Prosper Newsletter: April 2008 > Real Estate

You understand that the following information is educational in nature and is not intended to be legal, accounting, or tax advice. You are responsible for your own financial decisions and should consult your own legal, accounting, and tax advisors before making your financial decisions.

Offers

Forming the Right Offer

An offer is your gateway to purchasing property. As you create an offer, ask yourself these questions: Are there standard items you should include? Are there items that you should not include? As with everything else, a little spring-cleaning can help you make better offers as well.

Many homebuyers, particularly first time buyers, are unaware of the seriousness of writing a real estate offer. In most cases, an accepted and signed offer becomes a binding contract between a buyer and a seller, at which point no further negotiations can be allowed. If you write a contract that does not include all of the protections and contingencies you require, those additional items are no longer negotiable—the seller does not have to comply with any additional requests. However, you will still be legally required to purchase the property!

Additionally, an offer with too many contingencies may hurt your chances for purchasing the property. This is where a little spring-cleaning comes in handy. Here are some items you should include in every real estate offer:

Purchase Price: This is the most obvious component of a written offer.
Financing Contingency: A financing contingency allows you to pull out of a contract if you cannot find satisfactory financing. Additionally, you may want to include mortgage terms in the contract. Remember, pre-approval for a loan, before hunting for property, all but negates the need for this contingency.
Disclosure Requirement: A seller is legally required to disclose any information about the property that might affect its value, but it is helpful to have this disclosure in writing. A disclosure form typically features information on appliances, the HVAC system, water supply, environmental hazards, code compliance, and other related items.
Concessions (from the seller): If the seller agrees to make certain changes to the property, then those concessions should be in writing.
Home Inspection Contingency: Despite concessions and disclosures from the seller, you still need to have the property inspected. An inspection will grant you a complete picture of the condition of the property. There are many different types of home inspections, and which one(s) you choose depends on the type of property and region. Inspections can be general, or focus on one specific feature, such as lead paint, termites, plumbing, etc.
Property Inventory: It's important to spell out specifically what you expect to obtain with the property. Items such as kitchen appliances, swing-sets, window treatments, alarm systems and such should be itemized.
Condition of the Property: You should dictate the condition you expect the property to be in when you take possession of it. Such items may include curb appeal, cleanliness, and state of repairs.
Earnest Money: List the amount of earnest money you are presenting with your offer.
Final Walk-through Contingency: While we would like to believe that all sellers will live up to their agreements, it is important to include a contingency that allows you to verify that the seller has accomplished the items that they agreed to. A final walk-though is your opportunity to make sure that all repairs, changes, etc. are done to your satisfaction and that the property is in the agreed-upon condition.

Additionally, you can condition your offer on the sale of your current home, your lawyer's approval of the contract, review of HOA bylaws, and several other contingencies. Contingencies in a real estate offer are written to limit the buyer's risk, but you should be careful not to go overboard with them. Reasonable contingencies are expected, but unreasonable contingencies could cause your offer to be rejected. Make sure you adequately protect yourself, but keep spring-cleaning in mind as well so you don't clutter an offer and lose a deal.

Real Estate Student Earns a $500 Finders Fee

I got a call from a couple that had received one of my flyers. I mailed the flyer to the address that was on the foreclosure list at the court house. They were renting to own the property and lived there for almost a year. They found out that the owners filed for bankruptcy and the property was now in foreclosure. They also found out that the owners were using the monthly payments for themselves instead of paying the mortgage. It took a month for me to talk with the owners because they would not return calls or accept them. I got in touch with their bankruptcy attorney and he told them they should talk with me. I explained how I could help them and they would have nothing to do with it. The renters would have to get permission from the courts in order to possibly buy the property and they did not want to take the chance of losing their money. I gave them some names of investors in the area that had rent to own properties available. They looked at some homes over the weekend and loved one of the homes they looked at and moved in. Within 1 week I had earned a $500.00 finders fee. I am in the process of helping someone else in the same way and it makes me feel great that I helped someone. I am also currently working on a short sale that I hope to make $5,000.00 on. Thank you for the confidence and all the knowledge that you have brought to me.

Tara V.

Organization

Spring is a time year when we typically think of cleaning and organizing our homes and lives. It is also a good time to better organize your business. Your real estate investing business can be much more profitable and successful when your efforts are focused, effective, and organized.

Think of the money that is lost over the years when you fail to track your marketing efforts and results, or when you misplace contact information for sellers that you should be following up with. Lost opportunities can sure add up for most of us. The methods that work best for organizing your business are something that you'll have to explore and experiment with. What is important is that you recognize the need to improve and try something new and potentially better than what you have done previously.

One major area to focus organization efforts on is tax records. Too many investors sweat and panic as tax filing approaches because they have poor records. Stuffing a shoe box with receipts is better than not hanging on to receipts at all, but is still a far cry from the kind of bookkeeping that you should be doing to maximize profitability.

Consider taking a course on bookkeeping, or hiring someone to do it for you. The cost is minimal in comparison to the expense of paying too much in taxes, or stressing through an audit that you're ill prepared for. Also consider meeting with a good CPA as soon as possible to strategize and prepare a tax plan for the remainder of the year. As the saying goes, "The best defense is a good offense". Take your spring cleaning efforts into consideration as you prepare your game plan.

*See the Elective Class Catalog in your Success Center for the latest dates, times, and class details.

April

Elective Class Schedule:

General Elective Class Given by Dave Mink

1^st

Time:
7:30 AM (MST)

Topic:
Business Organizations
Real Estate Elective Class Given by Matt Gunderson

1^st

Time:
11:00 AM (MST)

Topic:
Navigating Auctions for Big Profits
General Elective Class Given by Paul Weaver

1^st

Time:
1:00 PM (MST)

Topic:
Revitalize and Activate Your Goals
Real Estate Elective Class Given by Carter Brown

1^st

Time:
7:30 PM (MST)

Topic:
Deal Analysis
Real Estate Elective Class Given by Jeremy Brand

2^nd

Time:
12:00 PM (MST)

Topic:
Big Profits in Short Sales
Real Estate Elective Class Given by John Radmall

2^nd

Time:
6:30 PM (MST)

Topic:
Selling Houses With Lightning Speed
Real Estate Elective Class Given by John Radmall

3^rd

Time:
10:00 AM (MST)

Topic:
Lease Options - Leveraging Your Way to Wealth
Real Estate Elective Class Given by Gail Long

3^rd

Time:
5:00 PM (MST)

Topic:
Creative Finding Techniques
Real Estate Elective Class Given by Cary Beagley

3^rd

Time:
6:00 PM (MST)

Topic:
Intro to Multi-Unit Real Estate Investing
Real Estate Elective Class Given by John Radmall

3^rd

Time:
6:30 PM (MST)

Topic:
Navigating Contracts With Confidence
Real Estate Elective Class Given by Carter Brown

4^th

Time:
10:30 AM (MST)

Topic:
Get Started in Real Estate Investing
Real Estate Elective Class Given by Jeremy Brand

5^th

Time:
9:00 AM (MST)

Topic:
Foreclosures
6th
Real Estate Elective Class Given by John Breedlove

7^th

Time:
2:00 PM (MST)

Topic:
Intro to Commercial Real Estate Investing
Real Estate Elective Class Given by Carter Brown

7^th

Time:
2:00 PM (MST)

Topic:
Deal Analysis
Real Estate Elective Class Given by Gail Long

8^th

Time:
1:00 PM (MST)

Topic:
Creative Finding Techniques
Real Estate Elective Class Given by Janeen Patch

8^th

Time:
3:30 PM (MST)

Topic:
Assigning of Contracts
General Elective Class Given by Dave Mink

8^th

Time:
4:00 PM (MST)

Topic:
Business Organizations
Real Estate Elective Class Given by Jeremy Brand

8^th

Time:
6:30 PM (MST)

Topic:
Foreclosures
Real Estate Elective Class Given by Matt Gunderson

9^th

Time:
2:45 PM (MST)

Topic:
Navigating Auctions for Big Profits
Real Estate Elective Class Given by Carter Brown

9^th

Time:
3:00 PM (MST)

Topic:
Get Started in Real Estate Investing
Real Estate Elective Class Given by Jeremy Brand

9^th

Time:
6:00 PM (MST)

Topic:
Big Profits in Short Sales
Real Estate Elective Class Given by John Radmall

9^th

Time:
6:30 PM (MST)

Topic:
Lease Options - Leveraging Your Way to Wealth
Real Estate Elective Class Given by John Radmall

10^th

Time:
6:30 PM (MST)

Topic:
Selling Houses With Lightning Speed
Real Estate Elective Class Given by John Radmall

11^th

Time:
10:00 AM (MST)

Topic:
Navigating Contracts With Confidence
General Elective Class Given by Darren Hardy

11^th

Time:
6:00 PM (MST)

Topic:
Small Business Accounting
General Elective Class Given by Paul Weaver

11^th

Time:
6:30 PM (MST)

Topic:
Revitalize and Activate Your Goals
12th
13th
Real Estate Elective Class Given by Matt Gunderson

14^th

Time:
7:00 AM (MST)

Topic:
Navigating Auctions for Big Profits
General Elective Class Given by Dave Mink

15^th

Time:
7:30 AM (MST)

Topic:
Business Organizations
Real Estate Elective Class Given by Carter Brown

15^th

Time:
2:00 PM (MST)

Topic:
Get Started in Real Estate Investing
Real Estate Elective Class Given by Gail Long

16^th

Time:
11:00 AM (MST)

Topic:
Creative Finding Techniques
General Elective Class Given by Paul Weaver

16^th

Time:
12:00 PM (MST)

Topic:
Revitalize and Activate Your Goals
Real Estate Elective Class Given by Jeremy Brand

16^th

Time:
12:00 PM (MST)

Topic:
Foreclosures
Real Estate Elective Class Given by Carter Brown

16^th

Time:
9:00 PM (MST)

Topic:
Deal Analysis
17th
General Elective Class Given by Darren Hardy

18^th

Time:
6:00 PM (MST)

Topic:
Small Business Accounting
Real Estate Elective Class Given by Jeremy Brand

19^th

Time:
9:00 AM (MST)

Topic:
Big Profits in Short Sales
20th
General Elective Class Given by Paul Weaver

21^st

Time:
9:00 AM (MST)

Topic:
Revitalize and Activate Your Goals
Real Estate Elective Class Given by Gail Long

21^st

Time:
9:00 AM (MST)

Topic:
Creative Finding Techniques
Real Estate Elective Class Given by John Breedlove

21^st

Time:
2:00 PM (MST)

Topic:
Intro to Commercial Real Estate Investing
Real Estate Elective Class Given by Matt Gunderson

21^st

Time:
6:00 PM (MST)

Topic:
Navigating Auctions for Big Profits
General Elective Class Given by Dave Mink

22^nd

Time:
4:00 PM (MST)

Topic:
Business Organizations
Real Estate Elective Class Given by Jeremy Brand

22^nd

Time:
6:30 PM (MST)

Topic:
Big Profits in Short Sales
Real Estate Elective Class Given by John Radmall

23^rd

Time:
6:30 PM (MST)

Topic:
Navigating Contracts With Confidence
Real Estate Elective Class Given by Jeremy Brand

24^th

Time:
6:30 PM (MST)

Topic:
Foreclosures
Real Estate Elective Class Given by John Radmall

24^th

Time:
7:00 PM (MST)

Topic:
Selling Houses With Lightning Speed
Real Estate Elective Class Given by John Radmall

25^th

Time:
10:00 AM (MST)

Topic:
Lease Options - Leveraging Your Way to Wealth
Real Estate Elective Class Given by Carter Brown

25^th

Time:
2:00 PM (MST)

Topic:
Get Started in Real Estate Investing
26th
27th
28th
Real Estate Elective Class Given by Janeen Patch

29^th

Time:
8:00 PM (MST)

Topic:
Assigning of Contracts
Real Estate Elective Class Given by Carter Brown

29^th

Time:
9:00 PM (MST)

Topic:
Deal Analysis
Real Estate Elective Class Given by John Radmall

30^th

Time:
1:00 PM (MST)

Topic:
Selling Houses With Lightning Speed
General Elective Class Given by Paul Weaver

30^th

Time:
6:30 PM (MST)

Topic:
Revitalize and Activate Your Goals
Real Estate Elective Class Given by John Radmall

30^th

Time:
6:30 PM (MST)

Topic:
Navigating Contracts With Confidence