-boring insect infestation on said property, or substantial damage from prior infestation, Buyer shall notify Seller of such alleged defects. Seller shall pay for necessary repairs up to $____. If the cost for such repairs exceeds $ _____, the Buyer may request Seller to pay such excess, elect to pay such excess or cancel the Agreement if Seller refuses to pay such excess. If Buyer elects not to pay, Seller may pay the excess or cancel the Agreement.

8. PRE-CLOSING INSPECTION. Within 72 hours prior to closing, Buyer shall be entitled, upon reasonable notice to Seller, to inspect the premises to determine that structures, appliances, utility systems, fixtures or machinery included in the sale are free from material defects or in working order. To the extent that such inspection uncovers material defects in the structures, or that the appliances, utility systems, fixtures or machinery included in the sale are not in working order, Buyer shall notify Seller of such alleged defects. To the extent that Seller does not disagree with such notice, Buyer may deduct up to $ ____ from the amounts due at Closing to pay for necessary repairs. If the cost for such repairs exceeds $ _____ or Seller disagrees with such notice, the Buyer may request Seller to pay such excess, elect to pay such excess or, if Buyer and Seller cannot agree, cancel the Agreement. In all other respects Buyer acknowledges and agrees that Buyer is aware of the condition of the Property and is taking such Property at Closing "as is".
SALES CONTRACT FORM | Page 2
9. INSURABLE TITLE. Seller shall give and Purchaser shall accept such title as or another reputable title company licensed to do business in shall be willing to insure in accordance with its standard form of Title Insurance Policy, which has been approved by the State of ___________________ .

10. CONDITIONS TO CLOSING. This contract and Buyer's obligations to close the purchase of the Property are subject to the fulfillment of the following conditions: (1) the representations, warranties and covenants of Seller shall be true and fulfilled as of Closing, (2) Seller shall deliver a valid and subsisting Certificate of Occupancy or similar certificate of compliance or evidence that none is required by law for the structures or other improvements made to the Property, (3) payments required to any state, county or municipal authority by reason of the transfer of title to real property e.g. state documentary stamps required on the instrument of conveyance and the cost of recording any instruments, other than the Buyer's mortgage, shall be paid by the Seller, (4) Affidavits or certifications required by federal, state, county or municipal law shall be delivered to the appropriate party and (5) the Property shall be delivered vacant and broom clean, except as otherwise agreed upon by the parties.

11. MECHANICS LIENS. Seller shall provide Buyer with an affidavit that there have been no known improvements to the property for 90 days preceding the date of closing, and no claims of liens or potential lienors known to Seller. If the property has been improved within that time period, Seller shall provide releases or waivers of all mechanics liens as executed by general contractors, subcontractors, suppliers, and material providers.

12. USE OF PURCHASE PRICE TO REMOVE ENCUMBRANCES. If at Closing there are liens or encumbrances that Seller is obligated to pay or discharge, Seller may use a portion of the Purchase Price to pay or discharge them, provided Seller shall deliver to Buyer instruments in recordable form sufficient to satisfy such liens or encumbrances and shall pay the cost of recording the same. Seller shall provide reasonable notice to Buyer to provide separate checks at Closing to accomplish the foregoing. If at the date fixed for Closing Seller is unable to transfer title to Buyer that or another title company licensed to do business in the state will insure or Seller shall have otherwise breached this Agreement, Seller shall be entitled to one adjournment not exceeding _____days to remedy any such title defects or breaches of contract (provided such extension shall not exceed Buyer's mortgage commitment or such new commitment shall not result in any loss to Buyer). If Seller is unable to cure such title defects or breaches of contract by such adjourned date and Buyer is unwilling to waive the same, then either party may cancel this Agreement. Thereupon, the deposit shall be returned to Buyer and Seller shall refund to Buyer the net cost of title examination (without the issuance of a policy) as incurred by Buyer. Anything in this Agreement to the contrary notwithstanding, Buyer may waive any title defect or breach of contract and demand specific performance upon the payment of the Purchase Price without abatement.

13. RISK OF LOSS. If the structures or improvements are damaged by fire or casualty or if the Property is condemned by an agency of government before delivery of the deed, this contract shall become null and void unless Seller and Buyer can agree on a repair alternative or on the application of the proceeds of such condemnation. At Buyer's option, Seller will assign all its rights under applicable policies of insurance or condemnation awards.

14. MAINTENANCE. Between the date of the contract and the closing date, the property, including the structures, improvements, lawn, shrubbery, and pool, if any, shall be maintained by the Seller in the condition as it existed as of the date of the contract, ordinary wear and tear excepted.

15. PLACE OF CLOSING. Closing shall be held at the office of the Seller's attorney or as otherwise agreed upon.

16. CLOSING DATE. This contract shall be closed and deed and possession shall be delivered on or before _______ day of ______________________, ___________ (year), unless extended by other provisions of this contract.

17. NOTICE. Any notice or other communication in connection with this Agreement shall be in writing sent by the parties or their respective attorneys to the respective parties at the address first set forth above or a substitute address furnished in writing by such party by certified mail, return receipt requested, or recognized national courier
SALES CONTRACT FORM | Page 3
18. DOCUMENTS FOR CLOSING. The Seller's attorney shall prepare the deed, note, mortgage, (if applicable) Seller's affidavit, any corrective instruments required for perfecting title, or as otherwise agreed and submit copies of same to Buyer or his attorney at least two days prior to scheduled closing date.

19. TYPEWRITTEN OR HANDWRITTEN PROVISIONS.
Typewritten or handwritten provisions inserted in or added to this form shall control all printed provisions in conflict therewith when properly signed.

20. OTHER AGREEMENTS. No agreements or representations, unless incorporated in this contract, shall be binding upon any of the parties.

21. LEAD PAINT DISCLOSURE. "Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage." Lead poisoning also poses a particular risk to pregnant women. The Seller is required to provide the Buyer with any information on lead-based paint hazards from risk assessments or inspection in the Seller's possession and notify the Buyer of any known lead-based paint hazards. A risk assessment or inspection is recommended prior to purchase.

SPECIAL CLAUSES (Riders)
________________________________________________________________________________________________________________________________________________________________________________________________

SIGNATURES

BUYER ___________________________________________ DATE ______ / _________ / ________
BUYER ___________________________________________ DATE ______ / _________ / ________

SELLER ___________________________________________ DATE ______ / _________ / ________
SELLER ___________________________________________ DATE ______ / _________ / ________

WITNESSED BY:
___________________________________________________ DATE ______ / _________ / ________
SALES CONTRACT FORM | Page 3
ESCROW AGREEMENT

Agreement between:
____________________________________________________________, (Seller),
____________________________________________________________, (Buyer), and
____________________________________________________________, (Escrow Agent)

Simultaneously with the making of this agreement, Buyer and Seller have entered into a Contract by which Seller will sell to Buyer the following property:
ADDRESS _____________________________________________________________________________
CITY _________________________________________ STATE _______ ZIP ______________________

The closing will take place at such time and place as Buyer and Seller may jointly designate in Writing. Pursuant to the Contract, Buyer must deposit:

$ __________________________ as down payment to be held in escrow by Escrow Agent, OR
$ __________________________ as earnest money deposit to be held in escrow by Escrow Agent.

The $ _______________________ down payment or earnest money referred to above has been paid by Buyer to Escrow Agent. Escrow Agent acknowledges receipt of $ _________________ From Buyer by check, subject to collection.

If the closing takes place under the Contract, Escrow Agent at the time of closing will pay the amount deposited with Agent to Seller in accordance with Seller's written instructions.

If the closing takes place under the Contract, Escrow Agent at the time of closing will pay the amount deposited with Escrow Agent to Seller in accordance with Seller's written instructions.

If no closing takes place under the Contract, Escrow Agent shall continue to hold the amount deposited until receipt of written authorization for its disposition signed by both Buyer and Seller or Escrow Agent may, on notice to the parties, deposit the Escrow Fund with a court of competent jurisdiction in an action for interpleader, the costs of which action shall be borne by the party ultimately determined by a court of competent jurisdiction not to have prevailed in such interpleader action, and upon such deposit having been made, all liability and responsibility of Escrow Agent shall terminate. Otherwise, if there is any dispute as to whom Escrow Agent is to deliver the amount deposited, Escrow Agent may retain the sum until all the parties' rights are finally determined in an appropriate action or proceeding or until a court orders Escrow Agent to deposit the down payment or earnest money.

Escrow Agent assumes no liability except that of a stakeholder. Escrow Agent's duties are limited to those specifically set out in this agreement. Escrow Agent shall incur no liability to anyone except for willful misconduct or gross negligence so long as the Escrow Agent acts in good faith. Seller and Buyer release Escrow Agent from any act committed or omitted in good faith in the performance of Escrow Agent's duties.

Special Provisions: ________________________________________________________________________________

SIGNATURES

SELLER ________________________________ WITNESS __________________________________ DATE _____ /_____ / ______
BUYER _________________________________ WITNESS ____________________________________ DATE _____ /_____ / ______
ESCROW AGENT _____________________________________________________________________ DATE _____ /_____ / ______
ESCROW AGREEMENT
NET TO SELLER WORKSHOP

THIS FORM CAN BE USED TO ESTIMATE THE NET PROCEEDS FROM THE SALE OF YOUR HOME.
To estimate cash proceeds from the sale, begin with the purchase price and subtract all amounts
you will have to pay at or prior to closing.

Your Estimated Sale Price: _________________ (A)

Known Deductions/Costs. Your mortgage holder can tell you the amount
remaining on your mortgage plus interest and any prepayment penalty.

*Amount to pay off present mortgage
(including interest through the Closing) __________________
* Prepayment Penalty on Mortgage __________________
*Unpaid property taxes (if any) __________________
*Unpaid property taxes (if any) __________________
*Additional Costs __________________ __________________ (B)

Estimated Closing Costs.
The following fees/expenses are typically paid by the Seller at Closing.
*Attorney Fees __________________
*Transfer Taxes __________________
* Real Estate Commissions (if any) ___________________
*Repairs for Termite or other damage ___________________
*Recording fees ___________________
*Other Closing Fees ___________________ ___________________ (C)

Net to Seller: A - (B+C+D) = E

E = Your Net Cash Proceeds $__________________
NET TO SELLER WORKSHOP
BUYER PRE-QUALIFICATION FORM

ABOUT YOUR LOAN PROGRAM
Loan Program: 30 Year Fixed 25 year Fixed 20 Year Fixed 15 Year Fixed 10 Year Fixed
5 Year Balloon 7 Year Balloon FHA 30 Year VA 30 Year Fixed

Loan Purpose: Purchase Construct Home
Refinance (No cash) Refinance (Cash out)
Refinance (Home improvement) Refinance (Debt consolidation)
Refinance (Change Loan Type) Construction to premenent
Zero Down Payment Other Purpose

Loan Amount: ________________ Property Value: ________________
Estimated Timeframe: < 30 days 30-60 days 60-90 days > 120 days Not sure

PROPERTY INFORMATION
Property Type: ______________________
Property Address: _______________________________________________
City: ______________________ State: _____ Zip Code: ________________

BORROWER INFORMATION

First Name: ________________ M.I.,: ___________ Last Name: ______________
Social Security Number: ________________
Date of Birth: Month: ______ Day: ______ Year: ______
Work Phone: ________________ Best Time to Call: ________________
Home Phone: ________________ Best Time to Call: ________________
Email Address: ____________________

EMPLOYMENT INFORMATION
Self Employed: No Yes
Years employed: _____
Annual income: ____________

You can fax this completed Pre-Qualification Form to: 1-800-620-8541
INCOME AND EXPENSE INFORMATION
Monthly Expenses ($): _____________
Credit History: Excellent
Good
Fair
Poor
BUYER PRE-QUALIFICATION FORM
SELLER'S PROPERTY DISCLOSURE STATEMENT

This disclosure statement refers to the property located at:
ADDRESS ________________________________________________________________________________________
CITY ___________________________________________ STATE ______________ ZIP ________________________

NOTICE TO BUYER AND SELLER: This disclosure statement is designed to assist Seller in disclosing to a buyer all known materials or adverse facts relating to the physical condition of the property that are not readily observable. All questions must be answered completely. If answers are affirmative, please provide detailed explanations on the "Additional Explanations" section (page 3).
YES NO DON'T KNOW

1. Does seller currently occupy property? ____ ____ ____

2. If not, when did seller last occupy property? ________

3. Is any part of the property leased? ____ ____ ____

4. Does anyone claim an easement on or a right
to use all or some of the property? ____ ____ ____

5. Does property rest on a landfill? ____ ____ ____

6. Is the property in a designated flood plain? ____ ____ ____

7. Is the property in a designated fire danger zone? ____ ____ ____

8. Is the property in a designated earthquake
danger zone? ____ ____ ____

9. Are you aware of any settling/earth movement? ____ ____ ____

10. Are you aware of any encroachments, boundary
line disputes, or unrecorded easements? ____ ____ ____

11. How old is the structure? ___________________

12. Are you aware of any problems, past or present,
with roof, gutters, or downspouts? ____ ____ ____

13. Are you aware of any past or present damage
caused by infiltrating pests, termites, dry rot,
or other wood-boring insects? ____ ____ ____

14. Is your property currently under warranty
by a licensed pest control company? ____ ____ ____

15. Are you aware of any past or present movement
or other structural problems with floors, walls,
or foundations? ____ ____ ____

16. Has there been fire, wind, or flood damage
that required repair? ____ ____ ____

17. Has there ever been water leakage or dampness
within basement or crawl space? ____ ____ ____
SELLER'S PROPERTY DISCLOSURE STATEMENT | Page 1

18. Have there been any additions, structural
changes, or alterations to the property? ____ ____ ____

19. Was work done with the necessary permits and
approvals in compliance with building codes
and zoning regulations? ____ ____ ____

20. Is drinking water source public or private? ________________

21. Is sewer system public or private? ________________

22. Are you aware of any past or present leaks,
backups, etc. relating to water and/or sewer? ________________

23. Is there polybutylene plumbing (other than the
primary service line) on the property? ____ ____ ____

24. Are you aware of any toxic substances on the
property? ____ ____ ____

25. Has the property been tested for radon? ________________

26. Are there or have there ever been
fuel storage tanks below ground on the property? ____ ____ ____

27. Is property subject to covenants and restrictions? ____ ____ ____

28. Is there a mandatory association fee? ____ ____ ____

29. If so, how much monthly/yearly? $_______ / ________.

30. Is there an initiation fee? ____ ____ ____

31. Are special assessments approved by the
association? ____ ____ ____
32. Has the property ever been the subject of litigation? ____ ____ ____

33. Do you know of any violations of local,
state, or federal laws, codes, or regulations
with respect to the property? ____ ____ ____

34. Are any equipment/appliances/systems included
in sale of property in need of repair or
replacement? ____ ____ ____

35. Does the property contain asbestos? ____ ____ ____

36. Does the property contain lead paint? ____ ____ ____

41. Additional explanations or disclosures (please attach additional sheets if necessary) :

_____________________________________________________________________________________________

_____________________________________________________________________________________________

_____________________________________________________________________________________________
SELLER'S PROPERTY DISCLOSURE STATEMENT | Page 2

The following checked items are currently on the property and will be included in the sale:

___ Burglar Alarms ___ Smoke Detectors ___ Fire Alarms ___ Central Air
___ Central Heating ___ Window A/C Unit ___ Dishwasher ___ Trash Compactor
___ Garbage Disposal ___ Oven ___ Microwave ___ TV Antenna
___ Satellite Dish ___ Intercom System ___ Pool ___ Washer/Dryer Hookups
___ Hot Tub/Jacuzzi ___ Washer ___ Dryer ___ Refrigerator
___ Pool Barrier ___ Safety Cover for Hot Tub

SELLER'S REPRESENTATION

Seller warrants that to the best of Seller's knowledge, the above information is complete and accurate as of the date signed by Seller. However, this disclosure statement is not a substitute for inspections and/or warranties.

SELLER ___________________________________________________ DATE __________________________
SELLER ___________________________________________________ DATE __________________________

BUYER'S RECEIPT AND ACKNOWLEDGEMENT
I acknowledge receipt of this Disclosure. I understand that except as stated in the Purchase and Sale Agreement with Seller, the property is being sold in its present condition only, without warranties of guarantees of any kind by Seller. No representations concerning the condition of the property are being relied upon by me except as disclosed herein or stated in the Purchase and Sale Agreement.
BUYER ___________________________________________________ DATE __________________________
BUYER ___________________________________________________ DATE __________________________

NOTICE: Many local law enforcement agencies maintain the locations of persons such as sex offenders who might be required to register their addresses. You may retain the right to contact local law enforcement authorities for information about the presence of these individuals in any neighborhood.
SELLER'S PROPERTY DISCLOSURE STATEMENT | Page 3
HOMEOWNER'S ASSOCIATION DISCLOSURE STATEMENT

1. This is a disclosure summary for __________________________________ (name of community).

2. As Purchaser of a property in this community, you will be obligated to be a member of a homeowner's association, pay the appropriate dues and/or assessments and subject to restrictive covenants governing the use and occupancy of properties in this community.

3. Failure to pay applicable dues/assessments could result in a lien on your property.

4. Check either (a) or (b) below:

(a) ________ As an obligation of membership in the homeowner's association, you are obligated to pay rent or land use fees for recreational or other commonly used facilities. The current obligation is $ ____________ per ____________.
(b) ____________ This community has NO requirement to pay rent or land use fees for recreational or other commonly used facilities.

5. The restrictive covenants (check only one) _________ can, _________ cannot, be amended without the approval of the association membership.

6. As a prospective Purchaser, you should refer to the covenants and association governing documents for a detailed description of the rules summarized here.

BUYER ___________________________________________ DATE ___________________________
BUYER ___________________________________________ DATE ___________________________

This disclosure must be furnished by the Seller.
HOMEOWNER'S ASSOCIATION DISCLOSURE STATEMENT