Hello everyone and welcome back to another installment of your Street Smart Q and A.  We’ve had a ton of questions over the last couple of weeks which I hope is indicative of your activity.  In today’s market we are seeing so much excitement, so much generation.  In fact, we have bought properties at auction over the last few weeks.  We have bought properties from people coming in off our signs.  We’ve had people coming in off the sign in front of our building.  We’ve got signs out all over the county and people are calling.  We’ve gotten over 40 leads in the last week just from signs.  We’ve gotten a ton of calls from our marketing, the Done for You marketing, where we’re approaching absentee owners, and also, probates, and several different things.  We’ve got a lot of excitement going on in our office.  A lot of things happening and houses being bought.  That’s exactly what needs to be happening in your business, too.

If you’re not buying houses right now, you’re missing out on an opportunity.  We need to look at that.  We need to find out what it is that’s stopping you from buying houses right now.  You do not need to miss out on this market.  Remember, I’ve said that this is what we’re going to see over the next few months is one of the best buying opportunities we’ve seen in over 20 years.  While the Street Smart system works day in and day out every year, there are unique opportunities about once per generation where you can just make a whole lot more money.  That’s exactly what we are interested in doing, so, we want to help you and support you in doing that.

Let’s start off with Agnes Chickuda who says I just bought your program this past Sunday in Minneapolis.  Bought a duplex in May of ’08 from an REO with refinancing of my primary residence and just rented it out after careful screening.  I happen to live across the street from the duplex.  I need your guidance to get another deal without my money and bank financing.  What will be the easiest way to get another deal?  You have many strategies in your manual.  I’m paralyzed and paralyzed with all the information in your manual.  Give me a few more baby steps.  I learned from rehab that contractors are out to get my money.  I spent $25,000 in rehab and buying new appliances.  I bought the duplex for $60,000 free and clear now.  The mortgage for my primary home will be totally paid by my tenant and the duplex, $650 for the one bedroom and $750 for the two bedroom.  That’s not enough to cover my personal expense because my school is closed.  I’m out of a job as a teacher.  I am tempted to get back to teaching.  I really want to be rich.  Teaching definitely won’t make me rich.  My problem is I dislike technology.  How do I overcome that?

Oh, my goodness, Agnes, such a great group of questions.  Let’s start with the first one.  I’m going to talk to you about the situation that you’re in right now.  I understand that you’ve taken out a loan on your personal residence that was free and clear in order to buy the duplex.  Now the duplex is free and clear.  Here’s a piece of good news.  You could go out and get an equity line of credit from Bank of America or one of the other banks who offer, for investors, a line of credit against their rental property.  Now that you’ve got it up and running and you’ve got it rented, they are going to lend you, likely, about 70 percent, or even higher, of value.  Now, remember what a line of credit is.  You’re not going to right a check for the money, and you’re not going to have to pay any interest on the money until you actually use it.  Now, Agnes, this is an important baby step, as you said, in getting into this business.  It is access to capital, and capitalization of your business.  It is so critical that you capitalize and have access to money in order to do the marketing, in order to get the leads, in order to buy the deals.  So, what we want to do is help you build a list of things to do for your marketing in order to get those leads.

I mentioned to you on Sunday one of the things you can start to do right away is take your seller questionnaire and begin making outbound calls.  If you’ll do that you’ll be able to generate so many great leads just from the newspaper.

The second thing you’re going to have to do is generate some inbound calls.  So, I want you to make some outbound calls to realtors and mortgage brokers.  Now, what you’re going to do is get out your yellow pages and call every real estate company in town.  I want you to ask a couple of questions.  One is, who in your office specializes in bank owned properties.  Find out who is the listing agent who gets all those listings.  Also, find out who is it in your office that specializes in HUD and VA homes.  Sometimes there are specialists and sometimes there aren’t.  In any case, I want you to get connected with these people and get on their lists.  If they have current listings, you can make offers through them.  If they don’t have current listings, then you can get on their list so that you’re notified when they do have listings.

The other people I want you to call is mortgage brokers.  Recognize that often they are working with people who they are getting qualified for new loans, but they already have a house that they have to sell in order to qualify for the new loan for the new house.  So, the mortgage broker can make a referral fee from you for having referred a property to you when you buy it.  You don’t pay anybody until you actually buy the property.  That’s just a couple of the ways you can get started right away to generate some leads.

As you grow, the next baby step is we’re going to make some marketing, some direct mail marketing.  I’m going to teach you to get a list of the absentee owners.  You might be able to do that through your courthouse.  Your local courthouse may sell a list of all the people that they are sending tax statements to, and these are people who are receiving a tax statement at a different address than the property address.  Ask if you can buy that list.  If you can, then you want to start making outbound marketing contact with them.  What I suggest is that you take out a, it’s called a Yellow Letter.  You just take out a legal pad that’s yellow and you write, Hi, my name is Agnes.  I’m interested in buying a property on your street.  Is your property for sale?  And, sign your name.  Mail it off to all those absentee owners and see what comes back.  We’ve found that those are very affective.

Now, Agnes, as you grow, I’m going to tell you that doing it yourself is not what I want you to do.  I want you to hire that done.  I’ve got all of those connections.  In fact you’re going to find out that we have, what we call whizzes.  We have sign whiz, voice whiz, mail whiz; we’ve got all these whizzes that we have drilled down and gotten an extremely good price for you and the best deal you could possibly get because you’re Street Smart.  You’re part of the Street Smart program.  If you’d like to know more about the whizzes, call the office at 1-800-578-8580 and we’ll give you more details about the Done for You marketing program.  Great question.

I understand you didn’t like technology, but that’s not going to matter.  We’re going to teach you how to do it.  Our web sites are designed to be totally user friendly and very easy to use.  Remember, it’s your customers I want to go to your web site.  I’ll teach you how to analyze the leads, and we’ll do this in class.  The important thing is that you just take the step.  Let’s get on out there.  Get in front of the bus and let’s see if we can make something happen.  Great questions, Agnes.  I’m so glad you responded so quickly to just seeing you on Sunday.

We’ve got a purchasing property question from Darrell Hern who said finding motivated sellers.  Almost everyone I talk to is upside down on their mortgage but don’t want to come down or do a short sale.  They want to sell at the inflated amount.  I can’t smell the money.

You’re absolutely right, Darrell.  If people are telling you they don’t want to take a discount, that’s the wrong lead.  I’ll tell you right now you’ll pay attention that a lot of folks start out by wanting full price and all cash.  By the time they’ve been beat up by the market for a while, then they take a different attitude.  They start coming down, coming down.  So, even the people that have already told you that they want full price, I want you to put them on a follow-up list.  In three weeks, every three weeks, I want you calling those folks back.  I want you to say, hey Mr. and Mrs. Jones, you know we talked about three weeks ago about your property.  I just wanted to check in with you and see if you’ve got that sold yet.  Oh, you haven’t.  Well, my goodness.  You remember what we do is we can buy your property today.  We don’t want to list your property; we want to buy your property.  Does that interest you?  And, then go into your seller questionnaire; what we do is take over payment s for you until we get the house sold.  Will that work for you.  Yes, good.  Then I’ll need a little information.  In addition, you go into the information that’s in the box.  You ask them, what is your situation?  Get all the details.  Create an opportunity.  Now, you’ve just turned around the very people that said they wouldn’t sell at a discount.  They certainly will.  As we work together and I teach you the cost to sell worksheet and how powerful that is, that will solve your problem beautifully.  Great question, Darrell.  I think everybody on the call will benefit from that because they run into the same things.

Just recognize that that cost to sell worksheet is exactly what’s going to get you the price that you’re looking for.  If you can simply work backward from their asking price, recognizing all the costs that it’s going to take to sell that property, getting down to that final number, and you getting proficient in making that presentation is exactly why people will do short sales even though they said they wouldn’t.  It is why people will give you the loan to their property even though they said they wouldn’t.  All these things are engineered inside the Street Smart program.  That’s exactly how we’re able to get people to do what we want them to do.

How would you enable to do the negotiations with the bank for the loan modification?  Well, we could get the real estate agent to do it.  I would like you to do it.  The way I recommend you do that is call the lender and say, Hi, my name is Joan, and what I’m doing is I’m working with a couple who are in a financial situation right now.  What I do is help people work through their financial problem.  I’ve looked through their finances and found that they simply can’t afford the payments on this property any longer.  We need to modify this existing loan from, say nine, ten percent, whatever it is now, down to five percent, or six percent.  Then that differential is going to give you the discounted amount that then people will adopt, they’ll accept;  that you, in fact, will buy the property subject to that new modified loan because it makes sense for you to do and because there is now a cash flow on the property.  You could get a realtor to do this for you, and in fact, they are going to want to get paid something for that.  Ask them what would you charge me to make this call and do this?  As I said, you can do this yourself.  That’s exactly what I want you to be proficient at as I teach you “sanding the block.”

We want to sand that block of wood and make it smoother, and smoother, and smoother.  The only way you’re going to get smooth is through experience and just going out there, trying it, doing it, and then that’s how it shows up.

We’ve got a question from John who said when making an offer do you indicate what the toxic waste sites are such as a dry cleaner, or do you say only the number of toxic waste sites within a certain radius of the subject property?

For everyone on the call, what John is referring to is that we find it’s very powerful to tell your seller, whether it’s a bank or an individual, what is around them and what potential liabilities there are with the property.  How are you going to find out about that?  Remember, I was mentioning the whizzes before.  We have something called comp whiz.  This is your comparable wizard who actually gives you all kinds of data that’s very sophisticated data, very good data that is actually used by appraisers to determine the value of the property.  One of the things in our comp whiz report is toxic waste sites.  It tells you all kinds of great things about what’s wrong in the area and what you can use as leverage against the bank or to show a seller what’s going on with their property.  It’s very powerful.  You could just print out that report separately.

For example there is a liquification report if you are in an area where sinkholes are common.  Or, there is a landslide report if you’re in an area where landslides are common.  So, liquification in Florida, landslides in California, and toxic waste dumps just about everywhere, including dry cleaners and so on.  Very powerful stuff that you can use as leverage.

The answer is that I don’t always use it unless I need it.  If  I need something to convince the seller that their number is wrong.  Let’s say they say they want $200,000 for the property and I know that the property is only worth $180,000, and in fact I’ve got proof of that with the comp whiz.  Then I’m going to show them that proof of actual sales in their neighborhood, and I’m going to show them the toxic waste report if that’s going to help me get a lower price.

Once we get agreement on that price, then we’re going to go through the cost to sell worksheet and work backwards from there.

We’ve also got a question; do you ever buy in undesirable locations such as a war zone or single family on a busy street if the price is right?

Let’s start with war zone John.  Do I ever buy in war zones?  The answer is yes, I do.  But, only if the price is right.  That means really cheap.  I really want your business focused with good houses, in good neighborhoods, that good people are always going to want.  They are not going to be fearful in going there.  In fact, they’re not going to be fearful when you put the ad in the paper and want them to go look at it.  They’re going to say, yes, I want to live there.  Yes, that’s great.  Yes, the schools are fantastic there.  That’s the kind of houses I want you focused on.

But from time to time, in fact, what I teach is we take the leads as they come, and from time to time you get leads that are not in your target market.  But, the deal is so good it just makes sense to do it.  The answer is yes, I do, but only if it makes sense to do it and I know I can exit out of that property with very little effort and very little cost on my side.  In other words if the seller is financing the property or I’m taking over existing financing, and that I know I can exit out quickly, then yes, I’ll buy that property.

You also asked about busy streets.  I’m not so worried about busy streets as I am about war zones.  The reason is if you ride down a busy street, you look to your left, and you look to your right, you’ll notice all those homes are filled with people in those homes.  That should tell you something.  There is a market.  In fact, houses on busy streets are, in some cases, easier to rent because you’ve got so much traffic going past there.  People see the sign.  It’s not quite what you think it is.  It could actually be better than you think it is.  Then, also the location, the ease of not winding through a subdivision and so on actually attracts some people.  Good questions.

We’ve got Evelyn Pecker who asks, hi Lou.  Please explain how you handle a private moneylender’s money.  How do they have the money available at the time you need it, or do you borrow it from them and put it in an account for your immediate use?  Evelyn from Pennsylvania.

The answer is you do what you can do, Evelyn.  If that lender is willing to go ahead and give me the money now and then we can negotiate when the clock starts ticking on the interest.  It can start now or it can start when we buy property; when we actually use the money.  It’s far better if they have their money in an IRA account, for example, that, let’s say, you move it from their stock brokerage account into a self-directed IRA.  Then, while it’s in the self-directed IRA, then you make the agreement with them that you are going to borrow from their self-directed IRA when you actually have a deal.  That way you’ve already got access to the capital, they’ve already set it aside for you, and now you’re just going to get the money actually when you’ve actually found your deal.

Of course it really is a motivator when you know that you’ve got the cash to be able to do it.  In fact, you could even go to a realtor and say, find me listed properties.  Go through all the listings in the MOS and find me ones that say motivated seller.  House needs repairs.  Great starter home, and all these kinds of things in the school district that I’m looking for, and boom.  You’re going to be able to find some terrific property right away because you’ve got access to capital and you’re not fearful that you’re actually going to tie something up that you then won’t be able to close on.  Great question.

You’re saying now, how do I work with them?

The answer is that you want to first show them your lender presentation kit, which those of you who don’t have that, it’s $79.95; best investment you ever made because it’s actually a presentation kit that shows your lender exactly what your program is and how it works.  All the mysterious things that you’re wondering what to say to a lender are already printed out and prepared beautifully in a presentation kit.  You can get that by calling our office at 1-800578-8580.  We tell you exactly how to do it.  In fact, there is even a calculator that’s included with it.  You can show your lender how much they are currently earning and then how much they are going to be earning with you, and even how much more they’re going to make with you than they would with their current program.  It works beautifully, Evelyn, and that’s what I’d recommend to get you over the hump of getting comfortable with asking other people about borrowing their money.

Janice from Connecticut has a question.  Hello Lou, I have a couple of different questions this week.  When approaching a _____ 21:38 calling them, do you tell them you are an investor right away, or do you play along with the tell me about your house and break it to them later?  Do you have a good opening line, a transitional line?  Do you get in to the buying alternatives available on the phone?  Thanks so much, Janice.

Let’s start here.  Hi, my name is Lou.  I see you have a house for sale.  I’m sorry, what is your name?  Wonderful.  That’s Jim.  Jim, what’s your last name?  Jones, great.  All right, Mr. Jones, oh, call you Jim, that’s great.  Now tell me about your house.  They tell you a little bit about the property.  You say, let me tell you something.  I work with a group of investors and what they do is they buy properties today.  You don’t have to wait the six or nine months that it’s taking in today’s market to get your property sold.  You can sell it today.  Would you be interested in that?

Now you got them.  They’re either going to say “yes”, or “no”.  I’m not interested.  I’m only interested in selling to somebody who wants to live in the house.

Fascinating.  I’ll tell you what.  Do you mind if I call you in say, three weeks, and see if your situation’s changed?  I don’t care if they say yes, or no.  We’re going to call them in three weeks and see if their situation has changed.  You just put them on the phone log.

If they say yes, I’m interested in knowing more, then you go in to I’ve got a few questions I want to ask you.  Let me tell you how our program works.  Basically, we can go ahead and buy your house today.  Wouldn’t that be great?  You can get rid of it right away because, you see, here’s the great news.  We have a buyers list.  We can go ahead and we probably already have someone to buy your house right away.  Let me ask you a few questions.

What we do is take over payments until we get the house sold.  Will that work for you?  Yes?  Good.  Then I’ll need a little information.  Then you go ahead and get all the money in the box, then you ask, well, tell me, what’s your situation?  Why are you selling?  Then you shut up and let them tell the whole story.

That’s going to give you key elements to be able to determine exactly which direction to go on the offer.  Whether they’re retiring and moving to Florida, or whether their son’s in jail, or whatever it might be, you’re going to find out what their situation is, or you’re going to delve deeper.  What you’re really looking for is what is their pain.  Then, when you get their pain, then you know exactly how you can structure the deal.  Great questions, Janice.

Maquel Garcia says Lou, I have found some vacant homes that I would like to make offers on, but I’m having trouble finding the owners.  I have heard of using a skip-trace service to locate missing homeowners.  Do you have any vendors that you would recommend to provide this service?  If so, what information should I receive and what should I expect for this service.  Once again, thanks for your help.

There are several different services out there, Maquel.  One of them is Findtheseller.com, I think it is.  It’s either find the owner or find the seller.com.  That’s one service you can use.  The cost is very cheap.  It’s based on them actually finding information for you.  Another is accurint.com.  What accurint does is, also, allow you to find the seller.  The other is zabasearch.com.  Again, you have the opportunity to put in someone’s name and see what information comes up on them.

Many of these services also allow and upgrade to what they’re offering for you to be able to search for their neighbors, and their associates, and their relatives, name and telephone numbers.

I’m sorry, Bruce?  Metacrawler.com is another one that can find information for you.  Great question.

What should you expect to pay?  Very little for the first search, but if you want to go deeper and you want to find out who their associates are, who their relatives are, and then you want to find telephone numbers for them and so on, that’s where it gets a bit more expensive.  Different ones it’s going to range from $9.95 up to 39.95 for that search.  I wish you the best of luck on that.

We’ve got Susan who says how to buy using lease option or similar strategy when a realtor is listing a property?

Great question, Susan.  If it’s a listed property you want to call up the listing agent, now you notice what I just said, you want to call up the listing agent.  If you did not find the property through your agent, then you want to go directly to the one who has the listing.  That would mean that that’s the name that’s on the sign that’s in front of the property.

Now, the listing agent has a bit of flexibility if they also become the selling agent.  In other words, if the house is listed at six percent, suddenly that other three percent that they typically don’t get because the other broker is the selling broker, all they ever really expect to get is the three percent and they think they’ve died and gone to heaven if they get more than the three percent.  Sometimes we’ll offer them a little spiffer over their regular commission for both sides of the transaction if, in the negotiation, we are shy on the money.  They can give up some of that commission that they really didn’t expect to get anyway if you catch my drift, because they’re getting both sides of the commission.

First you are calling the listing agent.  Secondly you are saying I’m interested in that property on Anywhere Street, tell me more about it.  You get the details and you say, tell me, why is the seller selling this property.  Sometimes they’ll tell you.  Sometimes they won’t.  Then you go deeper into what you do.

You say, what we do is we buy property.  I’d like to build a relationship with you to buy more properties from you than just this one.  I’d like you to be able to bring properties to me every month that I can buy from you.  That’s our intention.  Of course, if I buy this property and fix it up, I may sell it for cash, or I may sell it on our rent to own plan, and you could even bring me customers for that, too.  Often, I bet, you have customers that can’t qualify for a loan that call you to buy a house.  Well, that’s the kind of customer that we’re looking for.  There are many things that we can do together as we work through this.  Now tell me more about this house, again.

So, what we just did is put a bunch of carrots in front of the realtors eyes to say look, there’s more business down the road.  We’re not a onsie type buyer like most buyers are.  We’re going to be doing business together for a long time.

Then you want to get into the details of the property.  What you want to ask is, tell me about the existing financing.  Now, often the realtor will say, well, you’re just going to have to get a new loan.  Well, it doesn’t matter what the new financing is because you’re just going to have to get a new loan.  I understand, but Sally, here’s the truth.  I’ve actually got many different ways I can buy.  I’m trying to look for the best offer I can possibly make.  So, if you can tell me about the existing financing, sometimes I can tie that in to actually offer more for the property.

Hopefully, the realtor heard that right because that means when you offer more, guess what, a higher commission.  Because, they get paid a percentage of this sales price.  Of course, if you’re offering more, they get more.  It can make sense.

Sally, if you can just go ahead and find out the details for me about the existing financing.  Here’s what I need to know.  I need to know the current loan balance.  I need to know the interest rate.  I need to know if it’s a 15-year loan, or a 30-year loan, and maybe when they took that loan out.  I need to know what the payments are.  Does that include taxes and insurance?  Because there are many different ways I can buy the property.  In fact, we’ve found that we can actually offer a significantly higher price if we can take over the existing financing.

I’ll show you exactly how that works, but can you go ahead and find out the details for me?

Boom, boom, boom.  You see how we got the realtor to get buy-in to what we’re doing.  We got buy-in through carrots.  We got buy-in through honesty.  We got buy-in through showing them that they’re going to make more money with us than they would traditionally.

Moreover, by the way, Sally, we can buy this house right away.  We don’t have to wait 30 days.  We’re not on a contingency basis.  We can give you a contract quickly.  Would that interest you?  Boom, boom, boom, boom.

Now, negotiating with the bank to lower the interest rate.  Mark Van Buskirk says we have another transaction where the interest rate is 11 percent makes the deal unprofitable.  Will a bank negotiate the rate if the loan is current?

The answer, Mark, is you are going to have to go in and explain where you’re at.  You explain to the lender.  You say, listen, I’m working with a couple right now.  I’m their financial advisor.  I’ve been looking over the situation, and based on their current finances it looks like, while they may be current today, they are not going to be current on the first of the month.  What we are trying to do is eliminate a problem before it occurs.  If you’d be interested in working with us, we’d be able to keep this loan in a currently performing status instead of a default status.  Would you like to work together on it?  Yes, good.  You get a commitment from them and then you go into it.

Now, what are you really looking to do?  You’re looking to lower the interest rate, Mark.  You might want to go for the jugular and say, listen, for my people, I’ve don’t the calculations and the payment on this is simply too high, way too high for them to be able to make ends meet.  We’ve had job downsize, or somebody’s sick in the family, or one of them has lost their job; whatever you might want to say.  You say, listen, they’ve got a problem and we really need the payment to be, instead of $1100 a month, we need it to be $600 a month.  I’ve run this through my calculator.  We need the interest rate lowered to six percent interest.  Can you help me on that?

That’s exactly what you are looking to do is a loan modification.  The loan modification means they change that interest rate from the eleven percent to six percent, five percent, whatever you can get them to say “yes” to.  Then what you are looking to do is make that fixed for the remainder of the loan.  We’re not looking to do a short-term thing.  We’re looking to do a long-term thing.

If they say, we can do that for a couple of years, say, I understand, but really, I have to recommend my client what’s in the best interest of my client.  I’m going to tell you that the best thing for them to do is to get a fixed rate loan and just be done with this thing.  Great question, Mark.  I think everybody learned a lot of lessons from that one.

Vicki Blako.  Hello Vicki.  Good to hear from a long-term Street Smart licensee whose made a ton of money using our system.  Vicki says I had six short sale packets in with Countrywide and I lost the deal on all of them because Countrywide would not assign them to a negotiator in time.  Is there anything I can say or do to make sure they get assigned in time because they won’t even consider postponing the sale until they have the packet assigned.  I need your help.

Vicki, here’s exactly what you are going to do.  You say, hi Countrywide.  Great news.  I have a buyer for the property and I have a contract.  The only problem is the contract is for less than is owed for the mortgage.  I need your help.  The offer they’ve made is a good offer.  It makes perfect sense.  In fact, I can show you the numbers.  In today’s market it makes perfect sense for you to accept this offer.  I’ll show you why.  But, there is a sale coming up next month.  If we don’t go ahead and get this assigned today, not only are you guys going to have yet another house on your books, and yet another default on your books, and maybe even a bankruptcy because I might recommend that my client just bankrupt, but you’ve got another problem.  So, I’m going to recommend that you go ahead, find a loss mitigator, and get this file assigned as soon as possible.  I’ve got a buyer today.

Vicki, honestly, if you have to create a contract, you are a buyer after all, if you have to create a contract with you as agent, remember that’s you the buyer as agent, and you submit the contract to them to prove that you’ve got a buyer.  Often they will cancel and postpone the sale to give time to work through the mitigation process.  Try that, Vicki, and tell me if that doesn’t work beautifully.  You won’t have any more loss.  You’re right; Countrywide is difficult to deal with.  However, we’ve got lots of reports under my coaching program lately that Countrywide is coming around.  We’re seeing some good discounts from Countrywide.

Remember that Countrywide has been waiting merely to close and consummate the deal with Bank of America who is buying them out.  Bank of America said look, just wait a minute.  Don’t do anything.  Don’t mess up our deal.  Less go ahead and get closed and then we’ll tell you what to do with all these bad loans.  So, they’ve just been hanging out and waiting.  All these properties, you’re absolutely right, are going back to them and the good news is that they’re all going to get listed.

Here’s one more suggestion, Vicki; that I think everybody on the call is going to benefit from.  These ones that actually did go to sale; submit an offer through the foreclosing attorney.  Go ahead and write up a contract and call him up and see that you just foreclosed on this property on Anywhere Street, in fact, what did you knock it off for?  That’s lingo for how much did you knock it off on behalf of the lender for, and what was the bid price from the lender?  Now that you’ve got that number you say, I’ve got an offer for that property.  I’m going to go ahead and fax it over to you right now.  I’m asking you to go ahead and fax this over to your contact inside the bank.  They’ve got a sale today.  In fact, you, Mr. Attorney, for all your trouble, you can handle the closing, too.  How’s that?

So, suddenly you’ve just said the magic words to the foreclosing attorney.  He’s going to make another fee.  You’ve got to understand how attorney’s work.  They work off of fees.  So, you’ve got a great chance to have your offer accepted.  Forget the short sale.  Now we’re going to do an REO.  We’re going to just merely buy the house at a discount before they list it with a realtor and go through all that falderal.  Give that a shot, too, Vicki, and let me know how that goes.

We’ve got Fred Fedderhoff who says hi Lou.  I have a house under your standard purchase and sale agreement.  The first and second mortgages are with different lenders.  The first is $184,000, and the second is $50,000.  Our agreement is for a purchase price of $184,000.  The fair market value of the house is roughly $250,000 and if one ignores the fact that the builder is moving similar homes at $250,000, but the builder financed loans at 2.5 percent with huge incentives; vacation packages, etc.  If the second position lender does not agree to my maximum offer of $1,000, will their refusal blow up the deal?  Thanks, Fred.

Here’s what I’d do, Fred.  I’d go back to your second mortgage lender and I’d say, look, we have a buyer today.  We have a buyer at $184,000.  We’re authorized to offer you $1,000 for your position.  The property is moving into foreclosure, or it’s already in foreclosure.  Often, Fred, I want you to understand something, the second mortgage lender typically often does not check to see what the actual status, and see whether it is in foreclosure or not.  So, you can say, well, the property is in foreclosure, and you’re about to get wiped out and get absolutely nothing.  Or, you can get $1,000.  Which would you prefer?

If they say, no, we’re not interested, or we would never do it for $1,000, then say, well, tell me what would you do?  If they won’t give you a number say, don’t you understand, and I want to make sure that you do understand, we have a buyer.  That means that if we don’t do something here quickly, my buyer is going to go away.  They are approved.  They are pre-approved for a loan.  We can close this deal.  If we don’t do this right away, they’re going to go take their pre-approval and they’re going to buy another property.  You don’t want to see that, do you?  Then, you go ahead and work with them to get that discount.

Fred, we are seeing second mortgage lenders do amazing things, and I absolutely believe that you can get that higher amount, that $50,000 discounted very significantly.  I probably wouldn’t go over $2,500 on that.  But, you do have one thing working against you and that’s comps.  You do have a beautiful house in a beautiful neighborhood.  That works against you.  About the only thing you can do to get leverage is threaten bankruptcy, that the borrower might go bankrupt and see if that gets them down the road of agreement.

We’ve got Mark who says can a short sale, subject to, be done where both the first and the second are held by the same bank.

The answer, Mark, is it depends.  Remember that when we are dealing with people over the phone, the folks that we’re talking to are actually servicers of the loan, and are often not the actual lender.  The servicer of the loan may be servicing the first mortgage for one lender and the second mortgage for a completely different lender.  What we do is work through the second first, and the first second.  We try to get the short sale on the second first.  If that goes according to plan, we might merely reinstate the second and continue to pay it so that we’ve shorted the second and reinstated the first.  That works out very beautifully.

You say that the lender in this case is Wachovia.  Wachovia is a servicer of loans.  Based on the troubles Wachovia is having right now, I think you might have a pretty good chance at that.  Just about once a week Wachovia is under investigation for something else.  In fact I heard last week that there is another big federal investigation on Wachovia.  So, hopefully, that will help us as we work towards getting these things done.

Got a question from John who says if someone is current on their mortgage can it still be short saled.  If so, how?

I mentioned that in answer to another question a few minutes ago, John.  What you do is simply go to the lender and say we are not in default right now, but that’s not going to be true next month.  It’s actually going to be in default.  What I’m trying to do is prevent the problem before it occurs.  Let’s see if we can work together on this and solve this person’s problem.  Remember that you are calling the lender, not as an investor, you’re calling the lender as what?  You are calling the lender as a financial advisor working with Jones’ to solve their problem.  Hopefully, if we are able to solve their problem, they won’t have to file bankruptcy.  That usually perks up the lenders ears.

Gary Wade has a selling property question.  Lou, in the past when I sell a house that is being held in a land trust and I carry owner financing, I normally had the note and mortgage, etc, made out with the trustee’s name and the land trust name.  I’m sure this probably is not the best way to do this.  What I have had to do in the past, if they stopped making payments, was to get the trustee involved again to sign papers, etc, for foreclosure.  How should I have the note and mortgage made out?  Thank you, Lou.

All right, Gary, let’s analyze what you’ve got.  You are selling a house.  It is in a land trust, and you are carrying back owner financing.  You normally have the note and mortgage made out with the trustee’s name and the land trust name.  You say that’s probably not the best way to do this.  Yes, it is.  That’s just fine.  The property was in trust.  The trust is deeding the property, not going to own it anymore, and then it’s actually going to be deeded to the new buyer.  The trust, who is the seller, is now going to accept a purchase money note and mortgage in the name of the trust to receive that as an asset of the trust.  Payments would be made to that trust, and so on.  There is no problem with that.  I will give you a better way in just a minute.

Then you say what I have had to do in the past if they stop making payment was to get the trustee involved again to sign papers, etc. for foreclosure.  All right, here’s another idea.  In our Volume X, Owner Financing System, that is where we go very deeply into a concept called Agreement for Deed.  It’s split into two parts; Buying and Selling.  You can buy a property on Agreement for Deed, or you can sell it on Agreement for Deed.  It’s also known as Land Contract, Contract for Deed, and Bond for Deed.  But, it’s all the same thing.  My name for it is Agreement for Deed because that’s exactly what it is.  It’s agreement to receive the deed.

What’s good for you is when you’re selling a property, instead of selling it and giving the new buyer a deed and carrying back a mortgage, instead you merely give your buyer an agreement for the deed, and, in fact, all my paperwork outlines very carefully what happens if they don’t do what they are supposed to do.

Let’s go into that explanation.  If they don’t pay as agreed, and they don’t do what they said they’re going to do, then in my paperwork it says that you record a quitclaim deed on their behalf using the power of attorney that they granted you in the Agreement for Deed to do the same.  The reason they agreed to give to a power of attorney because that gives you the right, now, to go ahead, and get rid of the property.  Excuse me.  Let me say this right.  This gives you the right to receive the property back and evict them as a tenant.  Why?  Because that’s what they agreed to in the Agreement for Deed.  It’s all in the paperwork.  It’s all on your lovely disk.

If you are going to do some of these, Gary, I highly recommend that you get in depth knowledge about this because it is an extremely powerful way to exit your properties without giving up all the control.  And, it gives you the ability to avoid the foreclosure, which gives us a real great opportunity here.  If we avoid the foreclosure then we’ve just saved a ton of money, haven’t we.

Gary, try that out.  You can get the Agreement for Deed system, Owner Finance System, Volume X by calling my office at 1-800-578-8580.  As you probably know, each one of our systems are designed as a stand alone, so it’s got all the stuff neatly packaged right there to give you everything to move forward on this concept that is so much better than having to foreclose.

I’ll give you a little, quick anecdote.  One of my coaching clients, we went to lunch the other day, and he told me; now here in Georgia we’ve got a unique situation in that you can foreclose on a property within four weeks.  It’s such a short period of time most people say why wouldn’t you just go ahead and foreclose.  The answer is because it’s so easy to do it the other way.  He told me that even with any kind of hassles that might come from a tenant, or having to go to court, or anything like that, he said it’s still better to do Agreement for Deed.  He said what’s great about it is that he’s able to get; he says he’s got five of these going a month.  Just imagine at five a month its big news.  He said if I had to foreclose on five a month, he says, I’d never get it done.  He says Agreement for Deed allows me to do it so much quicker.  So, that really should underline and underscore the benefit to you, Gary.  I’m not sure from your submitted question, what state you’re in.  But, that really gives you some stuff to work with.

I got a question here from John who says, I just purchased a foreclosed two bedroom, two-bath condo in a working class neighborhood in south Florida.  I want to rent option, or sell it.  I have tried creative ways to advertise, yet I have few who e-mail and no appointments to show.  No response from the realtor, also.

Well, John, you’re going to have to get really deep into my selling program.  What I teach you is that I want you to have multiple things going on.  I want your house to be as if it has a spotlight on it.  That means that I want you to have multiple signs in front of the yard.  In fact, our sign whiz, we’ve got a stylized banner that I have designed and it’s got all the right words on there, and it’s three feet by eight feet.  It’s a big vinyl banner.  It’s got all the answers on there that the buyer needs to see such as; your credit is approved, no bank qualifying, owner financing.  All the goodies are on the banner.  Just imagine the excitement when people ride down the street and see that great big banner in the yard.  So, that is one way to get a spotlight on your property.  I know you said it’s a condo, but maybe it’s got a balcony.  Maybe you can hang it off the balcony.  Maybe there is some other way we can get a spotlight on it.

Now, don’t forget Craig’s List.  I want you to go on Craig’s List.  Go on to Craig’s List a couple of times a week, update your listing, and make sure that people are seeing it there.  Then, I’ve got about 50 other web sites you can list it to, too.  We want to make sure that not matter what, you have totally exposed your property in every way you possibly can.

I’m going to say this.  If you haven’t been to MPI, which is Massive Passive Income, that’s our training on how to exit your properties, and exit them right.  That is an in depth training that goes much deeper than most investors have any clue about going to get their property marketed.  You need to get yourself involved in that.  In fact, if you’ll go ahead and get signed up on that I’ll let you have a payment plan on that.  Spread your payments over the next number of months until we have our next event, however long that is.  If you sign up for it now, I’ll go ahead and fax you my whole list of all the web sites that we list on, and all the other goodies that you can use immediately to get your property marketed.

There is another thing we use too, that’s another idea, is our neighborhood referral program.  What we do is hit all the neighbors up for their friends, and relatives, and co-workers who may be looking for a property and offer to pay them a referral fee for having referred someone to us.  Then, there is another form that we use that I’ll also include.  That’s our attention brokers flier that we fax to all the mortgage brokers and realtors.  What we say is, I bet you’ve been working with someone, or have worked with someone in the past who hasn’t been able to qualify for a loan.  What we do is offer them financing today.  You can get paid today for the referral, and get paid later when they actually buy the property.  How’s that?  We’ve got a whole program around that, John.  We’ll include that as part of your sign up for the MPI program as an advance bonus.

By the way, anyone else on the call who wants to go ahead now and get registered for MPI, I’ll make you the same offer.  A zero interest loan, get yourself signed up for the in depth training, I’ll give you a zero interest loan on that that you can pay monthly payments on.  And, I’ll send you some of the bonuses now, upfront, just for signing up.  How’s that for a deal?  Wow!  Lou’s getting really generous in his old age, isn’t he?

We’re about to run out of time and I’ve still got piles of questions here, so we’ll be referring these on to the next question.  But, I’ve got a tax question here form Russ Merchant who says, in the MJS, Lou; you said that there was a difference in tax liability between a corporation or LLC and a trust when you sell the real estate.  What is the difference?

Well, Russ, if the trust is a flow-through trust, as mine are, which is the land trust and personal property trust, what that means is that the tax liability and the tax benefit flow through to you as beneficiary of the trust.  So, in other words, you’re able to use you as an individual to take advantage of your tax benefits as an individual.  A corporation gets taxed at a different tax rate, and an LLC as well, so you want to take into account the fact that you have the opportunity to kind of shift that to a different place and say okay, my tax liability really is different as an individual than it is between a corporation and LLC.  It’s simply because I took title in trust, and it was this kind of trust that flows through to my personal tax return.  Very good question, Russ.

Got another question from Janice, I think I’ll try to slip one more in here before we end.  Hello Lou, if a person inherited a home in summer or fall of 2007, how is the capital gains calculated?  One, it was originally appraised at $250,000 in October 2007.  This was a bank appraisal done when she was trying to refinance to her name.  She was not successful.  The mortgages are still in the name of the deceased.  Two, there are two mortgages totaling $160,000 on the property.  Three, it was put on the market in March 2008 for $215,000 per realtor price opinion, because the house needs work.  Four, it is currently under contract for $202,000 with a third party, not me.  This seller was referred to me a bit late.  (That’s pretty obvious.)  If the buyer falls through I may pursue something.  At this point, I’m trying to help the seller, as she is very confused.  So, I am curious.  What is the basis to calculate the gain?  Are there any transfer/inheritance taxes related?  This property is in Connecticut.

Okay, Janice, here’s the deal.  Has she filed a tax return yet, a death tax return on the deceased?  If so, then what happened at the deceased death, if there was a step-up in basis, that means that your seller actually inherited it at $250,000, and if the seller sells it for $202,000, the seller is actually taking a loss.  Which is kind of interesting, isn’t it.  That could or could not affect their taxes.  We won’t go into that right now.  The bottom line is, they’re absolutely going to have no tax consequence to inheriting this property unless the estate was for more than Two million dollars.  Two million dollars is, because it was in 2007, was the amount that was the exemption in 2007.  so, if the estate was for more than two million dollars, then yes, they are going to have to pay inheritance tax on the amount that’s above two million dollars.  If the estate is below two million dollars, then all good news.  Glad you asked that question, Janice.