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FINDING MOTIVATED SELLERS
Motivated sellers can be your express ticket to success in real
estate investing, despite your lack of capital money or credit. The
“motivated” seller has a problem that is being created by his real estate.
He is consumed with the problem created by the real estate and will be
flexible if you will promise to solve his problem.
The flexibility can come in the form of financing or some
substitute for financing that can allow you to control or benefit from the
property using either a loan from the seller or his granting of an option or
other right to you in exchange for your promise to help solve his
problem.
A perfect example of a motivated seller is a seller who has a
rental property that he cannot manage. That may be because he does
not know what he is doing, does not have the time, or perhaps is old and
would like to retire from the property management business. If you will
agree to take over management of the property, you can promise to pay
the seller from the proceeds generated from rents.
There must be a difference (profit) between the rents and
monthly expenses on the property, including any money you are paying
to the seller each month. To know what the true expenses of a property
are, look at the seller’s tax returns to see what he reports to the IRS as
his income and expenses. The seller will resist your efforts to see his
tax returns, but you MUST see them. The seller will tell you that he does
not report all of his income and that he overstates expenses. Tell the seller that if he cheated on his taxes he had his benefit by paying less
taxes, but he gave up the chance to sell the property for more then his
tax returns indicate the property is worth.

Another example of a motivated owner is the owner in
foreclosure. If an owner is in a property he or she cannot afford and the
bank is foreclosing, in the time leading up to the foreclosure sale, the
owners are generally very flexible. The will do pretty much whatever you
want to save their credit or remain in a place to live. The owner in
foreclosure is not concerned so much about the sale price of the
property or the fact that you might not pay on the mortgage. He is
already going to lose the house at foreclosure sale.
In some states, and as a practical matter with most residential
lenders, if someone catches up by paying the past due mortgage
payments, the lender is not going to continue the foreclosure. The
lender will probably have rights to continue the foreclosure if the house
is sold, but often will not exercise those rights if payments are being made, especially if the house is resold or refinanced within a relatively
short time period after you take over the loan. 

1. Contact Owners in Foreclosure.
The most motivated sellers in the market are going to be
people in foreclosure who are about to lose their house. Foreclosures
are publicly conducted sales and are always advertised. Generally
speaking, they are advertised for three or four weeks in advance.
Once you receive the list of foreclosures, you should go about
contacting owners in foreclosure by mail, telephone or by stopping by to
talk to them about your situation, about their situation and how you can
help them. The owners in foreclosure will be the most flexible. They will
allow you to take property subject-to an existing mortgage, assume
existing mortgages, enter into joint-venture agreements, and otherwise
be flexible. The whole trick is contacting them and establishing a
dialogue.  (to be continued)

Posted By - Robert Farmer - 2 days ago

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