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The Road to a Conventional Mortgage Loan!

Requirements for Fannie

· Copy of Rental/Purchase agreement – Minimum 12 month term

· 12 month payment history – Cancelled checks or money orders

· Appraisal to determine Market Rent

· Down payment Credit Calculation -- Credit toward down payment cannot exceed the difference between Market Rent and the Actual Rent paid for the last 12 months.

Requirements for Freddie

· Copy of Rental/Purchase agreement – No minimum term.

· Payment history – Cancelled checks or money orders

· Appraisal to determine Market Rent

· Down payment Credit Calculation -- Credit toward down payment cannot exceed the difference between Market Rent and the Actual Rent paid.

“Advertising Rules (Reg Z) for Real Estate Agents & Builders

The updated Truth-In-Lending Rules apply if you quote down payments, payments, interest rates or points. But wait, there’s more! These rules apply to all forms of advertising, including email blasts, flyers that you pass out at apartment buildings, TV & radio, and direct mail! They apply to all dwelling-secured loans: single-family, condos, town homes, mobile homes, etc.

Existing Advertising Disclosure Rules

If your ad contains any financing info…

§ Dollar amount or % of down payment

§ Number of payments or number of years to repay the loan

§ Dollar amount of any payment

§ An interest rate or a finance charge

…then you must disclose the following:

§ The terms of repayment over the entire life of the loan, including ARMs, Balloon payments or temporary buy downs

§ Dollar amount or % of down payment

§ The Annual Percentage Rate

Updated Rate & Payment Rules In Addition to Existing Rules

Effective 10-1-09, more disclosure must be included in addition to the existing rules above:

§ If fixed interest rate over the life of the loan, the rate and APR must be printed in the same size letters

§ If advertising a payment, you must include

o Fact that the payment does not include taxes, mortgage or homeowners insurance

§ If rate or payment is NOT fixed, (Buydown, ARM or Balloon)

o Each rate or payment & time period changes for entire term of the loan

o If ARM, future rate must be disclosed by adding index plus margin

Size of Lettering & Placement of Disclosure – Printed Ads

§ APR Rate and loan term details must be printed in the same size letters (or larger) than the rate or payment being advertised

§ Must be printed in “close proximity to info being advertised (not buried way down at the bottom or the ad)

§ Cannot be obscured in any way (i.e., shading, coloration, etc)

TV, Radio, Video & All Oral Disclosures

Must include all the information above PLUS:

§ Must be clearly stated (no talking fast or low tone of voice); or

§ Must provide a toll free number that may be used to call for additional info

For information only – it’s not comprehensive or intended as legal advice. Final Rule published in Federal Register Vol. 73, No. 147 and 12 CFR, Part 226

Tips On Buying HUD Foreclosures!

Bidding & Buying HUD homes—it seems to be the hot ticket in town.

However - Remember these key points to avoid problems and advise buyers:

• Only primary residence buyers allowed in the first round of bidding.
• Advise buyer that if home is being offered as eligible for FHA financing it:

• Has an existing FHA appraisal that must be used (unless expired) AND
• The sales price has usually been based on the existing appraised value. Bidding above the sales price may result in them paying the difference out-of-pocket between their bid and appraised value.

• HUD does not automatically provide title insurance. Explain this to your buyer and make sure that the lender has disclosed this additional expense to them if they want to purchase it to avoid surprises at closing. Only if HUD has agreed to pay closing costs, could the insurance be provided at HUD’s expense.
• If HUD is offering a repair escrow, explain to buyers that this amount can be ADDED to their FHA loan, but HUD doesn’t pay for it.
• Lender documents must be to the title company up to 10 days prior to closing date in some states. Make sure the buyer’s lender understands and can accommodate the requirement.
• HUD signs closing packages first. Then once the loan proceeds and the title company receives buyer down payment and closing costs, the buyer is allowed to sign. Make sure that the lender is aware and has the ability to fund the loan BEFORE they have a completed loan package.
• Closing delays are common due to “title clearing” issues. Foreclosed homes can have several liens due to utilities, taxes; etc that must be dealt with before closing can take place. Prepare the buyer in the beginning and discuss potential challenges, such as rescheduling of moving trucks, and possible rate lock extension fees.

Buyers will appreciate your proactive approach to making their dream come true!

Change is inevitable, except from vending machines! I want to share with you some of the rules and regulations that mortgage lenders must comply with--and how working together, we can insure smoother transactions & closings! There were 2 new laws that affect all of us:

The Mortgage Disclosure Improvement Act

• Uniformity – Lenders must all use the same Good Faith Estimate
• Business Days – Defined as Monday thru Saturday, EXCEPT holidays
• Re-disclosure – If APR rates changes an 1/8% over original disclosure
• Waiting Periods – Time to review disclosures and HUD 1
• GFE – 10 Days
• Appraisal – 3 days (Covered by HVCC law)
• Comparison Shopping – GFE encourages rate comparisons from 3 lenders

RESPA & New Good Faith Estimate

• New Good Faith Estimate, 3-page Form ALL lenders must use
• New HUD Settlement Costs Booklet
• GFE needs to match HUD1 at closing (some tolerances apply)
• No “waiting time” Waivers Allowed
• No Last-minute negotiations between buyers & sellers

What to Advise your Clients to Insure Smoother Transactions

• Lock interest rate 10 days before closing
• Encourage buyers to SHOP for their mortgage BEFORE buying a home. (Switching lenders starts the disclosure (and waiting periods) all over again)
• Review “good faith WORKSHEET” (not the uniform GFE) with your clients
• Read the HUD Settlement Cost Booklet (first pages describe the role of real estate agents)
• Add clause to purchase agreement with “automatic extension” due to RESPA/GFE delays
• Make sure clients get a REAL pre-approval
• Ask Title Company to Provide “mock” HUD1 at least 10 days before closing

Rules for Dropping Mortgage Insurance

What you and your clients should know!

Yep, there’s a disclosure for that!

But what do the PMI termination rules really mean to the average person?

Dropping Conventional Mortgage Insurance Rules

§ Automatic Termination

o Fixed Rate & Adjustable – Removed when reduced to 78% LTV

§ LTV based upon ORIGINAL VALUE

§ Based SOLEY on regular amortization (not prepayment of principal)

Additional Requirement:

§ Mortgage payment must be current

§ Borrower Requests Termination

o Fixed & Adjustable – Removed when reduced to 78% LTV

Additional Requirements:

§ Submit cancellation request in writing

§ Good payment history

§ Current on mortgage payments

§ Appraisal or Certification that property value has not decreased BELOW the original value

§ No 2^nd liens or subordinated loans on property

Dropping FHA Mortgage Insurance Premium Rules

Loans closed PRIOR to January 1, 2001 are NOT eligible for termination of MIP (monthly insurance premium) if closed on January 1, 2001 and after, MIP will be automatically terminated under the following conditions.

• More than 15-year term
• Must pay for 5 years AND
• 78% LTV based on original LTV

• 15-Year Term or less
• If original loan amount is 90.01% or more, of the original appraisal value, MIP will be terminated at 78%
• 5-year minimum payment waived
• If originaln loan amount is 90% or less, of the original appraisal value, NO monthly MIP will be charged.

NOTE: Loan-to-Value for purchases based on the sales price or appraisal value, whichever is lower

Loan-to-Value for refinances based on appraisal value

Loan-to-value figured on base loan amount WITHOUT UFMIP

Estimated Number of Years To

Drop Mortgage Insurance Chart

At application, do the math and let your clients know the estimated number of years that the PMI or MIP will be eliminated.

The interest rate makes a difference, but here’s an example of a sales

price/appraisal value of $250,000 at 6% interest rate, and based on making

regular monthly payments (no principal prepayment).

Down Payment Loan Amount Term Years PMI/MIP Eliminated

5% 237,500 30 yr 11 yrs

10% 225,000 30 yr 9 yrs

15% 212,500 30 yr 6 yrs

5% 237,500 20 yr 6 yrs

10% 225,000 20 yr 4.5 yrs

15% 212,500 20 yr 3 yrs

5% 237,500 15 yr 4 yrs

10% 225,000 15 yr 3 yrs

15% 212,500 15 yr 2 yrs

If the interest rate is 1% lower than 6%, subtract one year

If the interest is 1% higher than 6%, add one year

Information brought to you by Mortgage talking Points / MortgageCurrency.com

How do I know if it’s a Condo?

Because of the recent changes to the condominium approval/review processes it is absolutely imperative that you understand what type of property you are dealing with BEFORE you move forward with listing or selling a property. Condominiums present financing challenges better addressed at the beginning of the transaction, as opposed to later. For example: There’s no point writing up an offer at midnight for a buyer when this project isn’t on an approved list and the project wouldn’t qualify even if it was submitted for review.

 A form of ownership where units are owned by individuals but the land and common areas are owned jointly with all owners.

So what should you do?

1. Do not accept MLS information or verbal information. Get a copy of the legal description.

Blindly accepting what you read on the MLS listing or what the current owner says isn’t smart. Very few agents or owners have actually READ the legal description.

2. Do NOT rely on the project name for determination.

Many projects have misleading names. The developer names the project “Shady Pines Townhomes” so people assume that because the word “Condominium” isn’t mentioned that it’s not a condo and doesn’t require project approval.

3. READ the legal description – Does the legal description of the unit include the lot?

If not you probably have a condominium form of ownership. Check the project documents.

NOTE: There is a special exemption from project approval for “Site Condominiums” defined as detached units with no attached/shared garages etc. Site Condos are typical for only a few states.

Military & Certain Federal Employees

Get Home Buyer Tax Credits Until 2011

A little-known provision of the Home Buyer Tax Credit bill that became effective on Nov 6, 2009, is that certain military personnel and Foreign Service employees have an EXTRA year to purchase a home and qualify for the tax credit.

In addition to that, if they sold a principal residence between Jan 1, 2009 & April 30, 2010 because they had to relocate at least 50 miles due to “orders”, they qualify for a tax credit, even if they owned a home between the above time periods. Income, age and sales price limitations still apply.

Who qualifies?

§ Member of “uniformed” services

§ Member of Foreign Service of the US

§ Employee of Intelligence Community

§ Spouse of any of the above

And must have had:

§ Extended Duty outside the US for 91 days, or

§ Extended Duty inside the US for 91 days and had to relocate at least 50 miles from principal residence

§ Sold principal residence between Jan 1 2009 & April 30, 2010

Tax Credit Dates Extended to:

§ Signed contract by April 30, 2011

§ Closed by June 30, 2011

Can get tax credit if:

§ They sold their home or the home stops being their principal residence as of January 1, 2009 (because of government orders)

§ Extended duty (either inside or outside the US) and had to move at least 50 miles away from principal residence

 FHA PRODUCTS

 WHAT IS A 203(b) LOAN?

This is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines, limited lender's fees, and a maximum loan amount.

 WHAT IS A 203(k) LOAN?

This is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the seller's existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows:

The home must be at least one year old.

The cost of rehabilitation must be at least $5,000, but the total property value-including the cost of repairs-must fall within the FHA maximum mortgage limit.

The 203(k) loan must follow many of the 203(b) eligibility requirements.

Talk to your lender about specific improvement, energy efficiency, and structural guidelines.

 WHAT IS AN ENERGY EFFICIENT MORTGAGE (EEM)?

The Energy Efficient Mortgage allows a homebuyer to save future money on utility bills. This is done by financing the cost of adding energy-efficiency features to a new or existing home as part of an FHA-insured home purchase. The EEM can be used with both 203(b) and 203(k) loans.

Basic guidelines for EEMs are as follows:

The cost of improvements must be determined by a Home Energy Rating System or by an energy consultant.

This cost must be less than the anticipated savings from the improvements.

One- and two-unit new or existing homes are eligible; condos are not.

The improvements financed may be 5% of property value or $4,000, whichever is greater. The total must fall within the FHA loan limit.

 WHAT IS A TITLE I LOAN?

Given by a lender and insured by the FHA, a Title I loan is used to make non-luxury renovations and repairs to a home. It offers a manageable interest rate and repayment schedule. Loans are limited to between $5,000 and $20,000. If the loan amount is under $7,500, no lien is required against your home. Ask your lender for details.

WHAT OTHER LOAN PRODUCTS OR PROGRAMS DOES THE FHA OFFER?

The FHA also insures loans for the purchase or rehabilitation of manufactured housing, condominiums, and cooperatives. It also has special programs for urban areas, disaster victims, and members of the armed forces. Insurance for ARMs is also available from the FHA.

 HOW CAN I OBTAIN AN FHA-INSURED LOAN?

Contact any lender such as a participating mortgage company, bank, savings and loan association, or thrift. For more information on the FHA and how you can obtain an FHA loan, visit the HUD web site at http://www.hud.gov or call a HUD-approved counseling agency at 1-800-569-4287 or TDD: 1-800-877-8339.

 HOW CAN I CONTACT HUD?

Visit the web site at http://www.hud.gov or look in the phone book "blue pages" for a listing of the HUD office near you.

Finding the Right Loan For You

 How do I choose the best loan program for me?

Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.

• Do you expect your finances to changeover the next few years?
• Are you planning to live in this home for a long period of time?
• Are you comfortable with the idea of a changing mortgage payment amount?
• Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?
• Your lender can help you use your answers to questions such as these to decide which loan best fits your needs.

What is the best way to compare loan terms between lenders?

First, devise a checklist for the information from each lending institution.

You should include the company's name and basic information, the type of mortgage, minimum down payment required, interest rate and points, closing costs, loan processing time, and whether prepayment is allowed.

Speak with companies by phone or in person. Be sure to call every lender on the list the same day, as interest rates can fluctuate daily. In addition to doing your own research, your real estate agent may have access to a database of lender and mortgage options. Though your agent may primarily be affiliated with a particular lending institution, he or she may also be able to suggest a variety of different lender options to you.

 Are there any costs or fees associated with the loan origination process?

Yes. When you turn in your application, you'll be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal, a copy of your credit report, and any additional charges that may be necessary. The application fee is generally non-refundable.

 What is RESPA?

RESPA stands for Real Estate Settlement Procedures Act. It requires lenders to disclose information to potential customers throughout the mortgage process. By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction.

For more information on RESPA, visit the web page at http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm or call 1-800-217-6970 for a local counseling referral.

 What is a Good Faith Estimate, and how does it help me?

It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

 Besides RESPA, does the lender have any additional responsibilities?

Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her services to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD's Office of Fair Housing at 1-800-669-9777 (or 1-800-927-9275 for the hearing impaired).

 What responsibilities do I have during the lending process?

To ensure you won't fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:

• Be sure to read and understand everything before you sign.
• Refuse to sign any blank documents.
• Do not buy property for someone else.
• Do not overstate your income.
• Do not overstate how long you have been employed.
• Do not overstate your assets.
• Accurately report your debts.
• Do not change your income tax returns for any reason.
• Tell the whole truth about gifts.
• Do not list fake co-borrowers on your loan application.
• Be truthful I about your credit problems, past and present.
• Be honest about your intention to occupy the house.
• Do not provide false supporting documents.

The Things You Need To Know Before Buying a Home 

Most people don't have a strategic plan for buying a home.  If they had a strategic plan, they would probably save:

• Thousands of Dollars,
• Many hours of their time, and
• Most of the stress associated with buying a home.

That's why I offer a FREE, NO OBLIGATION Strategy Session to anyone who is thinking about the possibility of buying a home. In this free report, I will explain some of the things you need to know before you begin the process of deciding to buy a home.  CONTACT US to schedule a Strategy Session today!

ONE: Know the neighborhood, know the market.

Your first priority is to narrow your search to no more than a few neighborhoods that meet your most important criteria.

Does the neighborhood contain the kind of home youre looking for (are the houses the right size and style)?

Is the neighborhood conveniently located (close to your work, church, schools, shopping, and other important interests)?

If you have school-aged children, how are the schools that serve the neighborhood?
How do their test scores compare with the rest of the district?

How safe is the neighborhood (how does it compare to other neighborhoods in terms of crime statistics)?

What is the condition of the real estate market in the neighborhood? How many homes are listed for sale? How many of them sell each month? The relationship between sales and listings will tell you a lot about the market conditions and that will help you develop an effective negotiating strategy.

In a free, personal Strategy Session, I can help you get the answers to these and other questions and the most accurate, up-to-date information available.

TWO: Know the difference between what you want and what you need.

Why do you want to buy a home? Thats a question only you can answer as different people have different reasons. Maybe this will be your first home, and youre really excited about having a place of your own. Maybe you already own a home, but its too big, or too small, or you dont like the neighborhood, or you want to be closer to work, or to better schools for your children. Maybe youre looking at the purchase of a home primarily as an investment.

Whatever your reasons are, its important that you be clear about them, because understanding your own motivation will help you be clear about what you need, and what you want in your next home.

Once you know your dominant motivation, get yourself a notebook (this is something youll use throughout the entire home buying process to keep track of important information) and write down a list of the things you consider to be your basic must haves in a home.

For example, how many bedrooms & baths do you need? Write that down. Do you need a family room or study? A 2-car garage? Do you need to be within walking distance of public transportation, or schools? Write all these needs down. Remember, these arent things that you would like to have, but things you consider to be necessary.

Its important that you make this list of basic necessities now, before you start looking at homes, because once you start looking, the real estate agents are going to do everything they can to convince you that you absolutely need whatever features are present in the homes they show you. If you have your own written list of your needs before you get subjected to emotional appeals and sales pressure, you wont be tempted to pay more for things you dont really have to have. This doesnt mean you cant change your mind about what you need somewhere down the road, but if youre working from your own list of needs, youll be guided by your own thinking and not being influenced by someone else.

On a separate page, you can make a list of things you want things that would be nice to have, but arent essentials things you know you dont need to pay extra for.

Generally speaking, design choices like paint colors, wallpaper, and carpeting would be wants rather than needs in part because they are relatively easy and inexpensive to change compared to, say, the number of bedrooms.

One of the things I can do for you in a Strategy Session is to help you make distinctions between wants and needs. I can help you evaluate the economics of various types of improvements to a property show you how to determine the likelihood of being able to recapture your investment in such changes, given the relative costs of making them vs. the average price of homes in a neighborhood, market conditions, etc.

THREE: Know your buying power.

Take appropriate steps to strengthen your negotiating power

Whether or not you already own a home, its important to know before you start looking at homes your buying power, your budget, and your spending limits.

There are two numbers that are important to you: the first is your maximum purchasing power (the total of the money you will have available for down payment plus the maximum amount of mortgage loan you can qualify for). The second important number is your comfortable spending limit which is the amount you would feel comfortable spending in order to get the features you are looking for in a home. Your goal will be to buy the right home for a price that falls within your comfortable spending limit. You will only go above that number (up to your maximum purchasing power) for a home that is really exceptional and represents an excellent value for the money.

The only way to reliably arrive at these numbers is to meet with a qualified, professional mortgage lender and get pre-approved for a loan which means that the lender has made a written commitment to make the loan to you, without obligating yourself to take the loan.

Theres a big difference between being pre-qualified and being pre-approved. When a lender pre-qualifies you, none of your financial information (including your income, assets, and credit report) has been verified, and the lender makes no commitment to you. With a pre-approval, all of your information has been checked, your file has gone through underwriting, and the lender gives you a binding commitment, in writing.

In a Strategy Session, not only will I get you pre-approved so you know your maximum purchasing power; I'll also help you arrive at your comfortable spending limit, so youll know how much you want to spend, and how much you could spend if you found a home that was an exceptionally good value for the money.

One more thing about getting pre-approved its been estimated that about 30% of credit reports contain some error or inaccuracy that could affect the consumers credit rating. These mistakes can be corrected, but it takes time. Thats another reason why its so important to meet with me before you start seriously looking at homes. If theres a mistake on your credit report or even a correct derogatory entry like a late payment you dont want to be trying to get it fixed after youve already made an offer on a home and youre trying to meet a closing deadline.

Finally, in a Strategy Session, one of my most important objectives is to help you find ways to strengthen your negotiating position so you can not only find the right home, but also be able to buy it for the right price. Industry statistics clearly show that people who have been pre-approved for a mortgage loan before they make an offer on a home save at least 3% to 5% on the price they pay for their home. On a $150,000 home, thats a saving of at least $4,500!

FOUR: Understand the role of realtors.

What they will do for you, and what they will not

If you were a rock star or a professional athlete, you would have an agent to represent you in contract negotiations, and your agent would work hard to get you the best possible deal in part because the agent will receive a commission on the negotiated contract. In other words, the agents self-interest and your self-interest coincide. You both want the same thing the highest-paying contract possible.

If youre buying a home, real estate agents can be a tremendous source of information. They can help you find out about the neighborhood, schools, shopping, churches, and other community services. They have an extremely efficient system for identifying homes for sale that match your description of the home youre looking for. They can help you organize and coordinate the many details involved in closing a real estate transaction. If you are making an offer on a home, they will present your offer in its most favorable light (because they want to make a sale).

But it is not the Realtors job to negotiate the lowest possible price for the home you buy.

Realtors work for commissions. They are almost always paid by the Seller of the home. This is the case whether you are dealing with the Listing Agent, or a Buyers Agent who has been taking you around and showing you homes. The standard real estate commission in our area is usually around 6% of the actual selling price of the home. That commission is usually split 50-50 between the listing agent and the buyers agent when there are two Realtors involved. (If you deal directly with the listing agent only, he or she will earn the full commission.) Consequently, (and it is very important that you keep this in mind) the higher the price the home sells for, the more commission dollars the Realtor will earn.

It is a common misconception among homebuyers that the Buyers Agent is working for them. It is true that the agent has certain ethical responsibilities to you. For example, if you ask them about whether the home has certain defects, and they happen to know the answer, they are obligated to disclose that information to you.

But under no circumstances should you expect the Realtor to be trying to help you buy the home for the lowest possible price. It is simply not their job and in fact, would be a conflict of interest for them. There is nothing wrong with this. The Realtor is not being unethical the Realtor is representing the interests of the person who is paying the commission the Seller.

Therefore, you should make it a practice never to reveal your maximum spending limit to a real estate agent. If agents ask you how much you have to spend on a home, tell them that you have been pre-approved with a mortgage lender, and that if you decide to make an offer, you will provide them with a commitment letter that proves you have the financing to buy the home. Tell them (politely) that you would prefer to keep your finances private, and that you would like the Realtor to focus on finding you homes that match the description you have given them, regardless of the listing price.

If you were in the market for a new car, and you were on the dealership lot looking at a car you wanted to buy, would you ask the salesperson how much you should offer for the car? Of course not. For the same reason, dont ask a Realtor for advice on how much to offer for a home.

One of the most valuable services I can provide for you in your confidential Strategy Session is teaching you how to decide on the right amount for your initial offer on a home.

FIVE: Put time on your side.

Generally speaking, the Sellers are likely to be under considerable time pressure to sell their home. They may be planning to relocate for a job transfer; they may have already bought another home and dont want to be making two mortgage payments; or they may have had their home on the market for a while and are getting anxious about selling it.

This can be a negotiating advantage for you as a Buyer. If you are not in any particular hurry or pressure to move quickly, but are prepared to move quickly for the right home at the right price, the message you convey to both the Realtor and the Seller is that if the price of the house doesnt suit you, youre just going to keep looking its no skin off your nose, youll just keep looking until you find a house that suits you for a price youre willing to pay.

But for those Sellers feeling the pressure to sell their home, you are the bird in the hand whos worth two in the bush. They wont want to let you go if your offer is anywhere near what they need to get for the home even if its thousands of dollars below what they hoped to get.

Therefore, never tell the Realtor youre in a hurry to find a home (even if you are in a hurry). That will immediately remove what may be one of your strongest negotiating tactics. At the same time, do stress that you are in a position (both financially and logistically) to be able to move very quickly -- for the right home at the right price.

By the way, this is one more reason why its so important to have your mortgage financing pre-approved ahead of time so you are ready to close the deal as soon as you find the right one.

Finally, if you put yourself in a position where time is on your side (starting with taking advantage of my offer to give you a free Strategy Session), you will have plenty of time to do your research to track the asking prices of homes listed for sale in your target neighborhood, and record the actual prices those homes sold for, noting the difference between the two. This research will be invaluable in helping you decide what you should offer for a home, once youre ready to make an offer.

SIX: Fall in love with a person, not a house.

Love is a wonderful thing, but a good rule of thumb is that you dont want to fall in love with someone (or something) who cant love you back

When Realtors take you through a home for sale, theyre looking for the telltale signs of love. If they can see that you (and/or your spouse) are going gaga over the house, their eyeballs start turning into dollar signs and you are toast, as far as your negotiating position is concerned.

The Realtor may start babbling on about the wonderful this or that feature of the home. Your job is to be polite and friendly, but noncommittal. It is OK to fall in love with a home (or more accurately, to feel in your gut that this home is the right one for you) as long as you never, ever let the Realtor know thats how you feel. As long as the Realtor and the Seller feels that you could either take it or leave it, you are going to be in control. The instant the Realtor thinks you believe you have to have this home. You have lost all chances of negotiating a better price.

SEVEN: How to look at homes--what to ask, what to say.

You have given the Realtor the profile or criteria of the house you want to buy. The Realtor has done a search, and now wants to take you to see these homes.

How you conduct yourself during this part of the process will be critical to your success in finding the right home, and paying the lowest possible price for it.

To begin with, remember what I said about falling in love with a house (or letting the Realtor know youve fallen in love with it)? One of the ways a Realtor can tell how interested you are in a particular home is by how many questions you ask about it.

If you go through a home and dont have a single thing to say, dont ask a single question, the Realtor will assume youre not interested in that house. If you go through five like that, and then on the sixth house you suddenly start asking questions, its a dead giveaway that this is the house youre interested in.

So Im going to give you some questions you should ask about every house the Realtor shows you, even if you know the moment you see it that theres no way youd ever want to buy that house. You dont have to waste a lot of time on a loser property, but it is very much in your best interest to avoid showing enthusiasm for any one home so having a standard list of questions you ask about every home you see will keep the Realtor from getting the impression that you like a home so much youd pay any price for it. Here are the questions you should ask:

What is the asking price on this house? (The way you word the question subtly lets the Realtor know that you consider the listing price to be nothing more than the starting point of the negotiation of the price. The asking price is never the final price.)

Why is the home being sold? (Most Sellers need to sell more than most Buyers need to buy. Knowing the reason the home is being sold helps you evaluate the level of the Sellers motivation.)

How soon does the Seller want to close? (This is another way of getting at the level of the Sellers motivation/sense of urgency. Sometimes the agent will answer your question with another question, like, What would be best for you? Your response, if this happens, should be, We havent determined that yet. How soon does the Seller want to close?

How long has the seller owned the home? (If it has only been a short time, you might wonder out loud what was wrong with the house that they didnt want to stay there any longer. If they have owned the house for many years, it probably indicates that the seller has accumulated quite a bit of equity in the home, which might make them more flexible on the price.)

What repairs or improvements has the Seller made on the house? (If something has been repaired, it obviously means there was a problem. Realtors know that buyers typically have a perception that a history of repair problems lowers the value of the home. While the repairs may have completely solved the flaw and this may not be a problem for you you should always make any offer to purchase a home contingent on a satisfactory professional inspection you can use this perception that because the home was worked on there may be a problem with it as a negotiating point in your favor, something you can use to justify lowering the price youd be willing to pay.)

Remember, you should at least ask some of these questions about every home you see, and write the answers in your notebook, even if you dont have any interest in buying that house. This will help protect you from prematurely giving away to the Realtor your level of interest in a particular home if you ask questions about every home you see, the Realtor cant tell which one really wowed you. If they think youve fallen in love with a house, theyre going to be looking to get top dollar for it. If they think you could either take the house or leave it, you have much more power in a price negotiation.

EIGHT: How to make an offer

During your first tour of a home, you can count on the Realtor to try to get you to make an offer. He or she may tell you that the property is sure to sell it quickly, or even that an offer has already been made for the home (or that one is expected in the next 24 hours).

If the Realtor tells you there is another buyer who has made (or is about to make) an offer on the home, your response (assuming you are interested in the property) should be something like this: Were not interested in getting into a bidding war for this home. We like the home, but weve also seen other homes we like that are priced better. If the other buyers offer doesnt pan out, give us a call and we might be interested in making an offer then, but not for the price the Seller is asking.

Realtors in this situation might respond by telling you what a great home this is and that they would hate to see you lose it. You should respond by thanking them for their concern and explaining that you are the type of people who make the important buying decisions carefully, and that while you like the home, there are other homes youve seen that you also like. Tell the Realtor that if the other buyer buys the home, youd wish them well.

You will find that, more often than you might think, this approach will result in your getting a call from the Realtor within the next few days, telling you that the other buyer is no longer a factor, and asking you if youd like to make an offer. (The only exception to this rule would be a situation where there is a truly hot sellers market, and homes are being snapped up as soon as they go on the market it happens, but its fairly rare.

In a personal Strategy Session, I can help you find out ahead of time whether this is actually the case for the neighborhood youre interested in.) Often this is because the other buyer never existed in the first place it was just a ploy to get you to make an offer. Or there may actually have been another buyer, but they were unable, for whatever reason, to come to terms with the seller. Either way, your refusal to commit to the home at the price the seller was asking has put you in a much stronger negotiating position.

If the Realtor asks you how much you would be willing to offer for the home, answer, That hasnt been determined yet.

As a rule of thumb, you should not make an offer on your first visit to a home. If you really like the home, call the Realtor after a day or two and explain that there are some details about the home that you dont remember clearly, and that you would like to see the home again. This time, go through the home slowly and carefully (as much as an hour in total). Take your time. View it with a critical eye.

Ask plenty of questions about the condition of the home, any repairs or problems with the electrical wiring, roof, plumbing system, the structural condition. Ask again about the sellers reasons for wanting to sell, and when they want to close. (Remember that if the Realtor answers your question with another question, you answer by saying you havent decided yet and then restate your question.

The Realtor will once more try to get you to make an offer, and may very well suggest or hint that the Seller might be persuaded to accept an offer slightly below the listing price. This is a sure sign that the Realtor and/or the Sellers are highly motivated and willing to deal.

If you have done your homework, you will know how many homes are currently on the market in this neighborhood, and how many have sold in the last month.

You will know the prices of all homes sold in the neighborhood over the last 6 months to a year. You will have a sense of the rate at which homes in this neighborhood have appreciated in the past few years.

If you are prepared to make an offer on this home, your initial offer, generally speaking, should be for several thousand dollars below the lowest price for which a comparable home has sold in that neighborhood in the last 6 months to a year.

This is your opening offer; in most cases the Seller will give you a counteroffer, and your negotiation has begun. Bear in mind that the price will only go up from your initial offer; thats why you want to start low (but not so low as to appear not to be serious).

Any offer you make should always be contingent on a satisfactory thorough professional inspection. You might want to suggest a relatively long time frame to closing (say 90-120 days), which you can shorten to as little as 30-45 days as a concession to the seller in exchange for their accepting an offer which is well below what they were asking for.

How you approach making an offer will depend on a number of variables the state of the real estate market at the time, your specific circumstances, your goals and desires, your financial situation, and the specific features of the home youre thinking about buying and once again, the best way to thoroughly prepare yourself so that you make the best deal possible is to meet with me for 30 minutes or so for a free Strategy Session before you start seriously looking at homes.

NINE: You get what you negotiate.

If all of this seems like a lot of work, bear in mind that we are talking about the amount of money you will be spending for what may well be the biggest financial investment youll make in your life. If you spent a total of 40 hours doing your homework (including meeting with me for a personalized Strategy Session), being patient, and as a result saved $20,000 off the listing price of the home youd bought, youd have made $500 per hour for the time you spent not bad!

As I have said before, you will in all likelihood be negotiating with a professional Realtor who is highly skilled in the art of negotiating a real estate transaction. Realtors have far, far more experience at this than you can ever hope to have, and there are many thousands of dollars at stake. There are only three things you have going in your favor:

• The homework and preparation you do to make yourself ready to negotiate from a position of strength (including the confidential, personalized Strategy Session I will provide you at no charge)
• The fact that there are almost always far more sellers with homes to sell than there are buyers ready to buy at any given time
• The related fact that most sellers need to sell (and most Realtors need to make a sale) more than you, as a buyer, need to buy that particular home today.

If you've flown on an airline in the last few years and read the airline magazines, youve no doubt seen the ad for the negotiating course with the headline, In Life, You Dont Get What You Deserve You Get What You Negotiate! There is a great deal of truth in that statement. When buying a home, no one is going to offer you the deal of the century but you can save yourself thousands of dollars if you follow the suggestions in this report and put yourself in a position to negotiate the right price for the right home.

TEN: What to do if you have a home to sell.

If you already own a home and havent sold it yet, you will want to approach the sale of your home and the purchase of your new home as an integrated strategy. The price you get for your home, the price you pay for your new home -- and the timing of all of that are all interrelated.

With regard to the sale of your existing home, it is critical that it be priced right for the market. Sellers do tend to have a somewhat inflated idea of what their home is worth, in part due to their emotional investment in the home. But if you list your home initially at too high a price, you run the risk of discouraging serious buyers. A home can get a reputation among Realtors of being overpriced, and the consequence of that can be that it simply doesnt get shown.

One of the things I can help you with in a free Strategy Session is to refer you to a Realtor who will help you get top dollar for your home. Over the past 25 years, I have worked with most of the Realtors in our area, and I know which ones have the experience, professionalism, and integrity to do the best job for you.

Remember that, as a Seller, you and the Realtor are truly on the same side. That is, you are both looking to get the highest possible price for your home in the shortest possible time.

In terms of the home you want to buy, you have the luxury of having plenty of time to do the necessary research and preparation but it is by no means too soon for you to get started thinking about the home you want to buy. For as long as your home is still on the market, you will be in an extra-strong negotiating position: you can be even more aggressive in your price negotiations because you have more time if you cant buy a house you like for the price youre willing to pay, you know you have the time to find another one you can be patient and wait for the right opportunity.

In a personal Strategy Session, I can help you explore all the options available to you including, but not limited to the possibility of a bridge loan if you happen to find at great home at a great price before you've sold your existing home.

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