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Identification of the parties involved and the agreed upon price

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Specific “consideration” must be stated – something of value that’s being exchanged, usually money

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Signatures of each party involved
There are checks-and-balances to protect people in every situation and to protect the overall system. Appraisals are used to ensure that the property is worth what the lender and seller have purported. The appraisal prevents shady deals being stuck between investors and mortgage brokers. Commercial property has its own laws regarding use and sale. If there are tenants living in the property, there are specific laws to protect the landlord and tenants. Lenders are held to the law by how much they can loan, what documents and insurance are required, and even how they market their financing programs.

It’s important to know about tax law, or get advice from a professional, since it greatly impacts your success in real estate investing. Mistakes are costly, and by protecting yourself you can make decisions that will help your bottom line rather than take away your profits.

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estate law, the current market, and the other person’s situation. If you are buying the house find out why they are selling. Are they in foreclosure? Has something happened personally that makes them eager to get rid of the property at any reasonable price? Find out how long the place has been on the market, the number of other offers, if any, and at what amount. Is there outstanding debt on the home, and if so how much? Are they up-to-date with their payments?

Most sellers won’t just give out this information. Try to determine their status by giving up a bit of your own information first. Be careful about what you say because the seller might be able to use it when negotiating with you later.

When you are engaged with the other party in negotiating a contract, you’re trying to come to a mutual agreement on the price of the property and terms. Consider the area comps, true condition of the property from the inspection report, and seller’s situation. Before getting involved in any negotiation have your financing in place by being pre-approved. Before signing any written offers or contracts, seek legal counsel.

TIP: Make your offer in a non-round number. An offer of $233,200 vs. $230,000 might catch the seller off guard and leave them curious about what information you have that they don’t.

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If it’s your primary residence and you can afford to do so, wait it out. The market typically changes every 1 to 5 years, and you can sell on the next upswing.

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Look at your property from the point-of-view of the buyer and make all necessary improvements. This will make your property more attractive to buyers. Think of what might be a deterrent and account for it. For example, if you live next to a loud highway, close the windows and play soft music to take away from this drawback.

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Stage the house. Set out a few bouquets of flowers, turn the lights on, put on some light background music, bake some fresh cookies for a homey smell and welcomed snacks for visitors. Put out a flyer on the property with plenty of attractive pictures, a reminder of the property highlights and your contact information. Make it so the buyer can see themselves living there. Buyers want a home they that makes them proud.

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Encourage your neighbors to help you improve the appearance of the neighborhood.

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Make sure you’ve priced the home correctly. Markets shift frequently, so you might not be priced competitively priced for the current market.

If you’ve tried these tips and the property has still not sold, try taking it off the market for awhile, and then list it again after re-checking your pricing. When houses sit on the market too long, potential buyers assume there must be something wrong. Extensively advertise your property. Making the extra effort to get your house sold will only help you make a profit.

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Research your local market, and the prices at which comparables sell. You’ll need to have your finger on the pulse of the market during the entire sales process, which can take months. This is important because you may be in negotiations over a long period of time, and knowing the up-to-the-minute standing of your property will help you make educated negotiation decisions.

Advertising is needed to pull together a large group of interested buyers. By having many parties that want to purchase your property you may be able to create a bidding war which will drive up the sale price. How should you advertise? Use all of your advertising resources, like the newspaper, word-of-mouth, flyers, targeted mailings, special trade booklets, and the internet.

The internet is one of the most effective ways to market. There are many real estate investment websites that allow you to post your property with pictures. A comprehensive marketing campaign includes these online marketing tools. Find a site with good traffic and include flattering photos of the interior and exterior of your property. You can consider adding a virtual tour.

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Pricing it right the first time. To price your property correctly, you need to know the market. A poor pricing decision can cost you – under pricing will result in lost potential earnings, and over pricing will cause the home to sit on the market while you are paying expensive carrying costs. Home prices vary depending on the square footage, lot size, age, and other factors. Use neighborhood comparables to judge the most appropriate list price.

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Get the word out. If you sell FSBO, you won’t have access to the largest, most valuable marketing tool, the MLS. But thanks to the internet, the MLS isn’t the only way to market your home. Put out signs, list it on websites, and place ads in the newspaper to let buyers know about your house.

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Can you negotiate successfully? Some people are born with this skill, and other have to work at it. If you are not a seasoned real estate negotiator, research the subject and learn enough about it to avoid losing money.

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Be a fast learner. You’ll need to do what an agent does. Learn about the sales process, legal issues, contracts, closing process, insurance, and many other aspects of the selling real estate.

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Patience is important. Selling FSBO is a lot of work and small details, and you are in charge of managing them in order to get the job done.

Making the decision to do it yourself can be rewarding and save a lot of money, but a half-hearted attempted will most likely be unsuccessful.

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It’s a good idea to go through the house and make minor repairs before showing it, or putting it on the market. A home inspection will likely be done before the final deal, so if you take the time up front to make the minor repairs, you’ll be able to avoid some of the potential buyer’s bargaining chips in negotiating a deal. Fix the leaky bathroom faucet and fix broken windows.

Take care of your property’s curb appeal. Maintain the landscaping by trimming the lawn and shrubs, and planting some flowers. The outside of the home is what will draw in prospective buyers, or keep them driving.

Ask your neighbors to clean up their yard; offer to take their trash and junk away for them, ask them to move kid’s toys, or offer to mow the lawns next to your property. You could even consider giving a small cash incentive after the successful sale of the home.

Your home should be super clean before you show it. It’s usually too expensive to replace all the carpeting in a home, but getting it cleaned is affordable. Place your furniture in ways that mask worn spots. Put down new welcome mats and replace worn area rugs. Wash all the windows until they sparkle. Repair worn conduit, and replace air filters on air-conditioning and heating for a fresh look. Give the walls a fresh coat of paint.

Be sure the work looks professionally done, so that people can see the quality of your property. A well-maintained home usually garners a higher sales price than a home that has been neglected.

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These stats indicate that there has been incredible growth in the real estate market over recent years. As the home prices have risen, so has the associate risk involved with buying and selling property. Thankfully, every type of risk now has an appropriate insurance. Of them all, the two most popular are title and liability insurance.

Title insurance ensures the coverage of any potential financial loss that is a result of an error in the processing and researching of a property title. Any lapses that might happen during the title search process, prior to closing, are covered. The title company will search a public record database to make sure that the property is able to be sold, meaning it’s free of encumbrances. Public records are not always completely accurate, and errors can occur.

Liability insurance covers injuries that happen on, or because of, the property. If someone slips and falls on your property, your liability insurance would provide coverage. The more coverage you have, the more expensive it becomes.

Hazard insurance is available for less likely risks such as hurricanes, flooding, or earthquakes.
You can also get coverage for accidents created by humans. This includes chemical spills, electrical malfunctions, vandalism, theft, etc.

It’s best to shop around for favorable rates, and pay close attention to your deductible amount, and any limitations on the policy.

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What exactly is considered “satisfactory”? Any home containing wood should have a pest inspection, where the inspector looks for evidence of damage caused by termites, mice, carpenter ants or other pests. This inspection is separate from that done by the home inspector.

Your home inspector should focus on every mechanical and structural aspect of the property. They will look for substantial cracks in the foundation, levelness of the structure, and moisture in the basement. Water penetration is evident when there is mold, mildew or efflorescence – a white powder that shows where water has penetrated. High tech inspectors use lasers to see if the things are level and specialized radon gas meters to determine if there is a radon gas issue.

The structure of the home is closely inspected. Homes rest on top of a foundation. Floors have been installed on top of this foundation, and it needs to be inspected to ensure that proper materials have been used. Next, the walls might have improper framing or possible damage from water. Electrical and plumbing systems lie within the walls, and where possible, these interior systems are inspected for wear, out-of-code construction, and damage. Pipes are

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inspected for leaks or chemical concerns such as lead or rust. Some home inspectors test the water pressure and flow rate of the house.

The home’s electrical system is completely inspected. The inspector looks for uncovered switches or outlets, incorrect wiring, insufficient grounding, faulty circuit breakers, or unsatisfactory GFCI trips.

Once in the attic, the inspector should check for water damage and air leaks. The framing is looked at to ensure that it is strong. The underside of the roof is inspected for a good seal where vent pipes go through the roof.

On the roof, the inspector examines it for holes, loose shingles or tile, poor flashing, or any other concern that might cause the roof to not hold up against the elements.

Heating and air-conditioning systems are inspected for adequate flow, duct leaks, and filter condition. Outdoor faucets are tested to be sure they work and don’t leak or have inadequate water flow.

All appliances included with the sale of the house are examined. The hot water heater, stove, wood stoves and any other built-in units are check for proper function and standards compliance.

All of this information is compiled in the comprehensive inspection report that is available to the individual or company that paid for the inspection. Inspections benefit the buyer because they can use issues with the property as bargaining chips during negotiations. The home inspection is also beneficial to the seller because they then get an honest assessment of the condition of their property and can make improvements to some items before putting their home up for sale.

The home inspection is one area where a few hundred dollars spent often saves thousands of dollars during the purchase process

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Take advantage of the internet. You can find a “hidden gem” by searching through the millions of properties listed online, and viewing the property’s description, pictures, asking price, and legal information. Usually, the only way to avoid a real estate agent fee is to look for property listed For Sale by Owner, or posted on other free sites.

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Look into getting your own access to the Multiple Listing Service (MLS). A license is required in some areas, but some places you can buy into the service for a fee.

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Get out and investigate the area that you’re considering buying in person. Will the price be held down because of the condition of the neighborhood?

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If possible, talk to the neighbors. They might give up information about the property that the seller hasn’t mention, like the front yard that floods after two days of rain.

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Get a professional inspection. When you make your offer, add a satisfactory home inspection contingency. Use a trusted professional inspector and carefully review the detailed inspection report. Few properties, even new construction, are perfect. Use the report to negotiate the repair of problems or an adjustment to the selling price

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Credit history. They’ll review the size and number of previous loans and the repayment history on those loans. They’ll also look at your FICO scores and various other raw data.

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Income history. What is your profit history on your other investments? Over what length of time? They’ll look at the last three years of income statements and tax returns, your debt, and any legal judgments that may impact your financial standing.

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Your experience with loans. Basically, the lender wants to know that you are trustworthy and will hold up your end of the loan agreement. This means you need to be reliable and make good business decisions.

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Current holdings and financial situation. Lenders are most interested in liquidity – your cash flow and income.
When lenders are looking at your ability to make a profit, they’ll want to know about your total expenses related to the property. How much will it cost you to take care of the property? What will your insurance rates, taxes, and cost of repairs be? The lender wants to see that you can cover your costs associated with home ownership, as well as their interest charges.
Lenders often want short repayment periods, while it usually more beneficial for the buyer to have longer periods. Longer repayment periods mean that you can avoid origination fees, additional appraisal fees, and other costs. When it comes to loans for investment property, a 20 year fixed rate loan is considered a long loan. Normally this includes a balloon payment five to ten years into the loan.

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If your lender tries to push you into a shorter repayment period, you can set up an arrangement that you re-price after five years, instead of having to pay a large amount of cash in one lump sum. A common alternative is the prevailing prime interest rate plus 1%.
Keep in mind that most things in real estate investing are negotiable, and that your lender can be your partner in real estate investing. Developing a positive long-term working relationship with your lender can only help you.

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