Five Ways to Profit from Every Meeting with a Seller.

You can make a profit from the deals you find, even when the deals aren’t a fit for your real estate business. Here are five tips to make sure you get paid for your time.

1. Sign up the deal!

This is the most obvious way to profit from every appointment you make. Seven Steps For Creating Successful Marketing.

2. Turn your “junk” into gold.

Take the people you meet who just are NOT a fit for you and refer them to people in your network who CAN profit by the referral. This builds value into your referral network.

For example: You meet with a seller who really would do better to refinance the house. You simply say, “I can see it’s not a fit for me to buy this house. Your best option really is for you to refinance the property.

Here’s the number of a great mortgage broker I know [give him the number], and if I remember, I’ll ask her to give you a call next week to see if she can help out.” Then pass the seller’s name and phone number on to your mortgage broker. Population Explosion Does Matter.

Over time this will encourage your mortgage broker contact to pass leads to you, such as buyers whose loan fell through. There is a motivated seller now!

3. Get information on local market conditions.

Use the meeting to get information for the resale market AND for the rental market. Find out:

  • What are rental and resale prices like?
  • How long are properties staying on the market?
  • What types of properties are MOST in demand and what types are LEAST in demand?
  • What is the PERCEIVED market conditions according to the sellers?

4. Learn from the appointment

This is the ultimate way to leverage yourself. What went well with the appointment? What will you do differently next time as a result of what you learned on this appointment? Make sure you take five minutes and debrief yourself IN WRITING!

5. Future Deals

Follow-up, follow-up, and follow-up with all of these sellers.

Five Tips for Successful Negotiating.

I’ve gotten so many comments from readers that I decided to compile the best 100 tips into a series of articles for CRE Online to publish over the next six months leading up to the Annual CRE Online Convention. I will be at the Convention for the third year in a row, and I truly hope you will too. It is a GREAT event!

Here are five tips for successful negotiating.

Tip one: Four ways of dealing with seller objections

There are four ways to handle objections. Here is the list in order of least desirable to MOST desirable:

  1. Flop! This means NOT dealing effectively with the objection. (Yes, I know that you are NOT going to choose this option intentionally.)
  2. Handle the objection. While it’s good to know how to reply to the objection, once the objection is raised it is still somewhere in the back of the seller’s mind.
  3. Melt the objection. This means letting the objection just disappear with time. Many objections are really just the other parties way of saying that they are not comfortable with the situation.
  4. Preempt the objection. This is the BEST way to handle an objection–keep it from ever surfacing to begin with.

Tip two: Handle, melt, or preempt sellers’ objections

Building on the theme of objections and how to deal with them in your real estate negotiations, here are some ways to handle, melt, or preempt objections with other people in your real estate negotiations.

Handling objections:

You are talking with a seller who wants to run the deal past his attorney.

Investor: “I’ve found that when a person tells me he needs to check with his attorney, he generally falls into one of two groups.

“Group one, those people who really want to move forward. In fact they’re signed up and on board with all the ideas and concepts, they just want to make sure they are being prudent and run it past their attorney for one last checkup.

“The other group are people who really don’t want to do the deal, it’s just that they are uncomfortable saying no. Before you go to the expense of spending $400 to $500 just to have your attorney review what we’ve agreed upon, did you just want to tell me that you fall into the second group?”

The seller protests.

Investor: “Really, it’s okay. I’d understand if you wanted to go back on what we’ve agreed to.”

Seller: “No, I just want to have my attorney look at it.”

Investor: “Well that makes good sense. I’m really glad that we have such a good fit, and I understand and encourage you to take what we put down on paper here to your attorney. If for any reason your attorney’s not happy, you can just fax me over a note saying you want to cancel the agreement. Mad Cow Disease Spread More Extensive than U.S. Officials Realize.

“When do you think you’ll be talking with your attorney?” [You pick a time and date the seller can cancel with you, and you with them, by faxing over a written cancellation.]

Melting objections

Many objections are really the other party’s way of saying that you are rushing things, and they aren’t quite comfortable with you yet. Often, just by tabling an objection and letting more time pass you can literally MELT away the objection.

You are negotiating with sellers on a “subject to” deal and they want to know how they can count on you to make the payment.

Sellers: “How do we know you’ll actually make our payments?”

Investor: “I understand that you need to feel comfortable that your payments will get made every month. If I end up wanting to buy the property, that’s even more important for me since I would lose a lot of money if they aren’t made. How To Choose A Web Design Company?

“But I think we may be getting ahead of ourselves here, I’m still not sure if I even want to buy the property. Why don’t we leave that aside for a moment, and then we’ll come back to it later after we’ve both decided that we can even find a fit here, which we may not be able to do.”

Tip three: You need friction in your negotiations

So you want every negation to go so smooth it’s like gliding on ice? Actually, that may just be the most dangerous thing to happen to any of your deals. Shocking as it may seem you NEED friction in your negotiations with sellers to make a deal stick.

Friction can equal TRACTION! No give and tack, no awkward silences, no negotiating fun, probably no deal that lasts.

If rapport is important to create a connection with a seller to sign up the deal, then give and take and “friction” is what keeps the deal closed. Imagine rapport as being the power that opens the lid to a jar. Friction is what keeps the jar closed once you finish the deal.

You NEED the other side to struggle and work for the deal in order to have them feel fulfilled from the deal. This is one way you let them build value into the final agreement–by having them fully vested in the both the process and outcome.

I hope this gives you something to think about when you’re in your next negotiation.

Tip four: Build momentum

When negotiating with another party, remember that Newton’s Second Law applies–a body in motion tends to stay in motion, a body at rest tends to stay at rest.

What does this high school physics have to do with making money? The same principal applies to negotiation. If you can get the other party headed in the direction you want, you are much more likely to keep them going that way.

The way that you APPLY this theory is by getting agreement on the big picture first, and only then by narrowing the conversation and dealing with the tougher issues.

For example: “I don’t know if we could do this Mr. Seller, but what if we were able to get you a chunk of money up front, and then pay you the rest as monthly payments over time. Is that something we should even talk about, or probably not?”

See how BROAD that “what if” statement is. If the seller agrees you should talk more about it, then slowly start to narrow the specifics, slowly and incrementally. It’s like clamping down a vise one turn at a time.

Tip five: Learn to use selective hearing

Here are six ways your selective hearing will pay off:

  1. It gets the other party to repeat and reinforce both their commitment and their emotional attachment to something beneficial they said.
  2. It allows you to restate what they have just said–adding, deleting, or modifying subtly what they just said.
  3. It allows you to “miss” any personal remarks or attacks they make and to keep the negotiation as a game for you with no real emotional attachment to the outcome.
  4. It allows you to draw out and diffuse the other party’s negative emotions. (It’s really hard to keep the same emotional intensity the second and third time they say something.)
  5. It reminds you NOT to believe everything they say. It also makes it easy for you to TEST anything they say that you question the validity of.
  6. It allows you to hear any idea or offer you want as THEIR idea. This gives them full possession of the idea and credit for it.

Real Estate Foreclosures: Four Tips for Investing.

Tip one: Banks do not want to foreclose on real estate

I’ve seen a lot of investors miss out on huge profits because they just don’t understand how far banks will go NOT to take back a property. Banks don’t want to own real estate. Banks don’t want to have bad loans on their books. All they want is people to pay them on time and take care of the house.

When you understand this, you recognize how much power you have when negotiating with lenders to find creative solutions to help sellers solve their problems. The key is to COMMUNICATE with the lender about what is going on and what you need to make this work for their best interest, which is having the loan brought current.

Many times I’ll do a three-way call with the seller and the lender. I’ll coach the seller to introduce me to the lender as a, “friend who knows more about this real estate thing than I do and who is helping me to understand what exactly is going on and how I can make sure you get your money.”

Then I take over and find out the specific details and exact status of the loan. Many times I negotiate a payment plan, known as a forbearance agreement, with the lender right there on the phone. How to Easily Increase Your Affiliate Commissions in Two Days or Less?

One word of caution, don’t tell the lenders that you are buying the property because they might not like you buying the property without paying off or assuming the loan. If they ask any questions about who you are, which they almost never will, simply repeat that you are a friend of the sellers who is trying to help them out.

Tip two: Foreclosure tidbits investors don’t know

What happens if the lender doesn’t get all its money out of the foreclosure sale? Many homeowners think that once the bank foreclosure sale has happened, all their worries are over.

This may not be true. In many states the lender can get a “deficiency judgement” from the court which means the borrower (homeowner) owes the lender any money that the lender LOST from the whole process. How to Hypnotize People into Reading Your Sales Materials!

Does the lender make money in foreclosure sales?

No, they’re not allowed to make a profit. Any money made in excess of the amount owed the lender, including the foreclosure costs, will go to the borrower. The reality is that rarely will the borrower get anything for his or her equity in a foreclosure sale.

Lenders can get money for fees like:

  • Late penalties
  • Accrued interest
  • Attorney’s fees
  • Court costs
  • Filing fees
  • Title work fees

Tip three: Other ways property owners default

While we usually see property owners default on loans by not making the monthly payments, there are other things home owners do that can trigger the foreclosure process.

  • Homeowner fails to pay property taxes which creates a lien that jeopardizes the lender’s security
  • Homeowner fails to pay a Home Owner Association fee
  • Homeowner transfers title without getting the lender’s permission
  • Homeowner does something to the property that diminishes it’s value

All of these things COULD trigger the lender to foreclose on the property, but rarely will they be the cause of the bank foreclosure. By far the most common reason for a lender to foreclose is non-payment by the borrower.

Tip four: Don’t be afraid to knock on doors

One useful technique to find great deals is to literally knock on the doors of owners who are default.

Can we really mean just show up at their doorstep and knock on their door? Yes!

Let’s face it, out of the 50 other investors who have the Notice of Default or Lis Pendens information about the sellers in the early stages of foreclosure, 25 of them will pop a postcard or letter one time in the mail to them.

Five of them will go to the effort of tracking down the owners’ phone number and giving them a phone call. And only one or two will actually face their fear and go knock on the seller’s door.

Now this is time consuming and takes a bit of finesse to make it pay off for you. The biggest clue that it is worth the time for a personal visit is if you reasonably expect there to be either:

  1. A lot of equity in the house; or
  2. The property is in an area where you are very interested in acquiring long-term keepers.

If one or the other (ideally both) of these criteria is not met, then give the sellers a call on the phone or plug them into your mailing sequence but don’t waste your valuable time visiting them.

You might be thinking that the homeowners wouldn’t want you to come to their door. In many cases they really are in desperate need of help.

For example, a student of ours in Columbus, Ohio knocked on the door of a couple who were in the end stages of foreclosure. The sellers were a nice couple who had gotten caught up in an unfortunate financial situation.

Our student, Mike, agreed to make up the back payments and stop the foreclosure. Then Mike would fix up the house, take over the payments, and resell it. There was a large chunk of equity in the house so Mike agreed to give 10% of his net profit back to the sellers to make it even more of a win-win deal.

What to say when you knock on the sellers’ door

Here are two scripts of what to say when you’re knocking on their doors cold:

Script One: This one works well if the sellers are still in pre-foreclosure OR if you’re not quite ready to use the gutsier script below.

Knock, knock…[Step back off the porch, turn sideways, assume a passive, harmless posture to put them at ease.]

Owner: “Yes?”

Investor: “Hi, (looking as harmless and Bambi-like as you can manage) my name is Jim and I’m an investor who is looking to buy another house in this neighborhood. I was wondering if you knew of anyone in the area who might be at all open to selling their house if they got a fair offer on it?”

Owner: “Well, actually I might want to sell my house.”

Investor: “Oh, okay, but I’ve probably caught you right in the middle of something, huh?” Owner: “No, I was just making dinner. Now’s as good a time as any.” And away you go with them showing you the house and following the Instant Offer System.

Script Two:

Knock, knock… Owner: “Yes, can I help you?”

Investor: “Hi, my name is Jim [looking passive and harmless like a small puppy dog], and I’m an investor who helps out folks who have a house that’s in trouble. Is your house in trouble?”

Owner: “No, I don’t know what you’re talking about.” Investor: “Oh…[looking down at his clipboard and scratching his head] I’m a little confused here. It says here that the city thinks this house is behind in it’s payments. Heck, they even have it listed in the legal notice newspaper. But they probably got all that wrong, huh?”

Owner: “Can I see that paper?”

Investor: “Sure…” [showing the owner the clipboard that has a list of the owner’s house with the date that the Notice of Default was filed or even a copy of the legal notice publication with the seller’s property highlighted]

Owner: [a bit softer now] “Well I guess I must be a bit behind. I thought the bank would work with me longer before they did this.”

Investor: “Yeah, I know…banks sure can play real tough with little fish like us.

“You know though, a lot of times banks make mistakes when they send you all that paperwork that can make them have to start all over again from the beginning. I was visiting with another homeowner like yourself the other day when we spotted how the bank misspelled her name on the official notice. I helped her get another 60 days’ delay in the process to give her more time to find her best solution.

“If you’d like, I’d be happy to take a quick look over the paperwork they sent you to see if I can spot any mistakes they made. Would you like me to sit down for a second and see if I can spot anything in the paperwork?”

Owner: “Would you?”

And now you’re in the house and connecting with the owner.

I got an email from an investor who found a great deal by doing some research at the courthouse to find sellers in default. Next he went and knocked on the seller’s door. The seller’s wife answered the door, and the three of them sat and talked for and hour and a half.

Our student funded the deal by taking on a money partner, and the two of them will split the $50,000 profit 50/50. The best part was that he helped the sellers avoid foreclosure.

How to Protect Yourself in Lease Options?

When you are buying a house on a lease option, you must protect yourself from paying your rent payment to the seller, but him not paying the lender. The single best way to protect yourself is for you to pay your payment directly to the LENDER so that you are certain that the payments are kept current. Many sellers will be okay with this, although many sellers won’t.

Pay the lender directly

Whenever possible, this is how I handle my own lease option properties. Currently for about 30% of my houses I pay the lender directly. In many cases, I started off paying the seller directly, but after a little bit of time had passed, and I built up trust in the relationship, I ask the sellers if I can just send the payment to the lender directly.

Note: One very powerful way I build trust in the relationship is that I pay my sellers EARLY! I mail checks out on the 25th of each month. You would be amazed at how this small gesture impacts your relationship with the seller. Dos And Don’ts About Public Speaking.

Option two is for you to set up an escrow account you pay your monthly payments into, and for this escrow company to pay the lender each month (and notifying the seller and you that they have done so.)

I don’t use this method because it’s too complicated for my thinking. Variations on this theme are to send the seller a check made payable to the lender in the amount of the mortgage payment with a pre-addressed and stamped envelope to let the seller quickly forward the check on to the lender. Let Me Taste It First.

This allows the seller to feel confident that the payments are coming in, and lets you know that the payment has been made (by checking to see if the check has cleared.) Instead, if I can’t pay the lender directly, I simply pay the seller and let them pay the lender. How do I know the payments are being made?

I get the seller to sign two specific documents up front (in addition to the performance mortgage or deed of trust and all the other closing paperwork we escrow on the front end of any lease option deal.)

Document one: Authorization to Release Information

This gives me the ability to talk with the lender about any of their loans. I can even check every few months that the payments are current by calling into the lender’s touch tone phone hotline and entering in the seller’s loan number and social security number!

Document two: Authorization for Direct Payments

This gives me the right to pay any third party that is owed money by the seller that the seller hasn’t paid who could place a lien on the property, and to count this money as money paid by me to the seller under my lease option agreement. This includes mortgage payments, property tax payments, etc.

Here’s part of the agreement we use when buying on a lease option. See if you can find the powerful incentive we give the seller to make sure he does in fact make his payments with the money we send him:

“If the mortgage payments, property taxes, association fees, insurance premiums, or other property payments on __________________________ ever go into arrears, then ________________________________ (Landlord) hereby gives_______________________________ (Tenant) or his/her/its assigns or heirs the right to make payments directly to the lender or other party who is owed payment on Landlord’s behalf.

These payments sent directly to the lender or these other parties by the Tenant shall be considered as rent (or other money due) received by Landlord from Tenant for compliance of Residential Lease Purchase Agreement between these parties dated _________________.

To adequately compensate the Tenant for the additional risk incurred by making such payments of additional rents and costs, for every one dollar ($1) paid to lender or other parties to make up late payment(s) and/or fee, premiums, etc., three dollars ($3) shall be credited off the option price stated in the Residential Lease Purchase Agreement of December __________________.

Once these payments/fees are made current, Tenant may make his or her payments directly to the Lender and other parties for the remainder of the lease period state in the Residential Lease Purchase Agreement dated on ______________ between _____________________________ (Tenant) and ____________________________ (Landlord).

These continuing payments sent directly to the lender or these other parties shall be considered as rent (or other money due) received by Landlord for compliance of Residential Lease Purchase Agreement between these parties dated on ___________________, but shall not be credited with the three for one credit detailed above.”

10 Mistakes to Avoid When Analyzing a Deal.

Mistake #1

They take TOO Long. Good deals don’t wait around for indecisive people. Many people “think a deal to death.” One way to lower your anxiety level with a deal is to move forward provisionally (i.e. with a clause of some sort.)

Mistake #2

They trust the seller’s numbers. Even if there are only good intentions, most sellers just aren’t knowledgeable, and they are inherently a bit biased.

Mistake #3

They trust appraisals. An appraisal really isn’t meaningful, unless YOU hired the appraiser, and YOU gave the instructions, and YOU are handing the appraiser the check.

I can influence an appraiser to appraise a “$100,000” house for as little as $80,000 and as high as $120,000 (or more). That’s a 20% variance! That’s a lot to have in a marginal deal. So take any “appraisal” the seller hands you in the spirit that it was intended–as a MARKETING piece! How to Easily Increase Your Affiliate Commissions in Two Days or Less?

Mistake #4

They do their math in pencil. The next time you catch yourself thinking it’s okay to “fudge” your numbers a little to make the deal cash flow or the rehab payoff, BEWARE! Some investors have a tendency to “play” with the number a little to make them show a marginal deal is better than it really is.

Mistake #5

They overestimate market rents. This one happens all the time. The way you know what a house will rent for is to do a market rent survey. The rents listed in the paper may or may not be accurate. Poverty is not for the Poor.

Mistake #6

They overestimate “as is” value. So many investors forget that to turn a house in 60 days or less requires the price to be REAL–not pie in the sky. Be conservative in your estimate of value going into the deal. The worst case then is that you make MORE money than you thought you would!

Mistake #7

They get bogged down in process. Use a “Layered” Approach: I will be talking about this innovative way to analyze a deal FAST on Real Estate Radio.

Mistake #8

They worry about the house on the first layer analysis. On your first pass, you are only concerned about three things:

  1. Why is the seller selling (motivation level)?
  2. Is there any equity?
  3. Would the property cash flow if you held onto it?

Mistake #9

They underestimate the time it will take to flip, fix, fill, or sell. I’ve bought a lot of houses from investors who got stuck with holding costs too much for them to handle. Be careful here.

Mistake #10

They SKIP analysis until the deal falls apart on it’s own. Wishful thinking isn’t pretty.

Bonus Mistake #11

They hide behind analysis when they are AFRAID to act!

Non-Income Verification Loans.

The best interest rates are generally for conforming loans. A conforming loan is one that adheres to FNMA’s strict lending guidelines. Conforming loans generally require strict proof of income, assets and other debts. If, for example, you cannot prove income to a lender, whether it be you are self-employed for a short time or can’t otherwise prove income, there are non-income verification (NIV) loans. I Almost Flunked English But Went On To Make Millions of Dollars Writing Sales Copy.

NIV loans are not just for people that are self-employed. In fact, I often use NIV programs because the loan process is faster. Because I have many rental properties, documentation for the loan process becomes more and more cumbersome each time I apply. The NIV loan makes the process smoother and easier.

NIV loans (also known as “stated income”) require less documentation than traditional conforming loans. Lenders often advertise these programs as “no doc” loans, meaning the borrower does not have to come up with any documentation other than a credit report and a loan application. Unconventional Yet Effective Weight Loss Measures.

Some loans are called “no ratio” loans, in that you don’t have to justify your total debt (mortgages plus other continuing obligations, such as car loans and student loans) compared to your income.

Few, if any loans are true “no documentation” loans. Most of these offered programs are either “bait and switch” tactics; the lender says they don’t need documentation, but when the loan is being processed, the lender will ask for more and more documentation. Often times the lender will see some red flags that trigger the additional inquiry. Membership Sites- Your Money Making Venture Online.

The best defense to these tactics is a good offense; speak to your lender or mortgage broker up front. Identify documentation issues up front, educate the lender about your finances and be truthful. The more a lender suspects you are hiding something, the more documentation the lender will ask for.

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SIDE NOTE: Watch What You Say on NIV Loans. Just because you don’t have to provide documentation of your income to the lender, it doesn’t mean you have a license to lie. Most lenders will make you sign an authorization to release federal income tax returns. They may not check now, but if your loan goes into default, they may obtain copies of your tax returns. If the income you report on your loan application is way out of sync with your tax returns, you may be answering to loan fraud charges. ***************************************************************************************

Of course, there is a price to pay for doing an NIV loan; the interest rate is generally higher for NIV loans than for full documentation loans. The reason for the higher rate is obvious – the less documentation you provide, the more risky you are as a borrower. However, the more aggressive portfolio lenders, such as Countrywide and Washington Mutual, are now offering more competitive rates on NIV loans to borrowers with high credit FICO scores. Free Traffic Programs and How to Use Them.

Personal Property Trusts.

If you have been reading my articles, you are probably familiar with the concept of creating and using land trusts for privacy and protection of your real estate. However, what about your ownership of notes, mortgages, deeds of trust, leases and options that may appear on public record? What about cars, boats, mobile homes and other items that are registered and recorded in public places? Good news . . . there is a special trust just for that purpose!

The “Personal Property Trust” agreement is basically the same as a land trust in that the trustee is essentially a nominee title-holder acting at your direction. Like the land trust, the paper trust is a revocable, living trust. The same rules for tax reporting apply – there is no gift tax or income tax consequence of placing title to your paper in the paper trust. You still retain full control of your trustee, so no fiduciary tax return is required.

Like the land trust, the primary purpose of using the personal property trust is to keep your name off the public records. Let’s examine a few documents that are generally recorded and how we can use them with the personal property trust:

PURCHASE OPTION

A purchase option is often recorded in the public records to give notice to the world that you have first crack at the property. Again, using a trust as the named “optionee” will protect your anonymity. Furthermore, it may be an excellent tool for confusing potential creditors; you record options a gainst your property in favor of the name of a trust. To theoutside world, your property looks less valuable, because, after all, who would purchase a property subject to the recorded options (nobody but you has to know that your are the beneficiary of the trust and thus the “true” option holder!).

MORTGAGE OR DEED OF TRUST

One of the most practical uses of a trust is for holding a mortgage or deed of trust. A mortgage is an asset, like any other, that can be found by searching the public records. Using separate trusts for each mortgage will help you keep a low profile. As in the above example, you could record mortgages against your properties in the name of a trust to make your property appear encumbered. Make certain that there is at least some consideration for the mortgage or you may be found guilty of filing a fraudulent document. How To Brand Yourself On A Shoestring Budget?

AUTO OR MOBILE HOME

Essentially any asset that is recorded in public records can he held in the name of a nominee-type trust. Department of Motor Vehicle records are often public information and will let everyone know where you live. Holding your car or mobile title in the name of a trust with a post office box or business address will help protect your privacy.

LLC INTEREST

The names of the members of a limited liability company are public record for everyone to see. Consider forming your LLC using a personal property trust as the member (you being the beneficiary of the trust).

TRUST “STACKING”

You can combine a personal property trust with a land trust for greater privacy. Since the beneficial interest in a land trust is personal property, it can be held in the name of a personal property trust. Thus, you could form a self-settled personal property trust of which you would be the grantor and beneficiary. The personal property trust would then create a self-settled land trust of which it would be the grantor and beneficiary. This “stacking” of trusts might be appropriate in states which require the public disclosure of the grantor (HI, MS and AZ) or in situations which an uncooperative lender or title company insists on such disclosure in writing.

You can find information and forms for creating personal property trusts in William Bronchick’s Land Trust course

The Mortgage Elimination Scam.

You’ve seen the emails:

“Legally eliminate your mortgage”

Can this possibly be true? Well, I’ve read the claims and researched the law and here’s what I came up with.

The Claim

The claim is that you can legally eliminate your mortgage based on an accounting loophole that goes something like this…

“If the lender who funded your loan used borrowed money to fund your loan, then the loan is not valid. And, since the loan is not valid, the security (mortgage or deed of trust) is not valid either. All you do is simply march into court and ask a judge to void your mortgage lien, and you don’t have to pay it back.”

Now, without going into the legal issues, a common sense approach would tell you that the entire premise of this argument is patently absurd. Think about it… most lenders use borrowed money to fund loans, that’s the nature of the business.

So, if these “mortgage elimination” promoters are correct, then millions of mortgages would be void. The entire economy would collapse. This sounds vaguely familiar to the “tax protestor” scam where people claimed that they didn’t owe income tax because the government did not have the constitutional authority to tax them. More on that later…

The Law

The mortgage elimination promoters cite various court cases in support of their position. At first blush, it would seem there are dozens of court cases in which the judge actually did what they claimed, that is, declare a mortgage void because the lender used borrowed funds for the loan. But, since most laymen are not trained in the law, they take this stuff, hook, line and sinker.

I’ve read the decisions and they all have a common theme: they don’t support the mortgage elimination theory. In fact, most of the cases are only vaguely on point.

The “tax protestor” promoters did the same thing… take a quote from a judge’s decision out of context and cite the case as support for their position. In the end, the tax protestors all lost in court, paid large fines and went away with their tails between their legs. The government went after the promoters of the scam.

Similarly, the government is going after the promoters of the mortgage elimination scam. The Federal Reserve recently issued a warning, a copy of which can be found at the end of this article. The Office of the Comptroller of the Currency issued a similar warning last year.

The Minnesota Attorney General has also gone after a company that has allegedly charged consumers as much as $7,500 for this scheme.

The Cult of Stupidity

As I write this, undoubtedly a few “followers” of the theory will email me and argue that I don’t understand or that I’m part of the “establishment mentality” that keeps the little guy down. Of course, these are likely the same people who are collecting referral fees from the scammers that are charging thousands of dollars to consumers in exchange for a false promise to eliminate their mortgages. How to Easily Increase Your Affiliate Commissions in Two Days or Less?

On a philosophical level, I appreciate discussions about how the dollar really isn’t backed by gold, the government doesn’t have the right to tax Americans and the the like. But I wouldn’t tell a client to actually rely on any of these theories in a court of law. Nor would I charge someone thousands of dollars in exchange for a promise or guarantee that their mortgage could be eliminated without paying it off.

How to Really Eliminate Your Mortgage

There are some legal ways to eliminate your mortgage:

1. Pay it off in full

2. File for chapter 7 bankruptcy (in which case you will not be liable for the mortgage note, but you will also lose the house)

3. Find a REAL legal challenge that a judge is willing to accept as a valid reason to declare the debt void, such as usury, gross violation of lending laws, fraud, incompetency or the like.

How to Save Up to 90% on Title Insurance.

If you have ever bought or sold real estate, you have probably paid for title insurance. What exactly is title insurance? Why do we need it? How can I save money on title insurance? These are common questions asked by real estate investors.

Whenever title passes, the seller usually gives a deed containing certain guarantees or “warranties” (hence the name “Warranty Deed”). The seller warrants that title is good, that is, no one will come challenge the integrity of the title. For example, if a deed that was passed before him was forged, all subsequent transfers are void. Other problems may be more subtle, such as a deed with an incorrect legal description or misspelled name. Any irregularities in the “chain of title” will place a “cloud” on the integrity of the title. All About Auctions And Its Types.

The Title Search

When you are ready to sell a property, a title search is performed by a title company or attorney. The title searcher follows the chain of title back about 50 years, tracing the ownership through deeds recorded in pubic records. The searcher also checks to make certain that previously recorded mortgages and other liens have been released. Based on documents found in public records, the title company or attorney will prepare a “title insurance commitment.” A commitment is a statement that based upon certain documents found by a search of public records, the company will issue a title insurance policy for a certain fee. 8 Easy Steps To Creating A Money-On-Demand Machine.

The Title Insurance Policy

The title insurance policy, unlike most insurance policies, covers past events. For example, the daughter of a previous owner claims that her father conveyed a deed while not mentally competent, the current ownership may be in jeopardy. The title insurance company will defend the claim and pay for any damages (usually the value of the property). The policy does not cover claims based on events that occur after the policy is issued. Furthermore, the policy usually contains numerous exceptions, such as claims based on information undisclosed to the title company. Thus, if you are aware of any potential problems that might lead to a claim, your failure to disclose this information to the title company will lead to a denial of a claim based on those events. 3 Secrets for Closing the Sale.

Ask for a “Re-issue” Rate

A title insurance coverage starts from ancient history and ends from the date you transferred title. Since most transfers are insured by a title company, the longer you own the property, the more the policy costs. Consider this: if you buy a property and the transaction is covered by title insurance, then you sell it six months later, what are the chances that something went wrong in the last six months? The answer is that the chances are slim to none, so the risk of a claim against the title are slim to none. For this reason, title companies offer a “re-issue” rate. The re-issue rate is a discounted price (usually about 40%) on the title insurance policy if another policy from a title company was issued on the same property within the last few years. The rate is lower because any claims that arise from events before the previous owner are covered by the previous policy. Thus the new policy really deals with the risk of claims from events that occurred while you owned it.

Try a “Hold-Open” Policy

If you are buying a property with the intent of re-selling it within a year, ask the title insurance company for a “hold-open” policy. For a small fee (usually an additional 10% on the policy), the title company will hold a title commitment open for a year or more. Rather than issue a policy based on the first transfer (from the seller to you), they will issue a policy on the second transfer (from you to the next buyer). Since the seller usually pays for title insurance, you can pay the additional 10% when you buy, saving 90% on title insurance when you sell.

SIXTY DAYS TO YOUR FIRST BARGAIN PURCHASE.

Finding good real estate deals is an art that takes time to master. Like any business, customers are what drive it. Your primary customer is the seller who is motivated to sell below market value. Finding motivated sellers requires advertising, marketing, salesmanship, and, like any business, keeping your nose to the ground.

Nothing happens and nothing matters in real estate until you find a deal. You cannot put together a deal without a motivated seller and you can only convince a motivated seller to do something creative or that involves a discounted price. A motivated seller is one with a very good and pressing reason to sell below market.

The most common problem new investors face is finding bargain properties. Many who start out in real estate investing quit without ever buying their first property. They go through the motions of looking for deals for a few weeks or months and then decide it doesn’t work. They forget that finding motivated sellers is similar to the salesman finding his first customer . . . it takes persistence and hard work.

FIND THE MOTIVATED SELLER

At the cost of sounding redundant, the concept is simple: find motivated sellers that are willing to sell their properties at a discounted price or “soft” terms. Currently, the real estate market in some parts of the country is hot, hot, hot! Many people are complaining that the strength of the market precludes investors from finding deals on properties. The popular misconception is that in a rising market, even the most motivated seller can find a buyer for his property at full market price.

The truth is, you can find deals in ANY market. Real estate legend A.D. Kessler once said, “There are no problem properties, just problem ownerships.” The definition of a motivated seller fits squarely within Kessler’s idea. A logical person knows that time, money and effort can solve virtually any real estate problem. However, some people are too emotional about their real estate problems or have other motivating issues to deal with.

Some of these issues include:

  • Divorce
  • Lack of concern
  • Inexperience with real estate repairs
  • Time constraints
  • Death of a loved one
  • Job transfer
  • Landlording headaches
  • Impending foreclosure & other financial problems

FARMING NEIGHBORHOODS

Successful real estate agents utilize a technique called “farming” to increase their business activity. They pick a neighborhood or two and focus their marketing efforts within that area. You should try the same technique. Start with a neighborhood that is relatively convenient for you.

1. DRIVE THE AREA

Spend a few weekends driving around the area. The goal for you at first is to learn about the area, the style of houses and the average prices. Over time, you may expand your farm area, but stick with areas that contain the type of homes you plan to purchase. It is not necessary to begin your investment career by learning every square mile of a large metropolitan area; it is important to learn the value of “typical” homes in your target areas. This knowledge will enable you to make quick decisions about whether a particular prospect is a bargain.

2. ATTEND OPEN HOUSES

Visit open houses and “for sale by owner” (FSBO) properties on weekends. Speak directly with owners and their agents. Pass out your business cards. Make friends. Word of mouth and referrals are a big part of any business. How to Use Public Speaking to Attract Clients?

Part of the process of finding a deal is to know how to recognize one. Take a good look at the property and its physical features. After viewing a couple of dozen open houses in the neighborhood, you will get to know the value of the properties and the different styles of houses. When someone calls you about a house in that area, you will know the value by its description.

3. LOOK FOR UGLY & VACANT PROPERTIES

While you are driving around neighborhoods, look for vacant, ugly houses. How can you tell if a house is vacant? Look in the window! Of course, this practice may get you shot, bitten by a dog or arrested. First look for the obvious signs of vacancy – overgrown grass, no window shades, boarded windows, newspapers, garbage, mail piled up, etc. If you are not certain whether the property is vacant, knock on the door. If the owner answers, be polite, respectful and ask if he is interested in selling. In many cases, it may be a rental property, so ask the occupants for the name and telephone number of the owner. Dos And Don’ts About Public Speaking.

If the property is vacant, ask the neighbors if they know the owner. Most neighbors are helpful, as they know “ugly” houses hurt their own property values. In addition, ask the mailman – they know all of the empty houses on the block. Leave a business card and write down the address of the ugly or vacant properties. When you get home, look up the name and address of the owner. Finding the owner of a vacant house can be difficult, which is why the persistent people who find the information make the most money. The name of the owner can be found by calling your local tax assessor’s office or by looking up the deed recorded with the County land records.

If you want to contact the owner, it takes a little more digging. Try speaking with the neighbors or asking the post office for a copy of a change-of-address form on file for the property. Online services, such as www.infousa.com, will search public databases, such as the Driver’s License Bureau and the Department of Motor Vehicles. Painless Presentations.

Some cities, towns and counties will “tag” a house with code violations. This is often a sign of a neglected or vacant property. Ask your city if you can obtain a list of such properties or find where this information is publicly recorded.