ANOTHER RAY COMO HOME
FOR YOU! EASY OWNER FINANCING.
No Bank Qualifying. No Money Down.
No. Closing Costs.
Only $49,300 & we'll lend you the down
payment if you want to own this lovely
brick home. 2-3 bedrooms.
New Kitchen/Doors/Water Heater.
Security System. Garage.
Address: 1234 Chalfont St.
Ride by first, then Call 243-COMO.
We sold three houses in three weeks using the "killer" ad shown above. We sold two on contract for deed. We sold one on a lease/option. We sold two of the houses for exactly what we were asking and the third for $3,100 more than we were asking. We took cash down and paper down and we took paper back. Listen: We got our price, on our terms, and it happened so fast itíll make your head spin.
"All I want is for somebody to take over my $35,000 FHA mortgage. Itís assumable, you know," she said as she breathed a sigh of relief. Then she confessed her sins. "My property has been on and off the market for over two years now! Iíve had it in and out of the hands of Realtors~. Iíve placed ads myself week after week after week. In all this time Iíve had three lookers, with no offers and certainly no buyers. Iím just very frustrated; this house is whatís left of a bad marriage and I just want out. The problem is, I canít get anybody to even look at my house let alone take over my payments." She paused a moment, and asked "Please, can you do anything?"
"Moi...?" I asked, then I asked two, maybe three hundred more questions which she answered obediently and in the process I found out every nuance as well as every important particular that I needed to know in order to make an intelligent evaluation of her situation. I explained our governing policies. I explained that our corporation would handle the entire transaction from conception to completion. I explained that I would meet with her and she would sign an agreement of sale, a deed and a power of attorney giving us full authorization to deal with her property. She agreed enthusiastically and we set an appointment.
Needless to say, the appointment was short and sweet. I filled in all the blanks on The Buy-Sell Agreement™ and within fifteen minutes she signed everything on the spot! Nancy, my traveling Notary, embossed her seal and we were off and running again...on another exhilarating deal.
The next day I went to inspect the house and in minutes realized I had a "killer deal" on my hands. It was all brick. No deferred maintenance. Two bedrooms and a Florida Room. A one-car garage. A log burning fireplace. Nice carpet and undamaged hardwood floors.
In a day, I had the title search back. There was that one mortgage, FHA, just as she had described it. Everything was in place.
In one and a half days, (three days before the seller moved out, mind you), we had all the exterior wood trim painted, all the grass cut and all the hedges trimmed. As the seller moved out, we cleaned, swept and vacuumed the inside.
Before Friday of that week, we had the ad running that became the headline of this article. We made up telephone pole signs out of (8 1/2" X 14") legal size paper and we stapled them to all the telephone poles within five blocks of the house. We mounted our, hot new "FOR SALE BY OWNER SIGNS" in the front window inviting people who are attracted by the yard sign to stop their car, get out and read about the features and benefits while they tour the outside of the house at their leisure. We hung our combination lock box on the front doorknob with the instructions directly above.
By Saturday morning five people had read the ad and obediently took a ride by the outside.
By Saturday afternoon I had interviewed two likely prospects over the telephone. You see, we literally force prospective buyers to jump through a series of hoops. First, they have to read the ad. Then they have to drive by and look at the neighborhood and the house from the outside. Then they have to call back.
Slowly, nuturingly, inquisitively, I ask questions and I listen carefully as I interview them...
"Can I ask you some questions . . . then we will know how well our program will work for you? Good. Your name? Your phone? And where did you see our ad? Who will be living in the home? Where do you work? What is your occupation? For how long? Where does your spouse work? Your spouseís occupation? And for how long? Where do you live now? Do you own or rent? What do you pay now? What is your credit like on a scale of 1 to 10. Have you set aside money for a down payment? Can I ask how much, in round numbers? What do you think you can afford for a monthly payment?"
When I am thoroughly convinced, I mean thoroughly convinced theyíre right, I give them the combination to the lock box as I explain that in order to qualify for our program they must inspect the home on their own and get back us once they have completed their inspection and secured the house. Clearly another hoop they must jump through.
The second guy I spoke to loved the house, had seen the outside and was dying to get inside. He is a computer engineer making great money; his wife is a housewife; they have no kids. They had a little bad credit that consisted mostly of defaulted student loans. They had excellent references from all their past landlords. The husband had excellent references from his job. In fact, based on the looks of their credit report their credit had been improving year after year after year; for eight years.
They had $2,000 in cash to put down and they said they could afford $600 a month. I was pleased. I was going to be at the property the next day so I scheduled a time to meet them at the property as I explained that they ought to come prepared to put a deposit down if they expected to guarantee their place among a long list of prospects.
They showed up exactly on time. They looked the home over and within minutes they knew they loved it. In fact, they had to have it. In creative Real Estate we always say you have to find a motivated seller if you want to make a killer deal. Well Iím here to tell you that you should get a load of a motivated buyer!
We stood in the living room and the husband began to talk. "Your price at $49,300 is a fair one but you know how we said we could put down $2,000...?" as he paused I gulped. "...w-e-l-l, weíd like to give you $500 now and $1,500 at the end of this month, if thatís acceptable to you, Mr. Como?" I nodded, as I breathed a silent sigh of relief. He continued. "...and on the phone I know I said we could afford $600, but..." He paused. I gulped again thinking "here comes the deal killer." Instead, to my surprise, he smiled sheepishly, as if he knew he was about to nail this deal down for good, and he asked "we were wondering if we could pay $1,000 a month for the first year, just to save up a big down payment, then weíll drop back to $600 a month, OK?"
I almost fainted. After all, I was buying for $35,000 just by taking over a loan. I was selling for $49,300 with $2,000 down. I was buying by assuming an FHA loan @ 11.5% and I was selling on contract for deed "wrapped around" their bank loan @ 12%. My payment of Principal, interest, taxes and insurance (PITI) is $517 a month and they were asking to pay $1,000 for the first year and $600 a month for 22 years until they fully amortized their 12% contract for deed.
I was ecstatic. We wrote the deal on the spot. In eleven amazing days this house had been marketed for a paper profit of $14,300, a $2000 down payment, $483 cash flow the first year and then $83 cash flow for the next twenty two years!
We scheduled a closing date for the following Friday. I scheduled the closing at the branch of my bank that is located in the same town as this house.
I prepared a simple statement of payments showing the breakdown of principal, interest, taxes, insurance and the ramifications of making late payments. I created an Installment Land Contract specifying all the terms of repayment. I printed an accompanying amortization schedule and I prepared a simple closing statement showing the proration of taxes and insurance. I collected six months of taxes in addition to the down payment. We closed.
The story you just read is true. It has been condensed to fit these pages. You see, someone might begrudgingly say "Geez, $14,300 Profit in eleven days! How lucky can you get?" In fact, thatís what the seller said to me when she first saw my ad [to sell her house] in The Pennysaver™. She even had the audacity to ask me if she could have some of the profit because I did so well, so fast. She couldnít figure how I defied two years of Realtors® efforts and two years of her own ads. She wondered how I seemed to do this so effortlessly.
I said "wait a minute, let me ask you a question. Did I give you exactly the price you were asking?" "Yes," she said. "Did I get you free of this house and your bad marriage in less than a week?" "Yeah," she mumbled. "Did we go through this over and over and over on the phone?" "Yes," she said. "Now let me explain to you that Iíve been doing this for thirteen years. Iíve spent well over $100,000 just on seminars, books and tapes. Most importantly, Iíve made thousands and thousands of dollars worth of mistakes." Finally I asked "What do you think about the price?" She smiled, and had to nod "yes." She was in the agreement frame.
Between you and me? I think the price I paid was a fair one. Now let me give you my model for "reframing" anything bad that has happened in the past. I truly believe that if my life didnít go exactly the way it has, I would not be where I am today. I said "exactly"...and I mean to the minute. Remember this: Your life literally consists of the little one-second decisions you make every day and everything that happens, happens for a positive intent.
Whether you are experienced or inexperienced you can do deals like this any day. Notice I said "any day" and not "every day." Transaction Engineering is a skill you need to learn (no master), if you are to attack Real Estate Entrepreneurship in the nineties with the fury of a thousand wild coolas.
Finally, let me say this: Free-Form Finance of this genre is no longer just an alternative from conventional ways. It is literally your future. If what happened to the S&Lís happens to the banking system, your creative financing skills will be like water in a desert. Polish them now, before itís too late.
© MCMXCIV By Ray Como. All Rights Reserved
Ray Como has created, produced, copyrighted and self-published 15 audio cassette programs and lots of other forms and tools for business, real estate, corporations, selling, marketing, finance, management and Entrepreneurship.
|© 2001, 2002 The Real Estate Investing Depot|