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61   Link   Beginners' Quick Flip Primer (Part 1)
Beginners' Quick Flip Primer (Part 1)
By Jackie Lange
62   Link   Beginners' Quick Flip Primer (Part 2)
Beginners' Quick Flip Primer (Part 2)
By Jackie Lange
63   Link   Best Real Estate Invention of The Decade: The LLC
Best Real Estate Invention of The Decade: The LLC
By William Bronchick, J.D.
64   Link   Big Returns on Small Money
Big Returns on Small Money
By Terry L. Vaughan
65   Link   Borrowers retreat as rates rise
Borrowers retreat as rates rise
Source: Lou Barnes - August 22, 2003
Mortgage volatility declined this week, as rates held a stable, 6.25 percent-6.375 percent range despite more signs of an improving economy...
66   Link   Building a Pipeline to Wealth
Building a Pipeline to Wealth
By Robert Kiyosaki
67   Link   Buy for Nothing Down and Get Cash Back at Closing
Buy for Nothing Down and Get Cash Back at Closing
By Jon Richards
68   Link   Buyer's Remorse- Did You Make a Huge Mistake
Buyer's Remorse- Did You Make a Huge Mistake
Source: RealEstateABC.com - 2002
The first house might have been "too big," and another was "too small," but finally you found one that was "just right."..
69   Link   Buying a Fixer-Upper - House Needs to be in - Marketable Condition
Buying a Fixer-Upper - House Needs to be in - Marketable Condition
Source: Henry Savage - February 21, 2003
Question: My wife and I have been looking for the right house to buy
for the last year or so. Property values have skyrocketed so we have
been searching for well-priced "handyman specials", figuring we could
buy at a good price and make improvements ourselves, over time...
70   Link   Buying a Home With Resale Value - Location
Buying a Home With Resale Value - Location

Location, Location, Location?

Location - Local Community, Town or City

Location - the Local Neighborhood

Location - the Residential Neighborhood

71   Link   Buying a Home With Resale Value - the House
Buying a Home With Resale Value - the House

A Home With a View?

Lot Choice and Landscaping

House Size

Bedrooms & Bathrooms

Closets, Garage & Laundry

Kitchen

Fireplaces

Swimming Pool?

72   Link   Buying a Home With Resale Value.
Buying a Home With Resale Value.
Source: RealEstateABC.com - 2002
Location, Location, Location? Local Community, Town or City? Location - the Local Neighborhood...
73   Link   Buying a House with an Addition
Buying a House with an Addition
Verify that it was built with a permit prior to closing the sale.
Don't just accept the sellers word. Get copies of the permits before final sign off.
Should you want to refinance or sell at a later date, and the appraiser cannot verify the addition being permitted, no value should be given.
The result: no new loan or worse . . . no sale.

Important Tip!
Adding onto your house = Always obtain a building permit.
A 600 square foot addition built without a permit is given no value on an appraisal. When it is time to sell or refinance, the frustrations of the building permit process will be worth it.
Always save copies of the final permit sign offs and keep with your house papers.

Tip!
A one bedroom house or condominium doesn't appreciate as well and is harder to sell.

The most important thing you can do when previewing is to look at the house as if empty: four walls, floors and a roof.
Don't let the current owners' furniture and decor influence you.

Work with An Agent
An advantage of working with a real estate agent is that they can provide you with sales information of similar properties to better guide you on how much to offer.
Your agent can provide recent sales "comps" for similar homes in the neighbourhood.
Finding the list prices is also important. Comparing the list prices with the sale prices tells you exactly what percentage of the list price sellers are getting.

To find out what properties are selling for and to get a comprehensive report about the neighbourhood, try the Property Value Estimator & Comprehensive Report which covers most communities across the United States.
74   Link   Buying Homes "Subject to"
Buying Homes "Subject to"
By Charlie France
75   Link   Buying Homes In High-End Markets
Buying Homes In High-End Markets
Source: Broderick Perkins - October 4, 2002
James and Michelle Rigdon purchased a new $427,000 Gilroy, CA home with a conventional $282,500 first mortgage, a $25,000 deferred payment California Housing Finance Agency second...
76   Link   Buying Real Estate in Your IRA
Buying Real Estate in Your IRA
By Hugh Bromma
77   Link   Can a Buyer on a Real Estate Contract May be Held Liable Beyond His Earnest Money Deposit?
The "standard" real estate contract usually has a provision spelling out the legal remedy of the buyer or seller upon default of the agreement. In most cases, the buyer wants to limit his risk of loss by offering a small earnest money deposit and inserting a "liquidated damages" provision.

A liquidated damages provision states that if the buyer breaches the agreement by failing to close title, the seller's sole legal remedy is to keep the buyer's earnest money. Without a liquidated damages provision, the seller could sue the buyer for his actual, provable damages or force the buyer to purchase the property (called "specific performance"). The liquidated damages provision is thus an agreed-upon, estimated guess of the actual damages the seller would sustain if the buyer breached the agreement by failing to close.

Many court battles have been fought over the validity or enforceability of liquidated damages clauses, since they often result in unfair consequences to the buyer. For example, if the buyer placed 10% or more of the purchase price in escrow with the seller or his agent, the seller would get a windfall if the buyer did not close. The seller could resell the property for full price, even more, and still legally keep the buyer's earnest money. The buyer's legal argument in challenging the clause is that it result in a civil penalty which is against public policy.

In determining whether a liquidated damages clause is unenforceable as a penalty, the courts generally look at whether the amount settled upon is a "genuine pre-estimate of damages" in the case of breach. C. McCormick, Damages, §149. In most cases, the issue in litigation is whether the amount is too large and thus penalizes the buyer. However, McCormick further states that if the stipulated amount is unreasonably small in relation to the actual damages sustained, the Court will disregard it and permit the injured party to recover actual damages.

The Federal Bankruptcy Court in In Re Ilana Realty, Inc., 154 B.R. 21 (S.D.N.Y. 1993) applied this rationale in awarding damages to the plaintiff upon breach of a real estate contract. In Ilana Realty, the purchasers wrongfully refused to close and then sued for return of their earnest money deposit held in escrow. The earnest money was only 5% of the purchase price. The Court used its equitable powers to award damages beyond the amount of the liquidated damages. The Court did so because it found that the amount stipulated was disproportionately lower than damages actually sustained by the sellers. The Court further reasoned that the buyer's breach and failure to release the earnest money upon breach resulted in further consequential damages to the sellers.

This case brings up another point: what if the buyer is in breach of contract, yet refuses to let the escrow agent release the earnest money to the seller? Courts have sometimes ruled that the liquidated damages provision may not apply and the seller could sue for further damages. The rationale is that the release of the earnest money is a condition of the limitation of liability afforded to the buyer under the liquidated damages clause

This exact issue was presented in Fuels Research Company v. Roberts, 458 P.2d 751 (1969). In Fuels Research, the defendant agreed to purchase a business from the plaintiff, which involved holding certain papers in escrow (stock certificates, formulae, trademarks, etc.). The defendant defaulted on the payment of purchase money after making total payments of $1,000 and refused to return the escrow items to the plaintiff. Plaintiff then sued for breach of contract, and the trial Court awarded the Plaintiff a judgment for $15,000. On appeal, the defendant argued that the liquidated damages clause limited plaintiffs' recovery to the purchase money paid, that is, $1,000. The Court rejected this argument: "[W]e consider the return of the escrowed items as a condition subsequent to the effectiveness of the liquidated damages provision . . . The condition subsequent not having occurred, the provision limiting plaintiff's recovery to liquidated damages is not operative."



The liquidated damages clause is for the benefit of the buyer, to limit their liability in the case of breach. If the buyer has breached a real estate contract by failing to close and have refused to forfeit the escrow money, the seller is not bound by the liquidated damages clause.

There is little case law on this subject, so the result of a court trial would be unpredictable. The moral of the story? If you fail to close on a contract, don't play games. Do the right thing and release the earnest money from escrow to the seller.
78   Link   Can Foreclosure Investing Be Criminal? by William Bronchick, Esq.
I recently attended a "free" seminar on how to "get rich quick" in foreclosures. The speaker had a different angle than the usual "steal it from the homeowner" method. The speaker suggested that you approach the homeowner with the following plan:

Tell the homeowner you will make up his back payments and give him some cash

Take title to the property.

Lease it back to the former owner with an option to buy it back for one year.



The speaker suggested that after one year, the house would be yours if the former owner didn't exercise his option. Sounds great doesn't it? You could beat out all your competition who are trying to "steal" the same house.

Well, here's the catch. The poor homeowner in foreclosure will be your best friend when you make up his back payments. However, when the year is up and he can't get his house back, the trouble will begin.

In a number of cases, these homeowners will go to court and claim that the "sale/leaseback" was really just a disguised loan. He or his attorney will ask the court to "re-characterize" the transaction as a loan and place title to the property back in his name (for an in-depth discussion of sale/leaseback re-characterizations, read "How to Structure Sale-Leaseback Transactions"). If the court agrees, the loan is illegal, since it is usurious.

Here's how it works: Let's say that you find a house in foreclosure worth $100k. The balance of the loan $50k, and the homeowner is behind $5k. You agree to make up the back payments of $5k and take title. You then lease it back to the homeowner with an option to buy it back for $100k, its fair market value. What's the problem?

The problem is that if the court re-characterizes the transaction from a sale/leaseback to a loan, you have loaned the homeowner $5k at 1000% interest! Think about it . . . you give him $5k, and he has to pay $50k ($100k option price minus the $50k loan balance) to get his equity back. 1000% interest is usury, and the court will set aside the loan. You will lose the house AND your $5k.

If you're not familiar with the word "usury," it means charging more interest than permitted by law. The consequences of a usurious loan are usually civil; the court will declare the loan void and the borrower won't have to pay it back. If you get caught making usurious loans on a regular basis, you'll be hearing the words "loan-sharking" and "racketeering." These are CRIMINAL acts that will get you in jail. Many foreclosure real estate investors have been indicted on racketeering charges for doing exactly what I described above.

The Better Way to Do It

The safer way to deal with someone in foreclosure is to buy him out and get him to leave. If a person is in serious financial trouble, chances are he will get into trouble again. Thus, you will end up with a messy eviction and a court battle when the tenant/former owner. If homeowner insists on staying in the property, then simply lease it to him without an option to purchase.

If the homeowner is not willing to be just a tenant and has significant equity in the property, offer a partnership arrangement wherein the partnership will own the property. Your contribution to the partnership is the money to cure the back payments due on the loan. The homeowner’s contribution is the equity in his home. The partnership will lease the property to the former homeowner for market rent. If he defaults on the rent payments, the partnership evicts him. The former homeowner still has a partnership interest, but he does not have possession. At that point, you can buy him out of the partnership.

The partnership approach should not be approached without the assistance of qualified legal counsel.
79   Link   Can I deduct the loss I suffered when I sold my home
Can I deduct the loss I suffered when I sold my home
Source: HomeGain - October 22, 2003
The Internal Revenue Service currently does not allow deductions for losses on the sale of your own home...
80   Link   Can You Afford to Buy a House
Can You Afford to Buy a House
Be Sure to Factor in All the Costs
Source: Michele Dawson - November 4, 2002
While the thought of paying a mortgage is more enticing than paying rent,
it's important to understand all the costs involved in buying and owning a
home as you determine whether you can afford to join the ranks of homeowners...
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