Georgia FHA Home Loans - (& Opinion)

Sounds like the beginning to the Twilight Zone, yes? What home buyers and even home sellers do which is always a mistake only of shortsightedness or failure to have highly adaptable contingency plans is to think that everything is going to go smoothly - no glitches. Wouldn't that be just dandy! So what to do?

Educate, train, prepare. Even practice. Practice? Yes! Practice! Think you can't practice with a seller or a buyer? Think you can't dry run it? Oh you think that takes too much time to do with every deal? Okay then, hush your whining ;)

It takes maybe 1 hour to walk through a potential listing and hold nothing back about what you see. If you don't have a checklist of items available through your brokerage buy one from one of the online resources. You're trying to be a professional, a coach, a guide, and you don't want to tell the people their shoes sitting in front of the door are an issue? Their scratched up old non-stick skillets hanging from the rusty bar over the stained stove are a welcomed site to buyers?  Then get back on the porch and let the big dogs run! (I don't like that saying but it's so popular here in Atlanta ... silly, isn't it?)

The nicest way to do it to is bring in a walk through expert who will do all the talking for you. That way you can be the hero. You may have to pay them $200 or so for the 30 minute walk through but it will save your face and ket right down into the dirty little cracks and crevices! The walk through expert can even be one of your co-agents or a designer friend. Obviously a professional staging artist can do the same but sometimes they don't want to do it quite to the point it may need to go. A third party who will never be seen again may offer you the best out.

If you don't mind being brutally honest yourself - go for it! It's only going to help you sell the home faster and at a higher dollar amount.

You can also talk to your listing clients about their home while you are shopping for their new home ... if you're their buyer's representative. Point out good and bad things that you see while showing them properties that they can pay attention to in their own home.

Buyers Rep's especially for first time home buyers you can have your hands full as you know! I've been around the industry long enough to know that I don't want to show homes. I have no desire or intention to do so. However, I have agents who do and this is what I recommend they do and the ones who do are the ones who top the 6 figure bump year after year.

Bring the clients into the office. Set them down in a quiet space and pretend like they know nothing. Tell them you're going to pretend as though they know nothing so you make sure you're doing YOUR job properly and it's no reflection on them and their intelligence. Talk to them about the importance of being pre-qualified by a lender (at my office they just walk over to the mortgage side and handle it right there). Explain to them that you don't just evaporate into thin air when they can't see you that you are actually going to spend hours and hours searching through properties and preparing property tours for them. Never hesitate to tell them if you are very busy. Some "gurus" will tell you to never do this. Conversely my experience shows that when people know you're busy they (a) respect you (b) respect your TIME (c) perceive you as more successful and professional than they would if they thought you were the only client and (d) respect your advice with an additional amount of weight.

With new clients tell them what to expect. Tell them there will be rainy days, you'll go to houses they like but they don't like the neighborhood. Tell them there will be imperfections to look for which may be bargaining chips. Snow them a HUD 1, an offer letter and a sales agreement. Let them spend time with their mortgage person (NEVER answer mortgage questions REGARDLESS of what you think you know) and get all the facts about what happens on that side of the table. DRIVE THEM TO THE CLOSING ATTORNEY'S OFFICE AND LET THEM SEE THE CLOSING TABLE! If they've never seen one they have NO IDEA what to expect.

Prepare your buyers for offers that are not accepted and tell them what happens before it happens. Warn them about title issues that could come up - liens that the seller may not have known about.

It may take a little more time in the beginning to cover all these steps, all the bases, but in the end it is such a value to you and your clients that you were prepared for the storm that never came!

If you'd like to learn more about these subjects and others visit Cook Property Ventures and get in on some of our seminars, workshops and conference calls! 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Okay, you've been in the industry long enough to have seen that new "green" agent conducting their own "Homebuyers 101 Seminar" and you thought to yourself: Wait, you've never even SHOWN a home much less SOLD a home! Me too. But gosh, it seems like such a great idea!

Well, it is. And the truth is even a green agent with no sales experience who invites the right partners to assist in the seminar can give some extremely valuable information. I've facilitated over 2000 deals since 2001 but in 2001 I had only done my own deals and had been to the closing with a few family members and friends. We all have to start somewhere. Now I see literally thousands of people every year either in my office at our regularly scheduled seminars or at large events where we may be in front of hundreds or even thousands of people at one time like at the Learning Center's Wealth Building Expo with Donald Trump, Robert Kyosoki and Suze Orman.

My confession is that I had decades of public speaking and entertaining experience prior to my first real estate seminar so I wasn't nervous and I was well prepared. You can be at least 50% of those ... well prepared. Well prepared even allows room for nervousness.

KNOW YOUR SUBJECT MATTER!

If you're doing a first time homebuyer's seminar the worst thing you can do is give incorrect information. If you're a real estate agent don't try to teach the attendees about mortgages. If you're a loan officer don't try to teach about appraisals. If you're an appraiser don't try to teach about what happens at the closing table. Need I continue? Too often we try to be experts across the board. This is probably the greatest singel error I've encountered in seminars.

If you're a real estate agent invite an EXPERIENCED loan officer, an EXPERIENCED appraiser and an EXPERIENCED closing attorney to assist you - get the experienced professionals from the each field to attend. They'll be happy to do so.

Don't give a lot of useless stats or even stats that are useful to you but nonsense to your attendees like "housing starts are off by 8% over the same period last year". They don't care. What they are there to learn is what is expected of them. If it's a more advanced seminar you better be the expert in experience or advanced investors will never use your services.

You have valuable knowledge just from your experiences. Even if you've only been to one closing you're going to have attendees who never have: Do a mock closing as a part of your workshop. Show them an example of a full buyer's report and show them an offer letter, a pre-qual letter, an appraisal, a HUD 1, a contract addendum, a buyer/broker agreement, and all the other necessary paperwork. Set with them at the table and let your closing attorney who is attending as your expert go through the steps of a closing.

Let your experts interject as you are workshopping and give them time to present their field and answer questions. 20 to 30 minutes each is PLENTY. Your seminar really shouldn't last over about 1.5 hours with 30 of it being workshop and questions.

DON'T GO OVER YOUR HEAD! Stick to what you know. Plan well. Tell them no children or provide child care. Have experts there or don't bother. Advertise for at least 2 weeks prior and try to have at least 6 people there but really no more than 20 or so especially for your first one.

You CAN DO IT! 

If you'd like to learn more about these subjects and others visit Cook Property Ventures and get in on some of our seminars, workshops and conference calls! 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

It's all over the internet: Get a brand new credit record! Improve your scores overnight! Guaranteed 720 middle score regardless of your credit history!

Some of the above advertise absolute lies and scams. Some actually "can" work. What you need to know is how will any of the above affect your personal liberties (I call that my jail avoidance program) and your ability to actually secure a mortgage loan. Obviously the people charging for the service are going to give you the good salesmanship and tell you it will only improve your ability to borrow.

Here's the lender's side. Since the credit repair companies don't offer you mortgage financing and we do let me help you understand from our point starting with the felonious "new credit report" and working down to the do-able loan condensation program.

Here are actual teaser lines from actual internet ads:

"Credit problems? No problem!"
"We can erase your bad credit-100% guaranteed."
"Create a new credit identity-legally."
"We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"

When this issue comes into question with one of our mortgage or real estate clients we provide them with a nice little letter we've created with information from the Federal Trade Commission's Consumer Credit Organization which includes the following information:

Every day, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can't deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report; many simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, beware of companies that:

    * want you to pay for credit repair services before any services are provided;
    * do not tell you your legal rights and what you can do-yourself-for free;
    * recommend that you not contact a credit bureau directly;
    * suggest that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security number; or
    * advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific consumer protections. For example, a credit repair company cannot:

    * make false claims about their services;
    * charge you until they have completed the promised services; or
    * perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

That pretty much sums it up bet there are a couple of ways of "clearing up" your credit fairly quicly and honestly. One is simply to obtain a personal loan at a reasonable interest rate to consolidate your loans. The problem with this from the lender's side is that we know the borrower has no more self control than they had before they consolidated so now they are going to have their consolidation loan and expend all the available credit on their revolving and charge accounts. This is why debt-seasoning is an issue.

If the consolidation loan is only one or two months old we're going to question it even if the score may have increased. We're also going to be interested in the monthly payment amount going to repay that consolidation loan. It's generally quite pricey unless you were able to secure it and get it from a legitimate lender. A large number of credit repair companies who offer debt consolidation charge upfront fees and then high interest rates ... often higher than your initial debts!

From the lender's side nothing beats good old hard work, honesty and integrity. Pay down your bills. STOP CHARGING!!!! If you have to charge it you probably don't need it! I am always apalled at the people who come to me for help barely making it by with credit card debt over their ears and then they show me their debts and time after time there are debit card withdrawals to Sid's Sea Shack for $85, MovieBlock for $22, Corner Liquor for $68, GameZone Rentals for $12 ... my lord people, get a grip on the spending ;)

If you are enrolled with a debt management company "credit counselling" and it is recorded into your credit report it may prevent you from getting financing and will almost certainly keep you out of A Paper range. 

Best bet is self control and budgeting. Second best is a legitimate debt-consolidation with a money management plan to keep you from getting right back into the same position again.

If you'd like to learn more about these subjects and others visit Cook Property Ventures and get in on some of our seminars, workshops and conference calls! 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

I use this chart in every seminar to explain why you just can't expect to borrow 100% for an investment price for the same amount you can borrow 80% of the value of your own home. Funny thing is, some people still don't get it!

It's a simple illustration of Risk, Rate and LTV and how they are related. Mr. or Ms. Perfect Credit are there in the center. These are the people who *may* qualify for those seemingly rediculously low interest rates you see advertised. Anything outside of that such as a greater LTV, a different type of property, less ability to document income, or other changes, will affect the interest rate.

When a loan moves outside of that circle in starts to denegrate. Meaning the rate is going to go up or the LTV is going to come down. Lending is all risk based: the higher the risk, the higher the rate. Recently some politicians have tried to regulate how the industry treats people with credit issues. In some areas, Georgia, North Carolina and New Jersey to name a few, extremely liberal politicians have been able to pass legislation which ultimately penalized the ver sector of the population they claimed to be intending to help.

What happened, at least in Georgia, is regulations were created to govern the amount of interest that could be charged to a borrower regardless of the risk the borrower presented to the lender. They called the "predatory lending". In reality what happend was people who originally could have qualified for a loan, allbeit at a higher interest rate because the risk the presented to the lender, now can no longer qualify at all because the risk they present is too high for the lender to accept.

But I digress.

If you have a 562 credit score, have been on your job for less than a year, moved often during the last two years, have charge offs and missed payments you haven't yet lowered your risk to the lender. If you want the better interest rates here's what you do for the next 2 years:

1. Keep your job, at least stay in the same line of work and if you change jobs get a better one with more pay
2. Meet all of your monthly obligations ON TIME (on time means before the due date ... not after - you'd never believe how many seemingly professional people simply do not pay their bills AT ALL)
3. Manage your expenses so that you can save some money for a down payment ... 20% will qualify you for a great rate.
4. Pay all of your credit cards down to less than 25% of the available cedit line - full credit cards eat you up.
5. Do NOT close your credit cards without speaking to a PROFESSIONAL (Clark Howard is NOT a mortgage professional so take his advice on the subject with a grain of salt. He's an ENTERTAINER, an author, and a funny guy.
6. Do NOT join a credit repair or credit counselling company even if it is "attached" to or recommended by a mortgage or real estate company. These things can tie you up for YEARS!
7. Keep the same transportation you have if you at all can.
8. Start working NOW with a seasoned experienced mortgage consultant like one of the ones at Novation Mortgage
9. Don't get yourself confused by dealing with all different kinds of people and especially from people who have little or no experience in the industry ... Including Uncle Robert or Aunt Fredia!

If you'd like to learn more about these subjects and others visit Cook Property Ventures and get in on some of our seminars, workshops and conference calls! 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Investor funding available in Georgia and Florida from Novation Mortgage.

I have had literally hundreds, maybe thousands, of people through my seminars this year. I maintain contact with most of them through email, telephone or by them immediately becoming investment clients. After having witnessed the same cycles for several years now I'm ready to offer some seasoned commentary on what happens when you compare an emotional buyer to a prepared buyer.

The "prepared" investor has a tendency to make us, real estate service professionals, a little nuts at first but generally turn out to be the best long-term clients. They are often the ones who try to beat us to death on pricing and pick out brains in a method somewhat akin to a giant leach sucking on our brains! It's worth the donation of time in most cases, however, so if you're a professional hang in there. Be honest with them if they are eating up too much of your time in a random method and take control of when you're available for them. Often they will want several minutes or hours of your time a few or several days each week.

The "emotional" investor leaves my seminar thinking they know everything they need to know to succeed. Sometimes they will join the weekly conference calls for a couple of weeks after the seminar and they may email a few times but that will be it. The next time I hear from them they've usually gone out one their own, without the assistance of a buyer's agent, and located a property. Worse yet they've probably already made a bid and signed a contract! This really makes me want to wonder if they even paid attention in the seminar!

Can the "emotional" investor make a good deal? Yes, of course it's possible. It's also possible for a complete amateur archer to shoot an arrow at a target 50 yard away and hit the bull's eye. Chances are, obviously, quite limited. Likewise the "prepared" investor can make a bad deal ... overspend.

The emotional investor usually has big, fast dollar signs in their eyes thinking they'll grab a couple of properties undervalue, put a little money into them and make fast cash. They don't ever stop to question why they are able to get a particular property below value and what makes them think they can sell it for market value. This is not to imply that this doesn't happen it's simply that the emotional ones don't take time to really look at the numbers.

The prepared investor, on the other hand, will drive you nuts with spread sheets and questions for the appraiser and about the taxes. They'll want a property inspector and a general contractor in that house before they even make a bid! Likewise the prepared investor generally won't be concerned with wall coverings and window dressings. They'll more likely be looking for leaks, cracks and structural condition.

Where the two really separate is when closing time comes into play. The emotional investor generally will be doing a stated loan and the prepared investor will generally be full-doc. The emotional investor will freak out when the appraisal comes back lower than they dreamed it would and threaten to walk. The prepared investor will have all their documents neatly prepared and will generally have a better understanding of the business of real estate transactions than the emotional ones. 

At the closing table the emotional investor will show one of two types of behaviors: sign everything without reading anything or read every word and ask a blue billion questions. Generally the prepared investor will scan every page, sign every line and ask only a few questions.

I've tried to construct a plan for creating prepared investors from emotional investors. Sometimes I've nearly succeeded. Still, it blows me away that these people will set through a 4 hour seminar or a 3 hour workshop, hear everything I say, take notes, do the booklet exercises and then the next thing I hear from them they've purchased a property on their own, used some other company for financing and are calling me to bail them out of the bad loan, the bad investment or just generally HELP!

Don't think I don't still appreciate and treasure emotional investors. They are good for my business, good for your business and eventually can learn to succeed. Until they learn, however, to take the emotional factor out of their transactions it's a turkey shoot whether or not they will succeed.

Keep sending them to the seminars and workshops and I'll keep sending back buyers with a little more exposure to the realities of investing than they had before they came. 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Investor funding available in Georgia and Florida from Novation Mortgage. 

It's another great dilemna - you have an investment client who belives in "No Money Down" for investment properties but you want them to have equity in their purchases so they will come back again and again for more purchases. We all want investors to win and be successful. 

You really know the answer: buy under value. It's pretty much that simple. But so many new investors are just "raring to go" and make a few mistakes along the way. While I will post more information on this subject for now I'd like to invite you to join me for a free teleconference on August 16th, (Wednesday) at 8PM EST for a great talking coral on this exact subject.

More information coming soon and a teaser in audio available by clicking here. 

GEORGIA AND FLORIDA PROFESSIONALS PREFERRED for this teleconference. 

We will cover such subjects as:

Investment Horizons - how you determine the timeline of the lifetime of your investments
Cost of Investmens - how much  your money "costs" you (previously referred to as "Dollar Cost Averaging")

and other subjects relevent to this topic. 

So many gurus, so little time. And, when the gurus are finished with you ... so little money!

Much of my time as a lender/broker is spent correcting incorrect "education" and downsizing myths about the real estate investing world. There are, indeed, many extremely knowledgeable investor "gurus" sharing the news but there are also a great many who really don't need to be giving advice. Just yesterday, in fact, I listened to a blog of so called professionals who not only gave a little incorrect information but everything they said about a 1031 Exchange was incorrect. Not just a litte bit ... totally.

So, what are we to do? I have a simple formula.

Before you attend a seminar, buy a book or CD, listen to a radio show, answer these questions about the author/speaker:

1) How many investment deals have you personally done in your life and then again in the last 24 months?
2) What is your business and education background?
3) Are you currently actively involved in some field of real estate whether it be finance, sales, management, or legal?

If they answer less than 20 to question number one - forget them.
If they say "author", "reporter", "lecturer" to question number two - forget them.
If they answer "no" to question number three discount everything they say.

There is a particularly "snotty" girl on the radio on Sunday afternoons in my town. She's usually on opposite the Brave's or Falcon's games so she doesn't really have much of an audience but she does have listeners. Every episode of her show contains deeply incorrect information about the real estate business. Finally I emailed her asking about her background. She, of course, did not reply. So I did a little research and here's what I found:

"_________________ is an award-winning nationally-syndicated journalist who writes about real estate."

Something I just now discovered that I find actually humerous is a change to her website. On a prior date when I was researching there was a glowing, self-written no doubt, biography of this person. In it she gloated on her education and her writing awards. It's no longer there. No link, no explanation ... just missing.

The bottom line, after my digression, is that here we have a so-called "expert" in the real estate field giving advice and commentary when she has no education and no practical experience in the field!

The worst part? She's not abnormal. When I see an advertisement for a seminar, boot camp, workshop or what have you about real estate or real estate investing and the keynote speaker is one of my clients or disciples I know the truth. I do indeed have clients who have done high dollar seminars after just doing one or two investment deals.

DON'T BUY BAD INFORMATION! Being misinformed is much worse that being uninformed. Call the keynote and ask them the questions above. They may have great charisma and terrific speaking skills. They may have even read a thousand books and attended a hundred seminars. But if they haven't personally experienced at least 20 deals and at least 10 in the last two years you're not going to be getting cutting edge information from someone who knows from experience what the truth is. 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Investment funding in Georgia and Flordia available through Novation Mortgage. 

I was recently sent a Podcast from a married couple who are "real estate investment experts". Now I understand people make mistakes and misspeak - I'm guilty. Please correct me if you ever see something or hear something originating with me that you know for a fact to be different that reality.

I digress.

In this Podcast, among other items up for discussion, was a question from a listener about 1031 exchanges. Unfortunately the answer was so completely wrong I wanted to address it everywhere I post.

What a 1031 is:

A 1031 Like Kind Exchange is a tax deferment leaving you the opportunity to defer taxes until you actually pocket the proceeds.

What a 1031 is not:

A magic trick or loophole to make your tax liabilities dissappear forever.

You eventually will be responsible for your taxes or your estate will. When the final property is sold and the profits are kept you will, at that time, be responsible for the payment of all taxes due whether normal income or capital gains. 

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.

Why?

Simple - they are potentially illegal at worst and a rip-off at best. Here is one I recently uncovered from craigslist.com

"Get A Clean Credit Report Instantly"
Having problems getting a mortgage? Need a better rate? We can build a brand new credit for you and it's completely legal! We'll get you a 700 plus FICO score in just 48 hours. You'll have 5 seasoned trade lines showing all payments made on time for the past 2 or more years. You won't have any judgements or charge-offs and no negative information on your credit report. Use your new, clean credit report to get the best loan you can get.

Wahoooo!!!

So the best part is where the ad says "and it's completely legal".

Let's start with the first reason it's going to lead to a felony, at least one count, when you use this "new, clean credit report" to apply for a loan. It's a false statement. That's not your credit report. You know it's not your credit report and we, as lenders, have more investigative tools at hand than you can imagine.

Here's another reason it's going to head you into trouble: "5 seasoned trade lines". Listen, you can't just pull a trade line out of the air. Know this: when certain tradelines show up on a credit report our Loss Mitigation department gets a red flag and they go to work. When they see those other four, the same four showing up on other credit reports with high scores but no credit reports with low scores, bells and sirens go off.

NO MATTER HOW TEMPTED YOU OR YOUR CLIENT IS TO TRY THIS IT IS ILLEGAL AND YOU WILL BE CAUGHT.

Let me add here that you would be blown away by the intelligence departments at most lenders today. They are trained, skilled and experienced at sniffing out fraud. This is one of the easier forms of fraud to uncover. And, to make it worse, Loss officers do - by law - report to the FBI.

On the other hand so many of these are just plain scams. You send them $250 to have your credit repaired and the only thing that happens is you never see your $250 again. I traced one of them down to a UPS Store in Nevada. Try tracking that for yourself! Fortunately the FBI is now watching his mailbox. He'll get nailed for wire fraud, theft by converstion, grand larceny, and more.

Keep your eyes open for the next article about this subject titled "Credit Repair - The Real Way".

Ken Cook is Director of Operations for Novation Mortgage. Georgia's top funder of investment grade real estate funding. He is also a successful real estate investor in the Atlanta metro area. Since 2001 he has completed over 2000 successful real estate transactions.

Talk about your proverbial "Two Edged Sword" this is IT! Motivated sellers are a prize and a curse all in one little, tidy package. On the one hand it can be a really fast sale for a representative and a really great buy for an investor or owner. On the other hand it can be filled with panic attacks and angry neighbors. So what do we do with these prized gems of the investor game?

Any professional or aspiring champion agent should know you've got to find the pain behind the method. If you have a seller who, for example, is facing impending economic travesty in their life such as the end of an employment contract you probably want to get a move on, get some offers and get the property sold. Keeping them in the home too long could prove disastrous. In another scenario where the seller may have inherited the property and the liability thereof it may behoov you, as a seller's rep, to consider rehabbing, staging and going for the big bucks.

Investors, for obvious reasons, love motivated sellers. You're going to deal with some unreasonable offers from investors such as "I never pay more than 50 cents on the dollar." Don't blow this investor off because they may be a good client once they face a bit of reality (send them to my seminar ... I'll fix 'em) about buying homes that aren't burnt out shells! But you're also going to get offers from investors willing to pay close to retail for the right home in the right area and motivated seller to us (them) means negotiating room on price and points.

Homebuyers, especially first time, may really not have any clue about how to handle purchasing from a motivated or distressed seller. You may have to coach them through such things as understanding what "as is condition" means and why they can't ask for too many seller concessions. Obviously if there is plenty of available equity you simply bump the sales price to cover the concessions and consequently keep the neighbors a little happier.

Why are the neighbors upset? Good question! Because distress sales generally lower the property value for neighboors in similar homes. Remember, once that distress sale goes on public record any subsequent appraisals in the area must use that sale as a recent comparable sale. This is certainly something you as a seller's rep want to keep in mind while you are discussing the sales price of the home. You really don't want to become known as the agent who destroys property value but you also don't want to let your seller deal with unknown factors in other agents who may not have read my articles.

Here is a simple list of motivated sellers who just aren't going to be able to do anything short of "dump" their property:

Recently lost job or source of income and running out of savings.
Recently suffered or currently suffering major illness.
Divorce - enough said.
Recent death of a spouse or partner who helped with the costs of living.

Let's face it, you're probably not going to get any of the above to wait and see if you can get the highest market value for their home. In fact you'd be doing a disservice to them should you miss the deadline and the property goes into foreclosure or bankruptcy.

These are tough times and you'll almost need to be a psych major to help these people through. Heaven help you if one of the offers falls through before closing! I've literally seen people break down and sob at the closing table because of the amount of stress that is relieved when the liability is transferred to the new owner.

On the other hand you should coach the following into going for the highest market value:

People who are moving to a new home but can afford to carry the property for a while.
A seller who has inherited the property and "just doesn't wan to mess with it".
Any investor who is ready to retire and liquidate their holdings. (Pssssst ... call me about these, I may buy quickly)
Someone who has recently divorced or lost a love one and is downsizing but not under financial duress.

As you can see these are good candidates for a complete home staging and marketing campaign.  They also, generally speaking, come with much less stress and excitability.

I hope this article helps you to anticipate my next article entitled "Targeting Motivated Sellers". 

Ken Cook is Director of Operations for Novation Mortgage. Georgia's top funder of investment grade real estate funding. He is also a successful real estate investor in the Atlanta metro area. Since 2001 Ken has successfully facilitated over 2000 real estate transactions.

(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.