The Five Steps to a Successful Short Sale

Regardless of whether you are a home owner attempting to get out from under a crushing mortgage payment, or a Realtor attempting to assist that home owner, you’ll need to understand all the steps necessary to get a short sale accomplished.

The short sale process can be long and complicated. The following steps are the most common steps required by most lenders to facilitate a short sale. The length of time to obtain an approval on a short sale request has risen significantly over the past twelve months. Some lenders are actively telling us that they need ninety days to review a short sale request.

One of the challenges of putting a short sale together, whether you are a property owner or a Realtor, is that many buyers are unwilling to wait sixty or ninety days to find out whether or not they’ve been able to purchase a home. There are many properties on the market for sale for a buyer to choose from without having to wait, so we have to entice a buyer to hang in on the transaction.

An additional complication occurs when the home owner has more than one mortgage against the property. There may be a second mortgage that the home owner took out at the time of purchase, or there may be a home equity loan or line of credit the owner used to make some improvement, or any other lien against the property.

Requesting a short sale, in a nut shell, is finding a buyer, negotiating an offer on the home, contacting the lender, obtaining all the documents the lender requires for approval, and then staying in contact with the lender until they approve, deny or counter your proposal.

As I stress in every article I write about short sales, have an expert assist you with this process. Seek the advice of an attorney, Realtor, accountant and any other professional you might require to insure the process is done correctly, and to insure you’re making the appropriate decision for your situation.

Step 1: Contact Your Lender for Information

Most lenders will not approve a short sale until there is an actual offer to negotiate. Banks and mortgage services are typically understaffed and very busy trying to work out situations with other clients who already have offers on their properties. They don’t have the time and resources to analyze every possibility.

However, since short sale approvals are taking considerable periods of time, it makes sense to find out who you need to speak with and what the lender requires the owner or Realtor to supply. In most cases, the lender has a “short sale” package that includes a list of all the forms the lender requires.

Step 2: Market Your Property and Find a Buyer

Marketing a property that requires a short sale may also be a challenge for several reasons. First, you must notify any potential buyers that any offer must be approved by your lender. This will scare some buyers away from your home because they don’t want to wait for someone else to approve the sale. This will attract some investors who believe they can “steal” the home, because they’ve seen on late night television that banks will accept almost any offer. This is simply not true. Although they may get a very good price, they are not likely to “steal” the home in the current environment.

The components of marketing any property successfully include pricing, staging and marketing. Staging is simply presenting your property in the best possible light in order to attract buyers to offer on your property rather than competing properties. Pricing entails carefully selecting the correct asking price in order to attract potential buyers. There are methods to selecting correct price positions based on recent sales and competing properties for sale.

Step 3: Negotiating an Agreement

The typical home requiring a short sale sells for a bit less than other properties. The primary reason for this anomaly is that the buyer must have a reason to go through the pain of purchasing a home through a short sale. Historically, short sale properties sold to investors because they were the few with the fortitude to wait weeks to months to find out whether or not the sale would actually go through.

Imagine the stress of moving to a new home and perhaps a new school district. Consider the stress on your family. Now add to that stress the idea that unlike most real estate transactions, where a buyer knows within a day or two whether or not the owner will accept the offer, the buyer may have to wait several months for an answer. Worse, if the lender accepts the buyers offer, the buyer needs to be prepared to settle and move quickly.

Most buyers who are selling another home need to plan their move very carefully. They can’t rely on the hope that this transaction will settle. They need to be out of their home by a certain date and need a place to move. If they have a sixty day window to move from their home and they won’t find out a response about the short sale from the lender for forty-five days, that gives them little or no time to find another home should this transaction fall through.

Because short sale transactions are typically limited to investors and those who do not “have” to move by a certain date, the pool of potential buyers is smaller than for that of other homes. Enticing buyers to purchase a short sale home over one that doesn’t have the same challenges often requires some consideration in price.

If you’re an owner is this situation, you may be offended at selling your property slightly below market, but please consider that the lender won’t allow you to receive any proceeds anyway, so you’re not taking that direct loss.

An added complication is that many of the owners of homes requiring a short sale are in default on their mortgage or at risk of default. That means that the owner may have to get the home sold more quickly than the typical home in the area. If the Sheriff is locking the doors and auctioning the home in ninety days and the typical market time in a slow market in your area is six months, you need to be priced below the market in order to attract buyers to your property first.

Step 4: Put Together a Short Sale Package for Your Lender

Hopefully, by the time you receive an offer on your property, you’ll already have the full short sale package and you’ll have started filling it out. It is imperative to get this package to the lender as quickly as possible and then to follow up with the lender to make sure they received it and that they are processing it.

Whether you are the home owner, negotiating with the lender directly, or a Realtor or attorney attempting to work on behalf of the home owner, there is a lot of information that needs to be provided to the lender. Some of the information will have to be filled out by the home owner, because it directly involves the home owner’s financial situation. Some of the forms are better prepared by a Realtor, title insurance agent or attorney.

Although every lender is slightly different, the typical documents required in a short sale package include:

1. A Cover Letter

2. An authorization for the Realtor or attorney to speak with the lender

3. Seller’s Hardship Letter

4. Hardship Documentation – Copies of documentation related to owner’s hardship

5. Seller’s Financial Statement or Income, Expense and Asset Worksheet

6. W-2 forms for past two years

7. Two months pay stubs

8. Two to three months bank statements

9. Repair estimate for any necessary repairs to property

10. Agreement of Sale or Contract to purchase the property

11. Realtor’s competitive market analysis

12. Photos of the home (interior and exterior)

13. Seller Net Sheet

14. Payoff statements from any other lenders or liens against the property

15. Preliminary HUD 1 settlement sheet

Other forms that the lender may ask for include:

1. Title search of the property

2. Special forms

Step 5: Start Calling the Lender!

Remember that there are many people in the same situation across the nation. Lenders are swamped with phone calls and packages. When you complete the package, call and email the lender to determine the best method to get the package to the lender. My suggestion is to send it to them in two forms.

If the lender tells you they’d like the physical package by mail, then I would express the package in order to insure the package gets to the lender quickly and in order to insure it is delivered and can be tracked by who signed for it. I would additionally scan the entire package and email it to the same person to whom you expressed the package.

My goal is to insure they have the package and can begin working on it. If the lender asks the information to be faxed, which some are now doing, I would again both fax it and email it.

Expect a Counter Proposal

Hopefully the lender will simply accept the short sale proposal as written and allow the sale to be consummated. Don’t be surprised if the lender refuses the initial offer and makes a counter proposal. Should this happen, you may have to go back to the buyer and ask for more money in order to settle the transaction.

If you are a Realtor, you should be preparing your buyers to understand that this is a negotiation. The lender may accept the deal, or may counter.

Getting to Settlement

As with any transaction, title insurance must be ordered and settlement must be scheduled. In instances where an owner may be behind on their mortgage or may be considering a short sale, a wise move for either the Realtor or home owner would be to contact an attorney, title agent or escrow company to run a preliminary title search of the property. Make sure there are no other liens against the property.

Once a lender agrees to accept a short payoff, the owner needs to be ready to move quickly to complete the transaction.

Loren Keim is the author of several books including “Short Sales: Step by Step” and “How to Sell Your Home in ANY Market”.

Loren Keim Author of “How to Sell Your Home in Any Market” Author of “The Fundamentals of Commercial Real Estate” Author of “Short Sales: Step by Step”

Visit Loren Keim on Amazon.com or at http://www.realestatesnextlevel.com

Copyright (c) 2008 Cory Boatright
A “short sale” has certainly been a buzz word with all the foreclosures taking place in today’s real estate market. Distressed homeowners are looking for creative ways to sell their homes quickly. However many Realtors and investors are still unclear on how to get a lender to accept a short sale offer. Here is how you do it.
The following steps are to be used as guidelines on determining what to offer the lender to get a short sale acceptance. It is recommended that you consult a legal adviser before involving yourself in any real estate transactions.
All the steps you need to know:
1. Determine Fair Market Value (FMV)
2. Evaluate Sold Comps Systematically
3. Reveal the ARV (After Repair Value)
4. Figuring out the Lenders BPO
5. What is The House Type?
6. Learning the Loan Types
7. Memorizing the Percentages
8. How to Deal with Junior Lien Holders
9. In Closing
The FMV can be determined by evaluating sold, comparable properties in a similar or close proximity to the subject property. A Realtor will have access to the MLS (Multiple Listing Service) and can create a CMA (Comparative Market Analysis) for the subject property. This analysis will identify sold comparable properties with same square footage, bedrooms, baths, garage and other similar characteristics. Request the Realtors use a sold time frame within 6-12 months when pulling properties in the immediate or surrounding areas. Usually the short sale lender will not consider any sold comparables that are older than 12 months and that are further away than 2 miles from the location of the subject property.
2. Evaluate Sold Comparables Systematically
Contrary to popular and often misguided belief; you can use a formulaic system to work in your favor when determining what to offer on the short sale property. The way this works is like this
Let’s say you have eight sold comparables. You would take out the two highest comps and the two lowest ones and average the rest.
EXAMPLE:
You have a property you think is worth $145,000.
A Realtor pulls a CMA and you find eight sold comparable properties.
The MLS (Multi Listing Service) shows the following sold property values:
$159,000 $154,000 $153,000 $161,000 $148,000 $143,000 $146,000 $151,500
When you use the formulaic approach you would take the two highest sold comparables ($159,000 and $161,000). Take out the two lowest sold comparables which is ($143K and $146K). This would leave four others comps.
$154,000 $153,000 $148,000 $151,500 ———–
You would then take an average by simply adding up the sum of all the sold comparables and dividing them by the total number of properties left. In this case, that number would be four.
Total: $606,500 divided by 4 = $151,625
You can reasonably justify the house may sell for $151,625 instead of the $145,00 you originally estimated.
3. Reveal the ARV (After Repair Value)
This terminology is jargon or slang often used with real estate investors. FMV (Fair Market Value) is similar. The ARV is made up by the amount of repairs the investor thinks the property needs in order to sell quickly on the open market using FSBO (for sale by owner) techniques and not using the MLS.
It can be argued the ARV is more of a guess or suggested value derived by using sold comparables from houses that were NOT sold by a Realtor. One way to explain the difference is a Realtor will typically use a FMV (Fair Market Value) evaluation method. A real estate investor may elect to use an ARV. An appraiser can use both value methods, but generally sticks to the ones that come from off the MLS. The ARV is a less accurate and dependable value than what come off the MLS. It doesn’t hurt to know both.
(continue reading.. How to Short Sale Real Estate and Get Your Offer Approved – Part 2 of 3)

Many of the homes on the market today, and homes going into foreclosure are not worth what they have outstanding loans for. Now we have an expected 1 in 500 homes (national average)expected to go into foreclosure due to adjustable rate mortgages in the next year. How do you sell a home for less than you owe?

Short Sales! While we have purchased homes via a short sale, I would not recommend it. It was a very long drawn out process each time and consumed weeks of time and a flurry of faxes, conversations and numerous voice mails.

I found National Short Sale Center, Inc. a national company which assists homeowners and mortgage services on a nationwide basis in negotiating down the amount owed on a home loan. It creates a win-win situation for both parties by providing the homeowner an option before their property is foreclosed upon, and by achieving maximum yield for the servicer.

National Short Sale Center has been the national leader in conducting short sales since 2004. This is a result of our commitment to the homeowner and conducting each negotiation with excellence. We are effective because many of our employees have worked in the lender?s loss mitigation departments and have been trained in short sales as their specialty.

They list the following success stories on their website:

1. Negotiated a 2nd lien owed $63,000 to $2,000

2. Negotiated a 2nd lien owed $212,000 to $5,000

3. Negotiated a 1st lien owed $107,000 to $71,000

4. Successfully negotiated the complete removal of an IRS lien for approximately $25,000

If you are a homeowner, lender or realtor, it might be in your interest to contact them if you or a client owes more on their home than it is worth. I was not able to find any negative information on them and they are a member of the BBB (Better Business Bureau).

If you are heading down the road to foreclosure, you may wish to consider a short sale. This can and will at least protect you from having a foreclosure listed on your credit report, but it still may not completely clear you from all of the money owed to the lending company. The most important part of the entire process of selling your home in a short sale is the negotiation that is done with the lending company.

All lending companies have a department that works with sellers for negotiating all short sales. In the majority of cases, the department is known as loss mitigation. If you begin to talk with your lending company before you receive a notice of default, they may just ignore you totally. All lending companies are in the business to make money and if at all possible, they normally want you to repay the total amount of your loan so the do not lose money.

On the other hand, after a notice of default has been issued and records with the courthouse you can then begin the negotiation process. In most cases, you will not have much to do as most companies have pre-determined criteria for these types of transactions. All banks, lending companies, and mortgage companies have the right to deny or accept a short sale. Due to this fact, they are still going to want as much as they can get for the home so they do not lose more money from the loan that is in arrears. Some lending companies will take any reasonable offer.

A short sale may save you from having a foreclosure on your credit report; however, this does not mean your credit rating will stay excellent. Short sales are considered a type of settlement whereas you worked with bank in order to repay a loan that you were unable to pay. This does not look favorable on your credit report; however, it does look much better than a foreclosure. A short sale will stay in your credit history for seven years. In the majority of cases, you will be able to reapply for another mortgage loan within 1 to 3 years after a short sale.

The mortgage company in most cases, will work with the homeowner during a short sale and forgive the remainder of the loan, however, companies that have a lien on the property most generally will not forgive the money owed to them.

Before contacting the lending company, it would be in your best interest to talk with experts on short sales. Selling your home and saving your credit is the number one reason for short sales of homes, if you are still going to be stuck with a huge debt, and then you will not be any better off than before. Instead of trying to do it alone, talk with experts to ensure you are doing everything possible to save your credit and learn the process of short sales.

Every day more and more people are deciding to become weekend real estate investors. Armed with the proper information and right training this can be a lucrative business. Jumping in and playing blind archery can be a very costly mistake.
All of the stories you hear about being able to buy real estate with no money and no credit are true, but doing it without the proper documentation and training can literally wipe you out overnight.
I don’t say this to scare anyone away from the business quite the contrary, just due your homework before you start making offers on property. Concentrate on a small area and learn it well find out what homes in that particular area are selling for now and what they have been selling for the past six month to a year.
The best way for a new investor to start is by wholesaling properties to other investors. This is done by finding a property below market value and selling to another investor. If you add a few thousand dollars to the price and leave enough for the other investor to make money you will have more buyers than you could ever supply.
Most investors would give their right arm to have someone finding properties for them to fix up and resell for a tidy profit. You see, investors are basically a lazy group and don’t mind paying you for doing their legwork for them.
Another profitable way is lease option or get the deed as I call it. Your key here as with any other niche of real estate investing is to be working with people who need to sell not people who just want to sell. You can find hundreds of sellers that want to sell just by picking up the classifieds.
This may come as a shock to some of you but you really aren’t looking for houses you’re looking for problems. Homeowners who are getting a divorce, a job transfer, military transfer, burnt out landlords that just want to get out of the business simply because they don’t know how to manage the property or the tenants. Get the idea?
Preforeclosures are another great way to make money as a real estate investor. In fact your highest paydays and most motivated sellers will be those who are in the preforeclosure state. Sellers in preforeclosure are behind on their payments, but the bank has not yet taken back the property. Come on now, can you think of anyone more motivated to sell.
Remember that you are doing a great service to these seller by somewhat saving their credit by not having a foreclosure on their credit report. Most people don’t realize the severity of a foreclosure or how long it stays on your credit report.
Their problems are just beginning at this point. Picture yourself as a landlord and an individual that has just been foreclosed come to rent or lease option a home. The foreclosure shows up and the first thing that pops into the landlords head is, if they won’t pay for their own home the sure as heck aren’t going to pay me.
Unfair, possibly but put yourself in the landlords shoes and then lets see how unfair it really is. So yes you really are helping the seller solve some of their problems and making a profit by doing so. After all most of us don’t start a business and intentionally not make money.
Heck even non profit organizations make money and a ton of it; if they didn’t how in the world would they possibly stay in business for very long.
So get off your high horse and wake up and smell the coffee, this is the real world we are talking about here.
Buying Junkers and fixing them up and then retailing them is great also if you are experienced at estimating cost or can do most of the work yourself so you don’t get raked over the coals by some contractor that wants to make a killing on your first rehab.
Just slow down and look before you leap by doing some wholesale deals and lease options before you decide you want to play with the big dogs in the tall grass.
Make certain to get you team in place such as your title company, attorney, plumbers, painters electricians. In other words all your tradesmen before you take the plunge and start doing property rehabs.
Take it one step at a time and you’ll be a professional real estate investor before you know it, without getting kicked in the teeth a half dozen times while you are learning.

Flip Strategy #1: Buy, Fix and Flip
Let’s start with the most common form the good, old fix ‘n flip. This process involves buying a property that needs work, fixing it up, then selling on the retail market, that is, to a person who will live in the property.
This method is tried and true, and works very well. You can easily make $15 – $50k on one deal, depending on your market and how good you are at finding bargains.
The danger in fix and flips is either paying too much or underestimating repairs. Be very conservative in your fix-up costs and length of time it may take to resell. Also, make sure you include in your analysis the cost of paying a real estate agent to sell the property.
Flip Strategy #2: Buy, Refinance & Lease/Option
Rather than sell the fixed up property for all cash, sell for terms. Once you have completed the rehab, refinance the property at its new appraised value. If you did the math correctly, you should have little or no money in the deal.
Sell the property on a lease with option to buy. The rent payment from your tenant/buyer should cover your mortgage payment (if not, consider an interest-only or adjustable rate loan that is fixed for 3 years).
When your tenant exercises his option to purchase, you reap a larger profit, since you don’t have to pay a broker’s fee. If the tenant exercises his option after 12 months, you benefit from a lower capital gains tax rate.
Flip Strategy #3: Buy & Flip As Is
Don’t like to do fix-up work? Consider selling the property “as is” as a light fixer upper. If the local real estate market is hot, you should be able to sell the property in poor condition just a little below market.
This is especially the case with houses in “transitioning” neighborhoods. Make sure, of course, that you acquire the property sufficiently cheap enough that you can sell it below market quickly and still profit.
Flip Strategy #4: Wholesale
Strategy #1, the fix and flip, is very popular, which means there are a lot of investors looking for rehabs. You can buy the property cheap and sell it for just a few thousand dollars more to another investor without doing any work. You won’t make nearly as much as the rehabber, but you will realize your profit quickly.
Flip Strategy #5: Pre-Construction
In very hot real estate markets, prices are appreciating as much as 2% per month. If you time things right, you can put a contract on a pre-construction house or condominium, then flip it to someone else when the development is complete.
If it takes 12 months for the development to be complete, and the condo price is $500,000, you could make $100,000 or more in one year! Of course, the opposite is also true – you could end up losing money if the local economy tanks and you end up with a worthless condo that you can’t sell for more than you paid. Use this approach very carefully.
Flip Strategy #6: Scouting
The Scout is an information gatherer, so not technically a property flipper. He is the “bird dog” who finds potential deals and sells the information to other investors.
Many people get started as a Scout for other investors because it does not take any cash or prior knowledge to look for distressed properties. The Scout finds a property for sale, gathers the necessary information, and then provides this information to investors for a fee. The fee will vary depending on the price of the property and the profit potential.
The Scout can expect to make five hundred to one thousand dollars each time he provides information that leads to a purchase by another investor.
Flip Strategy #7: Illegal Flipping
OK, I am not advocating this approach, because it is illegal. Illegal property-flipping schemes work as follows: unscrupulous investors buy cheap, run-down properties in mostly low-income neighborhoods. They do shoddy renovations to the properties and sell them to unsophisticated buyers at inflated prices.
In most cases, the investor, appraiser and mortgage broker conspire by submitting fraudulent loan documents and a bogus appraisal. The end result is a buyer that paid too much for a house and cannot afford the loan.
Since many of these loans are federally insured, the government authorities have investigated this practice and arrested many of the parties involved. As a result, the public perceives is flipping to be illegal.
The fact is, flipping as I described in the beginning of this article is not illegal. Loan fraud in the process of flipping is what is illegal, so don’t confuse the two. The other six ways to flip are very legal, very ethical and very profitable!

Accepting your role as a marketer is the thing that will move you out of the rut of occasional mediocre deals and up into a level of sustained success that would not otherwise be possible for you. And this is true of anyone in any other business or industry. The person or company who is most on top of their marketing, makes all the money, and dominates their market.
A marketing machine! Very average pizza. But aggressive marketers, and they virtually own their market. Look at Bill Gates (yes, I know, everyone cites BG). If you saw Accidental Empires though, a PBS documentary by Robert Cringley, you’d know that Gates was just one of hundreds of fanatical “techies” who were trying to make this computer thing work somehow. With his astute positioning and relentless marketing he rode Microsoft up over IBM to the $80B company it is today.
Of course, this doesn’t mean you just market better and let your buying, negotiating and selling skills go to pot. You’ve got to be the very best property buyer you can be and run your office well too. After all, your sellers and buyers deserve the very best treatment from you. But more importantly, doing what you do so well that people can’t resist telling others about you, is the purest type of marketing in and of itself.
Remember, it doesn’t matter how good you are if you have no Motivated Sellers to talk to. Buying houses from Motivated Sellers with little or no money out of your pocket is the name of the game, and marketing is the thing that brings in the Motivated Sellers.
OK, so, marketing. Really fabulous! But, what does it mean? So far it’s just a word I’ve said 10 or twenty times, right? Well, there are two types of marketing people typically use.
The traditional approach which, for want of any better way to go, usually involves just going out after randomly selected sellers. They haven’t been screened or qualified in any way. We just know they have a house to sell. We run up big phone and classified ad bills to get to talk to them. In communicating with them we usually talk to them about our financing, and how great it is, and if they will just sell to us their problems will go away. We do it manually; call by call, door by door. We talk about us, rather than inquire about them. We chase, they run. When we stop, the marketing stops. The cost per deal is very high, both financially and emotionally.
The second approach is the targeted, low-cost, systemized, response-oriented approach that, through a variety of media (such as direct mail, lead generating classified ads, flyers, signs, radio, cable TV) states or implies a benefit for the seller, calls for a response from them, and positions you as “the solution” for the sellers who want that. The sellers step forward and select you. The marketing is automated, and it is an operating system that works whether you are there or not.
I don’t want to shock you, but we are not going with the first choice here. Pick up just about any book or course about real estate investing or creative real estate and you’ll find the choice
#1 approach to finding motivated sellers, if any. What you won’t find anywhere in those books or courses is the choice
#2 approach, which is direct response marketing. Direct response marketing targets a specific group of most-desired prospects that you have defined as those most likely to respond to your offer (out-of-state homeowners, or expired listings), then it advertises for or delivers a message to only those people via a media (e.g. personal-looking hand-addressed number 10 envelope mailed first class) that will reach them and get their attention. Once in front of the target, direct response delivers the following:
Benefit-telegraphic headline, true marketing message
offer, or offers, reason to respond immediately
precise response instructions and mechanisms
With these five elements in place, you set yourself up to be called only by motivated, partially pre-sold sellers, continually, day after day! So now you can be freed to do the most productive thing possible for you as an investor: make offers to motivated sellers!
Hopefully you can see the picture here. Direct response marketing cuts your advertising expense in half. It sifts, sorts and screens your prospects so that only the most qualified and most motivated respond and get to talk to you. In short, it allows you to make more while working less, with more predictability, consistency and control than anything else you could do to find deals. Is that something you want? Think about it. Is there anyone you know of who is buying and selling a boatload of houses every month?
They are still doing a ton of business. Now, why is that? They don’t offer sellers anything more outstanding than you, do they? They certainly don’t offer sellers anything more creative than you are capable of offering. They don’t have any better phone manner than you. Not at all.
The only thing that very successful Real Estate Entrepreneurs do better than anyone else is: Create a reliable, consistent flow of motivated sellers calling in each day! That’s it! That’s the difference. So did you get the message here? I hope so. If you want to change your experience in real estate investing from one of anxiety, frustration and disappointment to working less and making more, you’ll make the change.

Delray Beach is a rapidly expanding city in South Florida?s Palm Beach County that boasts award-winning public beaches and upscale dining and shopping. The only Florida city to win the All-America City award twice (connoting credit for constructive citizen cooperation to concur on certain community concerns), Delray Beach residential properties continue to sell quickly when they are priced properly and positioned in profitable parts of town. Downtown Delray is developing without delay, displaying a distinguished diversity of new construction homes and condos. But recently real estate for sale has replaced investor interest and initiated an immense 39% drop in properties sold compared to last year. Homes are sitting on the market for 90- 120 days, vastly varied from the 30 day average just a few months ago. Therefore, rates are regressing, rendering real estate reasonably priced once more, relinquishing ruling power to the buyers.

Regressing real estate rates do not represent a regional repugnance, but rather a national decline in residential real estate rates as supply has surpassed demand. Even as property values wane, Delray Beach continues to build, offering an abundance of new homes for low prices to potential homebuyers who wish to move to the area or use their Delray Beach home as a long tern investments. Local developers have put millions of dollars into building up Atlantic Avenue as a new hot spot for dining, shopping, and nightlife, as well as citywide renovations to promote local economic growth by attracting people to the region. Homes in Delray Beach tend to be younger than the national average (21.7 compared to 27.2 years, respectively) and real estate appreciation is a whopping 25.82% (in contrast to the 13.62 national average). But even with these impressive statistics, Delray Beach real estate remains an affordable alternative to other Florida destinations.

The decline in properties sold mirrors the state and nationwide trend of a softening market, but this lapse in massive appreciation rates is only truly a problem for investors intent on flipping their properties for profit immediately. Such practices are no longer recommended in a softening market, but long term investment is still a viable option as home prices will undoubtedly rise again after buyer interest is renewed. Think of real estate investment like any other short-lived fad; a craze that starts as abruptly as it ends, is reviled for a time as people rebound from the humiliation that only such obsession can warrant, then is brought back for nostalgia by VH1 shows until it is trendy again in a kitschy William Shatner sort of way. Industries operate in cyclical patterns, continuously vacillating so their courses resemble planetary orbits and their relative price indexes are reminiscent of cosine graphs.

Real estate experts are touting the idea that Florida real estate investment is as obsolete as the medieval barber surgeon due to the lapse in exceptional appreciation rates. As they continue to promote investment opportunities in other states, these experts are omitting the real estate market?s chief objective: to provide housing. Industry media has depicted the so-called ?collapse? of the Florida real estate market as an economically devastating catastrophe, but this is not necessarily true. Until humanity has degenerated back so far as to revert to its hunter-gatherer past, permanent shelter will be seen as a necessity to human existence, thus the real estate market will endure. And, if the residents do not perform a mass exodus from the state (picture a herd of off-white Cadillacs fleeing Boca Raton at 16-miles-per-hour with their right turn signals on), all signs show that the Florida real estate market will recover from this economic slump and prevail.

And now is an ideal time to invest! Prices are dropping in high quality new developments (like Delray Beach?s The Village at Swinton Square), so formerly unaffordable homes are becoming viable options for those looking for an actual residence or a long term investment opportunity. A discriminating human vision is the only thing that makes a property less attractive because of a price decrease. Viewed objectively and logically, a depreciating market cannot affect Florida?s ambiance or climate.

A high proportion of people who purchase property in the panhandle are retirees in pursuit of a pleasant place to pass the rest of their days. Due to their age, senior citizens are not seeking speedy investment transactions to secure savings as they have selected to stop working and spend their time in leisure activities. Retirees will keep purchasing property in Florida because of its many activities attractive to the elderly and the climate?s therapeutic value.

Florida is also heavily powered by the tourism industry, a market that depends on big-spending vacationers who are just passing through town. Palm Beach County?s individual tourism industry clears $1.5 billion per year, making it one of the most profitable businesses in the area. Generally, travelers stay in hotels, therefore a decline in real estate appreciation will not lessen the appeal of Pirates of the Caribbean, thus local employment in the industry will not falter. Tourist attractions will prevail as long as Americans continue to appreciate roller coasters, beaches, alligators, and shaking hands with mascots.

Latin America immigration is also continuing full throttle. Immigrants are quickly gaining significant buying power, especially in the condo conversions that are appearing throughout the state. Mexicans are leading the charge in Delray Beach, which has become far more diverse in the past fifteen years as the white population has dwindled to a mere 66.5% (according to the Sun-Sentinel). Latin American immigration is accelerating annually, Florida being one of the primary destinations. A depreciating real estate investment market is not going to convince immigrants to take a detour to Vermont. And as the immigration continues, buyer interest grows, thus the recovery of the Florida real estate market.

The Florida real estate market?s ?softening? is not an endemic epidemic like the bubonic plague?nor even the West Nile Virus?so purchasing Florida real estate for actual home use or long term investment are still viable options. But unfortunately for now, the manic trend to invest in and flip Florida properties is as dead as the slap bracelet.

The real estate contract is the most often used, yet little understood tool in the real estate business. Whether you are a rank beginner or seasoned expert, there is no excuse for not knowing and understanding the real estate contract.
Real estate contracts are based on common law contract principles, so it is important that you understand the nuts and bolts of contract law. Offer, Counteroffer and Acceptance.
In most states there are standardized contracts used by real estate agents and attorneys. The contract is generally drafted in the form of an offer. The offer is usually signed by the buyer (the offeror).
The contract is not binding until the seller accepts, creating a meeting of the minds.
An acceptance is made if the offeree (the seller, in this case) agrees to the exact terms of the offer. If the seller replies, I’ll accept your offer if you agree to close fifteen days sooner, there is no binding contract, but rather a counteroffer. The basic building block of a contract is that there is mutual agreement.
If the offer is not accepted in the time frame and manner set forth by the buyer (offeror), then there is no contract. For example, if the contract specifies that acceptance must be made by facsimile, an acceptance by telephone call or mail will not suffice.
A real estate sales contract is a bilateral (two-way) agreement. The seller agrees to sell, and the buyer agrees to buy. Compare this with an option; an option is a unilateral (one-way) agreement in that the seller is obligated to sell, but the buyer is not obligated to buy it is his option to do so.
A bilateral agreement with a liquidated damages provision yields the same result if the buyer fails to close escrow; the seller keeps the buyer’s earnest money and the deal is over.
There are some basic requirements that must be present to make a real estate contract valid: As stated earlier, there must be mutual agreement or meeting of the minds.
With few exceptions, a contract for purchase and sale of real estate must be in writing to be enforceable. Thus, if a buyer makes an offer in writing and the seller accepts orally, then backs out, the buyer is out of luck.
The contract must identify the parties. Although not legally required, a contract commonly sets forth full names and middle initials (it helps the title company in preparation of the title commitment). If one of the parties is a corporation, it should so state North American Land Acquisitions, Inc., a Nevada Corporation.
The contract must identify the property. Although not required, the legal description should be st forth. A vague description such as my lakefront home” may not be specific enough to create a binding contract.
The contract must state the purchase price of the property or a reasonably ascertainable figure appraised value as determined by ABC Appraisal Group.
A contract must have consideration to be enforceable. Consideration is the benefit, interest or value that induces a promise; it is the glue that binds a contract.
The amount of the consideration is not important, but rather whether there is consideration at all. It is common for a contract to state that ten dollars and other good and valuable consideration has been paid and received.
A contract must be signed to be enforceable. The party signing must be of legal age and sound mind. A notary’s signature or witness is not required.
A facsimile signature is usually acceptable, so long as the contract states that facsimile signatures are valid.

Interestingly enough, I actually have new investors frequently come to me who are fortunate enough to have a large nest egg which they can use to get started in the business. Many people have approached me and said, I have $100,000 in the bank. How should I invest it.
I always advise them to put their money aside and learn how to do deals without money. Money can kill your creativity, and creativity is essential in this business in my opinion.
Even $100,000 doesn’t go very far when buying homes, and if you always rely upon the cash that you have, you will often find yourself without any cash and unable to do more deals until you sell something.
So even if you have access to some of your own money, my advice is to first cultivate your ability to do deals without use of your own money.
Not only will this help keep you creative, but it allows the cash you do have to act as a safety net, making you even stronger. Never underestimate the value of a BBC (Big Bag of Cash).
Now lets go back to my earlier statement that no money down real estate investing should really be better phrased as none of YOUR money. Their bears further explanation.
Here’s a quick list of a few ways to invest in real estate with none of your own money: I’m referring to such things as a hard money lender or private lender to purchase and rehab a property.
Make sure you’re getting a good enough deal so that your lender can safely loan you enough money to cover your purchase price, closing costs, holding costs and rehab costs. I do it all the time. Then you can either refinance or just sell. None of your money was ever used.
Many individual sellers will be open to this scenario especially if you’re offering it on the short term and they can make a little more money because of it. (I will often pay a little more for a house if owner financing is involved because of what I save in closing costs.)
Many people will get into arguments with on this one about the due on sale clause. I won’t go into that here, that’s another article (or an entire course) entirely. But suffice it to say that it’s another variation of owner financing, and can be a powerful way to get into a deal with no money down.
Keep in mind that even though it may not be coming out of your own pocket, you must have a source for the working capital needed to hold and possibly renovate a property.
This source can be your own bank account if it must, but if you want your deal to truly be no money down real estate investing,consider finding someone else (a friend or colleague) who is willing to make an investment in you and fund these holding costs. This can be much easier than you may think, trust me.
Whichever you choose, you should be sure of your source for working capital before you buy an investment property.
Can you invest in real estate with no money down and keep your ethics intact? The answer to this question is a 100%, absolute, unequivocal yes!
Many people find this difficult to believe because they feel that we are taking advantage of someone when we buy homes really cheap.
In fact I struggled with this issue myself when I first started, especially when it came to offering less than what a seller was asking. If they were asking $80,000, then offering $60,000 made me feel uneasy.
But after getting a few of these offers accepted I realized that I wasn’t such the bad guy after all. The sellers were just happy to have someone willing to buy the home, and I was solving their problem in a big way.
Another example involves a woman who sold me two homes which had appraised for $100,000 (combined) for $29,000. She was crying when she sold them to me because not because she was so upset, but because she was so happy that I had taken these house problems off of her hands.
I realized at that moment exactly what a motivated seller was, and what kind of valuable role I had to provide them. I was truly providing a desperately needed service.
As a result of my experience, I have but one comment to make with regard to the sentiment that we are somehow stealing houses. If the seller could get more money or a better deal from someone else, then they would take it Get over it!
The reason the seller is willing to sell you their home really cheap is because no one else is willing to buy it or give them more for it.
Most of the properties that I buy really cheap are from banks or government agencies. Do you think they don’t know what they’re doing? Wouldn’t they get more for their homes if they could? Would you feel bad if a bank sold you their home for 50% of fair market value?
If so, relax! It’s all part of the business of finance and real estate. You are going to get paid for knowing how to buy and flip houses.
You will be helping not only the sellers by buying their problem properties (something which few are qualified or willing to do), but you will help other investors by providing them with a profitable opportunity, the local community by doing something productive with an otherwise vacant home, and eventually a family by providing them with a nice place to live.
So all things considered, I would submit that not only is no money down real estate investing possible and ethical, but when properly practiced, it provides the community at large with a number of benefits and a much needed service.