Foreclosures Foreclosures occur in both good times and bad. The foreclosure process begins when a borrower (trustor) defaults on the terms of his loan. At the time the money was borrowed, a promissory note was signed. This document states how much is owed and how it is to be paid back. To secure the lenders interest, a Trust Deed or Mortgage is recorded at the county where the property is located. This shows evidence that the lender of “beneficiary” is owed money. The name of the trustee is on the Trust Deed. In the event of a default by the trustor the beneficiary will contact the trustee named on the Deed of Trust. If the beneficiary chooses, he/she may substitute another trustee in place of the original trustee by filling out a “Substitution of Trustee” form. The trustee will then request the beneficiary to fill out a form called a “Request to Prepare Notice of Default”. In this document, the beneficiary will specifically state the reason the loan is in default. In the original deed of trust there are many provisions that allow a beneficiary to foreclose on the Trustor. Failure to receive the monthly payment owed on that particular trust deed is only one on the provisions that appear. Others include: 1. Failure to keep the property in good repair. 2. Failure to maintain fire insurance. 3. Failure to pay property taxes. 4. Failure to pay a senior lien that could foreclose, thereby endangering the beneficiary’s interest. 5. Failure to get approval of a transfer of a “Transfer-Due on sale clause”. Each Trust Deed is different, so check your specific Trust Deed to see what it contains. The most common reason for a foreclosure is failure to make payments. The beneficiary may start foreclosure as soon as the trustor is late, even on the first payment. Most lenders wait a few months before starting the foreclosure process. On rare occasions, lender wait over one year to begin foreclosure. Once the trustee has received the declaration by the beneficiary, they record a “Notice of Default” in the county where the property is located. The recording date begins the first phase of foreclosure. If the beneficiary decides not to foreclose by using the Trustee, he has the option of doing a judicial foreclosure. This is a court process that is very long and costly. The beneficiary might choose this avenue if he believes that the property being foreclosed on does not have sufficient equity for a deficiency judgment, if proceeds from the sale do not pay off the beneficiary in full. A judicial foreclosure also allows the trustor the right of redemption. If the proceeds from the sale were sufficient to pay off the foreclosing beneficiary plus the costs involved, the redemption period is 3 months. If the proceeds of the sale were less, the redemption period is 1 year. Keep in mind: this concept of deficiency judgment and right of redemption never apply to a non-judicial foreclosure. When a beneficiary uses a trustee to recluse, the recording of the notice of default starts in the first three-month period. 1. The First Three-Month Period A. The Trustee At this point the trustee has already received the original documents from the beneficiary and recorded the Notice of Default. They then order a Trustee Sale Guarantee policy from a Title Company. This will show them the exact condition of the title up to the moment. Anyone who has recorded a “Request for Notice” must be notified of the default by certified mail first class within ten days. The notice will be mailed to that last known address. It is not the responsibility of the trustee to determine if the address is correct. If the original Trust Deed did not contain the Trustor’s address, the notice of default must be published once a week for four weeks in a newspaper of general circulation. The trustee must also notify the following people by mail within 30 days: 1. Any beneficiary of a trust deed secured by the property. 2. Any successor in interest to the property. 3. Any assignee with any interest in a trust deed secured by the property. 4. Any vendor or successor vendee of a contract sale. 5. Any lease with a recorded lease payment. 6. Any federal agency that has filed a lien. 7. Any state controller when there has been a lien filed for property taxes. At the end of the first three-month period trustees will call the beneficiary for further instructions. B. The Trustor In the beginning stages of the three-month period, many options are available to the trustor. As time goes by these options become fewer and fewer. C. The Beneficiary This is a quiet time for them. Everything is in the trustee’s hands and the three-month clock is ticking. If the beneficiary really does not want the property back it might be wise to contact the Trustor. 2. The 21-Day Period (Or Publication Period) A. The trustee The three-month period is now over and the beneficiary has still not been paid. The trustee will call the beneficiary and request further instructions. Upon the beneficiary’s instruction the trustee will proceed to cause the property to go to sale. They first contact the title company. They request what is known as a “date down”. If the update on the title policy shows any new actions, the trustee must deal with them accordingly. If, for instance, an IRS lien has shown up against the property, the Trustee must notify the IRS thirty days before a sale could be held. This would delay the sale. When the title company gives the trustee a date down, it is their approval that a sale can take place on that day. Now the Trustee is free to record a Notice of Sale. The notice must contain correct information regarding: 1. Amount owed. 2. Street address of the property or legal description. 3. Name and address of beneficiary. 4. Name, address, and phone number of trustee of the person conducting the sale. 5. Reasonable estimate of costs and expenses. This figure should include the cost of Trustee Sale guarantee policy, trustee’s fees, back payments and advanced payments to other beneficiaries. 6. Date, time, and place of the sale. The place must be specific and be located in the same county of the property going on sale. A copy of the Notice of Trustee Sale must be: 1. Posted in a public place at least 20 days prior to the sale. 2. Advertised in a newspaper of general circulation once per week for at least 3 weeks. The first publication date must be at least 20 days prior to the date of sale. 3. Recorded 14 days prior to the sale. 4. Mailed at least 20 days prior to the sale to everyone that had recorded a request for notice and to anyone that has an interest in the property. During this period of time the trustee will get calls from equity purchasers to check the status of the sale. They might also get a call from the Trustor saying that they have the money necessary to pay off the loan or bring it current. Important: The Trustor has until 5 business days before the sale to bring the loan current. This is known as the reinstatement period. After that the beneficiary has the right to demand full payoff of the entire debt. The beneficiary may decide to wave that right and allow the Trustor to just bring the loan current after the 5-day period. In the event that a sale is postponed for a length of time, the reinstatement period is extended to 5 days prior to the new sale date. 3. Day of the Sale A. The Trustee On the day of the sale, the Trustee calculates the exact amount owed to the foreclosing beneficiary, including the cost of the sale. This amount becomes the opening bid. The representative for the Trustee Company will arrive on time (usually) at the designated sale place. They will read all of the sales that have been postponed or cancelled and give reasons for each occurrence. The properties that are going to be sold are done last. The trustee will ask if there are any interested bidders. Each bidder must produce a minimum of the opening bid in the form of cash or a cashier’s check. That bidder will be allowed to bid up to that amount and no more. The Trustee will allow him to re-qualify with more certified funds if the bidder has more with him. The trustee continues to ask for any higher bids until “going once, twice, three times” is said. The sale is over and final. The trustee takes the money from the winning bidder and gives them a receipt for their winning bid. If the money given the trustee was higher than the final bid, the excess will be returned by check within a few days. B. The Trustor On the day of the sale the Trustor may request a 24-hour extension. When properly done, it cannot be refused. Usually upon request, the trustee will give the trustor the request form. All the trustor has to do is fill it out and the extension will be granted. This is a one-time thing. The trustor may go and obtain an extension by mutual agreement with the beneficiary over and over again. He only gets one 24-hour extension against the will of the beneficiary. If the Trustor decides that bankruptcy is the way to go, the action must be recorded prior to the time of the sale. One minute after and technically, the sale is considered to have been held. C. The Beneficiary It is not necessary for the beneficiary to attend the sale. Their interests will be protected by the Trustee’s opening bid. If the property sells to a third party bidder, the proceeds owed to the beneficiary will be mailed. If the beneficiary requests it, the proceeds can be picked up. If the property does not sell, the beneficiary now owns the property. He also owes everything recorded on the property that was a senior lien to his trust deed. This includes property taxes and trust deeds with an earlier recording date than this trust deed. If the IRS has a lien on the property, the beneficiary may be contacted. For 120 days, the IRS has the rights to pay the same money you had as your opening bid plus a small rate of interest. During this time, don’t do any major improvements. You may be enriching your government. As a beneficiary, you may postpone the sale voluntarily three times. More than that and the whole “Notice of Sale” process must be repeated. You may mutually agree to postpone the sale with the Trustor as many times as you like. None of the postponements that have the Trustor’s consent count toward the three-postponement rule. TITLE COMPANY INFORMATION FORM One of the following properties, please list all encumbrances that are recorded against the property or the owners. SALE DATE:__________________________TIME:_________________ ADDRESS:___________________________________________________ TRUSTOR:___________________________________________________ OWNER:_____________________________________________________ LEGAL:______________________________________________________ A/P#:________________________________________________________ TD#:_________________________________________________________ This trust deed is a: 1st_______2nd_______3rd_______Other:_____________ Back property taxes:_____________________________________________ Other deeds of trust: Amount Recording Date _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ Property Judgments:_____________________________________________ IRS Liens:_____________________________________________________ State Tax Liens:________________________________________________ Have all recorded owners signed trust deeds? Yes______ No______ Any deeds of trust in foreclosure? Yes______ No______ THIS PROPERTY IS BEING PURCHASED FROM: OWNER__________ T/D SALE_________ HOW TO FIND OUT WHO IS IN FORECLOSURE There are many ways to locate foreclosure properties. If you are truly serious about being in the foreclosure business you must subscribe to a service that locates the properties for you. If you took the time necessary to go to the county recorders office to search the properties yourself, you would have little time for investing. There are three basic sources of foreclosure information. 1. Legal Newspapers Papers such as the Daily Commerce report on notices of default, trustee sales, REO’s, fictitious business names and probates. This paper publishes articles from well- known writers everyday. They also keep you updated on current seminars being given. I advise taking this type of paper in addition to any other source of foreclosure information service you choose. You can find out the local legal papers by checking with your city hall or the yellow pages. 2. Default Services by List Everyday these companies compile a list of the new defaults and properties going to sale. This list gets mailed to all subscribers and within a few days you have the new information. Getting the list from an experienced company with accurate information is a must. No list will be accurate all the time. Every list will have disclaimers as to the accuracy of the information. Don’t ever rely on it 100%. 3. Default Services by Computer The main advantage of this format is the speed with which you have new information. It is definitely the quickest way to have current foreclosure records. The disadvantage is that the cost is usually much higher. Some people might not have access to computers while others find it hard to get around in them. You will find many companies that offer both a list and a computer service. All of the services I have referred were pleasant to deal with. They were open to answering questions and provided valuable information. Make sure one of your team partners in the foreclosure business is a reliable source of foreclosures in your area. 4. From Local Realtors Many people attempt to sell their distressed properties before they lose them. Once the realtors know you can close a purchase, all cash within a short time frame, the calls start coming in. Foreclosure Opportunities Owner in Foreclosure Purchase property from Owner Purchase property from during 3 calendar month Owner during 20-day reinstatement advertising period RTC Resolution Purchase property from Purchase property at the Lender after foreclosure foreclosure sale 1. Banks, Savings & Loans and Mortgage companies 2. FHA/VA Foreclosures: www.vahomes.com Owner Defaults 3. HUD Foreclosures: www.goldenfeather.com 4. SBA Foreclosures 5. FDIC Foreclosures Owner doesn’t pay taxes 6. IRS Foreclosures Owner Behind in Taxes 7. Tax Sales Foreclosures Lost Law Suit 8. Sheriff Sale Lender or Individual has 9. Foreclosure Auctions Trouble Selling the Property Person Dies 10. Probate Auction Lender Defaults 11. FDIC Sales or Auction WHERE WILL YOU FIND THE MOST FORECLOSURES? 1. Phoenix, Arizona 2. Las Vegas, Nevada 3. Jacksonville, Florida 4. Atlanta, Georgia 5. San Bernardino, California 6. Riverside, California 7. Anchorage, Alaska 8. Dallas, Texas 9. Denver, Colorado 10. Boulder, Colorado THE TRUSTEES’ SALE To be a full time Trustee Sale buyer, you need between $400,000 and $500,000 in liquid assets or credit lines. This amount will allow you to own as many as five or six homes simultaneously and still have enough to protect what you have purchased. To begin with $100,000 will do. This will allow you to purchase at least one foreclosure, fix it up, sell it and close escrow. This whole process may take between two to six months. For 60 to 180 days, you may be unable to attend any trustee sales. A good suggestion would be to get a few partners with $100,000. You do all the work and get 50% of the profit. Not only will you make more money, you will constantly be on top of all of the foreclosures in you area. If every time you buy one foreclosure you quit following all of the other homes going to sale, you will be missing out on some of the best buys. Many trustee sales get postponed for months before finally going to sale. The people that follow these everyday will have a huge advantage of you. My suggestion is to follow the trustee sales carefully whether you have the money available right now or not. That way when your money is freed up, you will already have many opportunities to buy. BUYING AT TRUSTEE SALES 1. Not a safe place for a beginner a) Without knowledge the odds are that you will lose money. b) Very helpful to have good contacts inside a title company. 2. Extremely profitable when you know what you are doing a) The more knowledge it takes, the less people there are b) The more money it takes, the less competition there is 3. Very helpful to have a very flexible job a) Access to about $400,000 in cash -Allows you to buy 3-5 homes simultaneously b) If you don’t have it, get a partner -Split 50/50, you do the work c) Foreclosures work best if you stay on top of them constantly -If you lose contact for months at a time, you lose profits 4. Subscribe to a service in your area that shows all the sales in your area. 5. Most foreclosure properties never make it to this list. 6. Many that make the trustee sale list have no equity. 7. Eliminate the properties of no interest just as we did with the NOD list. 8. What remains should be properties with potential profit a) Either go down to the county court house and check out all the encumbrances on the property or b) Have a contact with a title company that will do this for you -Fill out the title company information form -Get it to the title company -You need more than a property profile -You need the equivalent of a preliminary title report -Your goal is to be such a valuable customer that you receive that information for free in exchange for all your business. You must know exactly what is owed on the property Why is this so important? 1. Before you go all over the county chasing properties, find out exactly what is owed on them. It will save you a huge amount of time. 2. The past or present owner could have IRS liens, judgments, property taxes, state income taxes, bail bonds, etc. against them. Getting the correct information will save you a lot of money. 3. Before you bid, make sure you know what position the trust deed you are bidding on holds. At a trustee sale, you are assuring that position. 4. If there are other liens and trust deeds against the property, this is how to know if they are senior to junior to the trust deed going to sale. a) If the trust deed or lien had a recording date after the trust deed going to sale, the trust deed or lien is considered junior to the trust deed going to sale and would be wiped out. b) If the trust deed or lien was recorded before the foreclosing deed of trust, the trust deed or lien is considered senior to the foreclosing trust deed and will remain against the property. c) There are two exceptions: -Property taxes are senior to everything else -If an IRS lien was wiped out by the trustee sale, the IRS has 120 days to redeem the property from the winning bidder. The winning bidder will receive something in the mail from the IRS stating that the IRS is considering redeeming the property. Do not repair the property prior to either getting a release of lien from the IRS or the 120 days pass. The IRS does not have to reimburse you for all repairs done on the property. Also, by repairing the property, you are making it more likely that the IRS will redeem and sell it itself. All of this, property elimination, has gone on without you even starting your car. It is very important to save time in the foreclosure business. NOW IT’S TIME TO GO SEE THE PROPERTY 1. Go see one week’s properties in one trip 2. Determine in advance to knock on every door a) You may be able to still buy the property from the owner. b) Meeting the people give you an advantage over someone who hasn’t. c) Seeing the inside of the house would be a bid advantage at the sale. 3. Make a list of the homes for sale in the area a) Don’t miss auction signs 4. Check out the retail value of the property 5. Fill out the trustee sale bid sheet. BEFORE YOU GO TO THE SALE 1. Call the trustee the day of the sale, even one hour before the sale 2. Get your cashier’s check (free of charge) 3. Determine a maximum amount of your final bid prior to the sale AT THE SALE 1. Pay attention and ask who the people are a) Good to know who the lender is 2. You can learn a lot by observing the other bidders. 3. Be cautious when answering questions about the bid property 4. Don’t believe everything you hear at the sale a) Some people will miss-represent the value up or down b) You will hear comments such as “too bad about the fire last night” 5. The key to success is to be the most knowledgeable about the property. 6. The trustee will usually have more than one sale to conduct a) They read all the cancellations first b) Then they conduct the sales 7. The trustee will ask for proof of money a) Do not show your money to other bidders b) Do not go first, because the trustee may reveal your amount, accidentally of course c) Qualify with one amount and give additional funds if necessary later 8. The trustee opens the bid a) The amount owed to the beneficiary b) Could be less than is owed to the beneficiary c) Overbid the same small amount every time d) Do not look at fellow bidders during the auction e) Do not allow statements like, “This one’s going for retail today” f) Show no emotion. This is like high stakes poker. 9. If the only bidder is the lender a) They don’t want the property b) Make each bid after the trustee saying going once, twice… c) Up the bid a very small amount each time 10. When you are the only bidder a) Assume you are wrong b) Assume you are right c) If you have a doubt about your information, you shouldn’t be there in the first place. 11. When no one else shows up, not even the trustee a) The sale was postponed after your last call b) The location was different than the usual place WHEN YOU WIN THE BID 1. Trustee will take your money 2. Take some information 3. Give you a very important receipt AFTER THE BID 1. Secure the property if vacant; change the locks 2. Get insurance 3. Arrange title insurance 4. Record the trustee’s deed 5. Repair and sell for a profit 6. Don’t repair until you officially own it IF THE OWNER IS STILL IN THE HOUSE 1. Meet with them and explain the situation a) If they are going to receive some money from the sale, tell them b) Cut a deal with them to leave right away c) If you have no cooperation, hire an eviction service d) Video the condition of the home if possible e) If, after the eviction, the former owner still leaves stuff in the house -Video the contents with a witness as to the date and time -Have the items put in storage and pay for it -Don’t just throw it away TO REVIEW -Stay away from trustee sales until you know what you are doing -Save time by checking out what is owed on the property -Determine a maximum bid and stick to it -After you are the winning bidder, protect yourself TRUSTEE SALE OFFER FORM FULL VALUE OF PROPERTY $______________________ REPAIR ESTIMATE $______________________ CLOSING COSTS $______________________ SALES COSTS $______________________ CARRYING COSTS $______________________ LEGAL COSTS $_____________________ MISC. COSTS $______________________ PROFIT $_____________________ TODAY’S VALUE =$______________________ SUBTRACT SENIOR DEBT -$_____________________ MAXIMUM BID AT SALE =$______________________ OPENING BID AT SALE =$______________________ BID AT TRUSTEE SALES WHEN THE OPENING BID IS LESS THAN THE MAXIMUM BID. HOW TO SELL YOUR HOME SOME IMIPORTANT BASICS TO CONSIDER 1. Consider the cost of selling when you are buying 2. Price the property right the first time 3. Make sure the property shows well 4. Expose the property to many potential buyers 5. Use selling methods that leave you with many options THREE WAYS TO SELL A PROPERTY 1. Work with a broker ADVANTAGES a) You won’t have to deal directly with buyers b) You will have someone to do your negotiating c) You might need their expertise d) You may get a higher net price DISADVANTAGES a) Can tie up your property for a while b) Can eliminate other options c) Listing agent may exaggerate just to get the listing If you decide to list the property Pick a proven winner a) They have the skill to close a transaction b) They have cooperation of other good agents c) They can usually close a buyer d) They are the best when the going gets tough, and it will Look for signs of success a) Plaques on the wall b) Top ten in the board c) You get along with them Probe with questions a) Experience b) Volume of transactions c) Percentage of listings sold d) Ask for a 30 day sale price on your property e) Check for vacation plans of the agent Discounting commissions a) Never hire anyone who will discount their fees b) Want the best people to work with c) If I have purchased the property right, I can afford the best How to get every agent excited about your property without even being licensed yourself? Now, having said all of that, I rarely list a property with a broker. The reason comes down to one factor; it limits my options. What if they don’t perform as agreed? Do I have a buy out clause to get out of the contract? I could but news travels fast in the real estate world. If you develop a lousy reputation with a few agents the news will get around real fast that you should be avoided. I’d rather find a way to interest many agents and keep a good reputation at the same time. How can this be accomplished? It is very easy. Only pay agents for selling your property. I call it my “Pay them well when they sell” plan. Have you ever heard of the old sales axiom “People don’t buy what it is they what it does”? We are not interested in paying a listing agent anything. What we want is the property sold!!! You increase your odds by a huge percentage by paying only the sales agent. You also create huge interest in your property. Why would they show a $100,000 property and get paid $3000 when they can show yours and get paid $6,000? Do you have to licensed to pull this off? No, not at all!! Take a look at a recent flyer sent to every agent in Riverside. That flyer has over fifty agents busy showing my properties and I get more calls every day. Anyone could have sent this flyer, licensed or not. The cost? Twenty bucks. The best thing about this plan is I still have all of the other options available to me. I haven’t signed a listing with anyone. I only pay agents when they sell my properties. 2. Set up a referral network If you have not listed your property with an agent you will be free to utilize this fantastic method of selling houses. A referral is usually a lead that comes from someone not in the real estate business. You have made a prearranged agreement with them to earn a finders fee for referring a client your way. They get paid when the property closes escrow only. Here are some ideas to help you locate sources of referrals. 1. Think of people that have spheres of influence a) Business owners b) Tax prepares c) Ministers d) Doctors and lawyers 2. Mail them a letter to intro duce your program 3. Follow up with a phone call a) Arrange a meeting 4. When you meet a) Have current list of homes available b) Have letter of recommendation from similar referral sources 5. Send a thank you card 6. Expect it to be slow at first a) Call again b) Update the list 7. When the first referral comes a) Make sure the people are happy b) Send a thank you card again c) When escrow closes pay promptly 8. When it starts to work, it works like magic Just so you realize the potential, some tax preparers have 3,000 clients. Over half of these clients probably don’t own a home. How many referral arrangements do you think the tax preparer has available to them? You guessed it, none. You will have no competition. All of a sudden selling properties can get really easy in any market. 3. Sell the property yourself If you are not happy with the choices thus far you can always sell the house yourself. Let’s ask a few questions to see if this is practical for you to take on. 1. Have you sold a house by yourself before? 2. Are you up to date on the current disclosures and contracts? 3. Do you have the flexibility to answer the phone at all hours and show the property any time day or night? 4. Is the property for sale close to where you live? If you are sill a candidate for selling the home yourself, this is how to go about it. 1. Price the property right a) Have it appraised by your lender’s appraisal i) Having the value in writing gives the asking price validity. 2. Present the property well a) Have the yards looking good b) Fresh paint and clean carpet is a must 3. Have the termite report already done a) Prevents loss of time later b) No surprises c) No negotiation tactics 4. Have disclosure forms prepared 5. Have bank deposit receipts and know how to fill them out 6. Have preliminary title report done 7. Have a flyer done showing amenities, price, payment, etc. Now you are ready to expose your house to the market place. Your goal will be to get as much interest in the property as soon as possible. This will give you important feedback on important matters such as: 1. Your asking price 2. How the property shows 3. How many buyers are in the market place To get this entire activity jump started, here are a few suggestions: 1. Have an open house/yard sale 2. Place a for sale by owner sign on the front yard 3. Pass flyers out to the surrounding 500 houses 4. Place adds in the local paper and Penny Saver When someone calls on your ads 1. Keep record of what they wanted a) You make a list of future buyers this way b) Maximize your advertising dollar 2. Have them drive by the house first 3. Meet them at the property a) Meet other potential buyers there at the same time 1. Creates competition 2. Reduces the risk of low offer Someone makes an offer The moment we all have been waiting for has arrived. Someone is interested in our property. As you go over the offer, here are a few things to be aware of: 1. Look at the price offered a) If it is full price don’t give them a hug b) If it is a low-ball offer say the price out loud in the form of a question; Seventy five thousand? 2. Look over the reminder of the offer a) Will you be cashing out? b) Will you be paying points? c) How long is the escrow? d) Are there any contingencies? e) How large is their down payment? f) How large is their deposit? How to handle the following types offers: 1. The contingency offer: a) What type of contingency? 1. Financing 2. Credit approval 3. Preliminary title report 4. Termite report This is why we have so many of these documents handled up front. You can’t have an escrow contingent on a termite inspection that is already clear and in their hot little hands. These types of contingencies are reasonable, however we can get rid of them immediately if we are prepared. b) Contingencies that are designed to buy time 1. Partners approval 2. funding the down payment 3. Long lengths of time to look at documents 4. The sale of another property These and other types of contingencies are designed to buy time and could cost you a lot of money. If you really need to sell the property and interest has been low, work with these contingencies, but get rid of them as soon as possible. The fewer contingencies, the more likely your escrow will close. 2. The low ball offer a) Say the price out loud in question form; Seventy five thousand? b) Be quiet. You will soon find out whom you are dealing with. 1. If they back off quickly, you caught a buyer just fishing 2. If the buyer says nothing or comes back with “Would you prefer I withdraw the offer?”, you are dealing with an investor. c) Maybe the offer is all cash and will make you a profit anyway 1) The $20,000 sale (he didn’t know I bought it for eleven) d) If the offer is too far away from the asking price, counter at full price. You are back to where you started. Now the buyer knows you are firm. If they are really interested, another offer will be forth coming. If no other offer is made the chances were slim that an agreement could have been reached. 1. Lawn mower example and my 10-year-old son 3. The creative offer a) If it makes sense look at it b) If it puts you in jeopardy of losing most of your equity, pass c) If it is nothing down deal or cash back to the seller, be suspicious d) If the offer requires you to take a property in trade, consider it if the cash flow makes sense e) If the offer has you receiving gem stones or fine art? Need I say more? 4. The verbal offer a) Request it be put in writing with a deposit check b) If they refuse, pass. All you are doing is negotiating against yourself. 5. The first offer you receive a) Consider it very carefully 1. It may be the only one you ever see 2. Never assume more will follow Once the offer is accepted Make sure you control the process after the offer is accepted. More deals fall out of escrow because of a poor choice of either an escrow company, lender, or title company than any other reason. I want my people handling the paperwork. That way I know immediately if we have a problem. Problems are normal to every escrow. I fully expect problems. I never even think about closing an escrow until I have been handed a list of problems to solve from someone. Once the list shows up I feel we have a real live deal. The problems are solved and the escrow closes.