:Forest Folk

Today we discuss escalation clauses because much of the country is experiencing an extreme “sellers’ market.” By that, I mean there are more buyers than there are sellers, and that results in sellers’ getting more than one offer to buy their property. The seller can be picky about the terms under which he is willing to sell. A potential buyer is apt to make one or more offers which are rejected before making a successful offer. If you are a buyer, how do you increase the chances that your offer will be the acceptable one?

The obvious things a buyer can do is to have a strong “pre-approval” lender letter, and make an offer that is full price and is as “clean” (has as few contingencies) as possible. Is there anything a buyer can do beyond that? You bet your bippy!

Escalation Clauses

A buyer who really wants to buy a property can do the above, plus add an “escalation clause.” An escalation clause simply states that the basic offer is full price, but if the seller receives one or more other offers at full price or higher before this offer is accepted, then this offer is increased by $500, $1,000, $5,000 (or whatever figure you choose) above the other acceptable offer. Of course, you choose the amount of the incremental increase based on what you think it’ll take to get the sellers’ attention given the original asking price of the home.

Now, I can hear you thinking, “That’s all very well. I can see where that’ll get me the winning bid, but how do I make sure there really is another contract? More importantly, how do I make sure I can afford the home? Isn’t this awfully open ended?”

Yes, it is. So let’s fine tune the escalation clause idea a bit.

First, make the escalation offer such that it will increase the sellers’ net proceeds (not gross proceeds) by $500, $1,000 or whatever. That way, your price is not artificially increased by a higher offer that includes a provision for the sellers to pay some of the costs that are normally born by the buyer.

Secondly, name an upper limit to which your offer can be carried. For example, your offer could state that you will pay the sellers an amount that will increase their net proceeds by $10,000 above any other acceptable offer up to a total price of $1,500,000. That puts a cap on how high you’re willing to go.

Prior to making an offer like this, be sure to have a conference with your lender to be sure you qualify for the highest amount required by your offer. Obviously, you also need to be sure you know and can pay the mortgage payments on that amount. It’s also a good idea to get a lender letter for this higher amount, so that the sellers will be confident you can do what your offer says you’re willing to do.

The third bit of fine tuning is to require that the seller provide you with a copy of the acceptable competing contract as signed by the other potential buyer. Make sure the “buyer” isn’t a relative of the seller! With the written offer on hand, you can be sure everything is on the up and up.

In this hot sellers market, escalation clauses can be the key to closing a deal on your dream home. If a seller is motivated by greed, you will have them dead to rights.

Raynor James is with http://www.fsboamerica.org - providing FSBO homes for sale by owner. Visit our “sell my home” page at http://www.fsboamerica.org/seller.cfm to list and sell your home for free for one month. Visit http://www.fsboamerica.org/buyer.cfm to see homes for sale by owner.

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Whether you are buying or you are selling a property in both the conditions you always go through an escrow period. This part of the process involves the establishment of a lender account, as they do not trust you.

It is not so that escrow is a process that is used only in real transactions. It is also used in business transactions to create a safety zone for any transfer, most often for business secrets or intellectual property. Escrow is used to make a centralized, impartial company or agent that can collect documents as specified in transaction documents in the real estate. This is simply known as escrow, and is not a lender account.

A lender account is a bank account. It is to be dealt by a buyer as it is tied to any home loan on a property. A lender does not really trust you even if he is giving you a home loan for hundreds of thousands of dollars. As a result it demands for a bank account to be established, which is under its control. The lender uses the bank account to make sure for the payments certain bills are paid, debts that might otherwise cause the lender problems if they are not paid. These liabilities and debt include homeowners insurance, private mortgage insurance, and real estate taxes such as property taxes. The lender will specify the particular cost that is to be covered in the loan documents.

Every month the borrower is required to make the necessary deposits to the bank account. The lender takes the said money and pays the relevant liabilities and debts related to the real estate. Depending on the loan and the lender, the borrower may be required to keep a cushion in account. A cushion out here refers to a minimum balance. The cushion is required to make sure there is money in the account to clear the bills if the borrower fails to make the monthly payments.

A lender account is good from the perspective of the lender. Buyers need to make sure they understand the payments required as a large cushion requirement could seriously impact a buyer’s cash flow.

Alex Tonel is editor of UK Mortgage Directory and UK Education Directory

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There has been a lot of talk lately about the “Real Estate Bubble”, and a lot of folks are asking the question: “When it is going to burst”?

They are saying that the market just can’t sustain this level of growth and appreciation much longer, and I heat them say that it is inevitable that it must come crashing down soon. People are worried. They don’t think it can last; That whatever goes up, must come down.

These folks have been conditioned to believe what they believe most likely from the experience of the stock market bubble of 2000, and maybe the 1990’s when the real estate market was hit hard in many large metropolitan areas across the country.

Its human nature to feel this way. We all know the saying (or the 80’s tune for you big hair folks), “Once Bitten, Twice Shy”. Or what about, “All good things must come to an end.”? Its how we react to almost everything that affects our well being and general safety. Its a subconscious reaction at the gut level.

Just like in the stock market, there are bulls and bears. Bulls are typically more optimistic about the market and expect it go up, and bears are generally more pessimistic and expect the market to go down. They will always be there to provide free advice and “expert consulting”. Remember though, who you decide to listen to will certainly have an effect on your decision making, and ultimately your success.

Well, I’m here to say that there is no real estate bubble! There never was a real estate bubble. Its a complete and utter fallacy.

“How can I say that?” you ask. I can say that because the real estate market is in reality, a Wave. Its a cycle, and we just happen to be riding the big swells, or the crest of this long, consistent, and fairly predictable pattern.

There is no doubt that real estate has been a rock solid investment for decades, and will continue to be for the foreseeable future and for many reasons that I would like to demonstrate here and now. Because you, as a real estate investor, must be able to move forward with confidence when deciding which projects and properties you want to buy and sell. That is the purpose of my website, www.realestateinvestment.net, to provide you timely information, strategies and techniques to help you succeed.

But first, what is a bubble? In terms of economics and markets, the best definition is probably something along the lines of “an isolated or ephemeral situation or condition with little support or substantiation from external conditions”.

The best example, and the one foremost in the minds of us all, is the stock market tech bubble of 1999 and 2000. We all rushed into the tech stocks and the stock market in general as we saw the .com millionaires being made.

Y2K was a big factor in the tech bubble. People were buying new systems at a unprecedented rate in order to prepare for doomsday. People were also buying consumable goods to stock up for the dreadful event that never came.

So what was holding up, or supporting the “irrational exuberance” as Alan Greenspan characterized it? Well, we learned soon afterward, not much. It was an isolated, temporary incident that had little support from the other conditions. It was indeed like a bubble that burst.

And it has had little support since then. Historically speaking, after the stock market crash of 1929 and 1987, it took decades for the market to recover, although it did eventually recover. Just look at the Dow average and the S&P average for the last hundred years and see the pattern of recovery. You can be sure that a slow steady rise for stocks is in progress.

Now back to real estate. Let me explain why this is not a bubble.

Real Estate is Cyclic

Real estate has had its ups and downs over the years, but it is generally stable, with no drastic swings per se. If you were to look at the cycles on a chart you would see a clear pattern of gently rolling swells. This pattern is consistent across cities and regions all across the United states, although slightly varied in degree.

In addition, the cycles tend to favor the ups rather than the downs. It is not uncommon to see large cycles of appreciation and much smaller downward cycles. In other words, the current double-digit growth we’ve all come to know and love in recent years will likely be followed by downturns of single digit declines. Its like taking two steps forward and one step back.

In the big picture you will still be further ahead than when you started. You may see slower growth, but it will still be growth.

Real Estate is a Basic Necessity

People need to live somewhere. They need a roof over their head and their children’s heads. Like food and clothing we must have a home. People don’t need stocks or bonds. Therefore, you can be sure that whether the market is high or low in growth, whether interest rates are up or down, people will be buying, renting, leasing, and selling homes. It is as perennial as the years.

This Real Estate Wave Has Been Around Awhile

I don’t know when you first realized we were in an up market in real estate, but it has been on a solid upward trend for at least the last 3-4 years. It didn’t just happen yesterday. Of course like anything else, awareness of the general public is a bit latent, and dependant upon the media. It has only been lately that the media has really focused on it and thrust it onto the front page.

The old adage “Success breeds success” is also true. The momentum will grow as other more traditional investors continue to jump on the band wagon and pour their money and resources into real estate investment. It tends to create a perpetual, self-feeding market that is ideal for more seasoned investors.

Real Estate is Local and Regional

It is true that even in today’s real estate boom, there are areas in the United States that are not enjoying the high rates of return that others are experiencing. California is a fantastic place to invest, so is Arizona and a host of other places.But the Rust Belt states are not as fortunate. Watch what happens to Florida home values after this horrendous hurricane season. This is because real estate is driven by the primary capitalistic force of Supply and Demand.

Generally speaking, property values increase in areas where the job market is strong, and where there are more people moving into than away from. Of course there are other factors to consider; including interest rates, availability of funding, climate, and governmental policies. These are all important and you must be cognizant of their impacts to your strategy.

However, it is true no that matter what the rates are or how nice the climate is, people will continue to migrate where there are abundant job markets and affordable housing. If you can stay just slightly ahead of that migration, you will profit immensely.

Real Estate Investing is Diverse

You can invest in so many different ways, from foreclosures and fix and flips, to buy and hold and everything in between. Right now the commercial space is relatively soft. It will recover no doubt, but people investing in single family homes are probably doing slightly better in returns. Vacancies are up and rents are down for commercial properties, but fortunately, the forecast is for this sector to improve over the next few years.

The key to successful real estate investing is to understand the forces, trends, and conditions that are driving the market. BE AWARE of your surroundings; Read articles and stay on top of industry news; Look in your own area at the job market and forecasts. Check my website www.realestateinvestment.net for all the news and information you need to help you succeed in your real estate investing career.

There is no real estate bubble, but there is a real estate wave. Like any dedicated surfer, when the surf’s up, get in the water and catch a wave! But watch for danger, be flexible, and be smart. Invest wisely and you can prosper in any real estate market.

About The Author

Copyright 2004 realestateinvestment.net

Michael Setz is an author and the founder of www.realestateinvestment.net - The network for successful real estate investors.

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When moving to an unfamiliar community, like Cave Creek or Carefree, Arizona, it is important that you engage a Cave Creek Realtor who will possess intimate knowledge of the amenities and nuances of the neighborhood. Cave Creek, Arizona is essentially an old cowboy town that, whilst retaining true to its roots, also caters to a growing core of residents who enjoy the equestrian, hiking and golfing opportunities that Cave Creek has to offer. Cave Creek provides homes that range from simple seasonal townhomes to luxurious spacious compounds. Cave Creek real estate runs the gamut from desert landscaping, mountain top aeries, hillside estates, golf club properties and spectacular wilderness getaways bordering state land.

Carefree is another upscale community bordering Cave Creek, AZ, which also sports a thriving community with upscale shopping, dining, and an artist community that is the envy of the state, all minutes from Scottsdale.

Carefree and Cave Creek real estate is a magnet to automobile enthusiasts from around the country. Arizona offers fantastic scenic drives on uncrowded roads that attract both motoring and motorcycling afficionados alike. Recreational vehicles abound and many Cave Creek and Carefree luxury homes include facilities to accommodate them. Oversized garages are often included in these Sonoran desert hideaways to house the family toys and heirlooms.

Many people are astonished to learn that the great state of Arizona is also home to the highest number of boats per capita in the USA. Yes, even in the middle of the Arizona desert, waterfront real estate is a possibility for the marine enthusiast.

Of course, your Cave Creek real estate professional would be privy to all this information and is the reason that when selecting an agent for that long awaited move to Arizona, you should pick someone who lives in the community you are considering.

Finally, your Cave Creek home will be an excellent central base from which to discover the rest of the state of Arizona, be it the theater district of downtown Phoenix all the way up to the Grand Canyon.

Come home to Cave Creek or Carefree Arizona, you know it makes sense.

Gary and Shannon Kiernan are a husband and wife team licensed, respectively as a broker and sales associate, in both Arizona and California. We specialize in the Greater Phoenix area concentrating on Cave Creek, Carefree, Scottsdale, Phoenix and including Desert Hills, Anthem, Paradise Valley, Gilbert, Mesa and Chandler. To learn more about Gary and Shannon and Cave Creek, Arizona and the surrounding communities please visit our website at http://www.garizonaproperties.com or you may email us at skiernanc21@yahoo.com

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The amount you pay each month for your mortgage is based on a number of factors. These factors include your interest rate and term length; here is what you need to know about these two important aspects of your mortgage.

Your mortgage payment amount is determined by the amount you borrow, the term length you select, and the interest rate you choose. To understand how your mortgage is repaid you need to understand the way mortgage loans are amortized.

Amortization can be a scary word. Amortization describes the process of repaying your mortgage loan. A mortgage loan is front-loaded with interest payments. This means in the beginning of the loan you will pay more to interest than you will to repaying the principal balance of the mortgage. This is why term length is important to your loan amortization.

Mortgage loans with longer terms have lower monthly payments. This is simply because repayment is spread out over a longer period of time, such as thirty years. The downside of a thirty year mortgage versus a fifteen year mortgage is that you will pay more to borrow the same amount of money. Your mortgage lender wants their interest paid up front; with a thirty year mortgage less of your money is applied to repaying principal than with a fifteen year mortgage. This concept is easily demonstrated graphically using a good mortgage calculator such as the one found on RefiAdvisor.com.

To find the best mortgage for your situation you will need balance the needs of your budget with the optimal term length and interest rate. To learn more, register for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing - What You Need to Know,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free guidebook today at: http://www.refiadvisor.com

Chicago Mortgage Refinance

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Shopping for a mortgage can, unfortunately, be complex, frustrating and time consuming. If you are in the market for a mortgage refinancing or second mortgage, the Internet can be a great place to research and shop for a loan on your terms. At the same time, the amount of information available regarding mortgage refinancing programs on the Internet can be overwhelming. For example, searching for the phrase “mortgage refinancing” on Google returns 8,600,000 results. Searching for “second mortgage” on Yahoo returns 37,500,000 web pages.

From these millions of results, you will find two main categories of websites:

1. Actual mortgage companies

2. Lead sellers or “aggregators”

Following is information for both types of results.

Mortgage Company - This is just as it sounds and is an actual company that is in business to do first or second mortgages. It will likely take the form of either a mortgage broker or mortgage banker. You can usually recognize websites that are mortgage companies by the following:

1. They will post an easily viewable phone number that you can call.

2. They will post their address.

3. Their mortgage licensing information should be posted on the site.

4. They may post current interest rates for either their mortgage refinancing or second mortgage programs.

5. They may have an “about us” or staff directory page.

Lead Seller - Lead sellers are in business to gather your information and then sell it to a mortgage company. They are not mortgage refinancing companies and do not make loans. The majority of these sites use some variation of “simplify the mortgage shopping process by completing 1 form and have up to 4 mortgage companies compete for your business”. While these sites can certainly deliver as promised, you should also consider the following if you are completing one of their forms:

1. Are they using a secure connection to collect and transmit your information?

2. Do you know where your information is going?

3. Are you sure they will only sell your information 4 times. As with many industries, this industry has its share of dishonesty. The lead sellers are paid each time they sell your name, so some do not stop at 4 as promoted. From personal experience working on the mortgage side of business, I have spoken with clients whose names have been sold 15 - 20 times. The end result is a phone that keeps ringing and frustration.

4. Be careful filling out more than one of these types of forms. Completing more than 1 will likely inundate you with telephone calls and emails.

When shopping for a mortgage refinancing or second mortgage, it is wise to speak with more than 1 company. If, during your search, you cannot find at least 2 or 3 mortgage company websites that you like, you might consider completing a lead aggregators form. Just remember that you do not want to end up with information overload.

Click here for more
Mortgage Refinancing and Second Mortgage Tips.

Bob Peckenpaugh is a professional mortgage planner with over 15 years lending and banking experience. His programs assist clients with increasing cash flow, reducing liabilities and building equity by integrating a client’s mortgage decision with their overall financial plan. He is a manager with CFIC Home Mortgage providing both purchase and refinance transactions. Bob holds a B.S. in Marketing and Management and is Fair Credit Reporting Act certified.

http://www.americanmortgagefundingcorp.com

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