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Don’t Leave Thousands on the Table at Closing

By Kathy Kennebrook (The Marketing Magic Lady)

One of the things that never ceases to amaze me in the real estate business is how many investors leave hundreds or thousands of dollars on the table at closing due to errors in the closing documents. This is an area where many investors need to be educated. Many times investors get excited about the bottom line and forget to check the figures on the documents.

It is a mistake to assume that the HUD or closing statement is correct or that the closing documents are correct. The person preparing the closing statement can make mistakes. In addition, the person preparing the closing statement and documents is using figures that they have acquired from other people who could also make mistakes, such as the insurance company, the Realtors, the lender, home inspection service, or the surveyor.

You need to take the time to read all the documents carefully before closing on any deal. I have personally seen errors on the HUD at almost every closing I have ever been part of. Many investors only look at the bottom line and think “yes that’s enough money” but they fail to look at the whole closing statement, and in doing so possibly leave thousands at the table. I just had a closing take place recently where there was a mistake of a thousand dollars on the HUD. They put one of the buyer’s expenses on my side of the closing statement. I don’t know about you, but I think a thousand dollars is a lot of money to leave behind when you are entitled to it.

If you are looking at a closing statement and you aren’t sure why a figure is there, ASK the closing agent or attorney what it is and why it’s on the closing statement. It’s their job to make sure things are done correctly and all the figures are on the right side of the statements at a closing. Until I thoroughly learned the real estate business, I questioned every closing statement I looked at to make sure there were no mistakes.

There are some areas in particular that should be checked thoroughly. If there is a Realtor fee, make sure the percentages are correct and the payment amount to each Realtor is correct if more than one Realtor was involved in the deal.

Make sure you check the per diem interest to make sure this figure is calculated correctly. There are programs online that can help you with these calculations. I recently had a deal where I was the lender and my borrower was paying me off with the sale of the property to a buyer. When I received my check for the payoff on my note, I had been overpaid by $750.00. The per diem interest and pre-payment penalty had been calculated incorrectly. Had I not caught the error and written a check to my borrower, he would never have known there was an error. His mind was on nothing but the bottom line and he left at least $750.00 at the closing table. Compared to big checks, these may seem like small amounts, but multiply these amounts by how many closings you will do over a period of just a year and it adds up quickly! If it’s your money, you are entitled to it.

Make sure that the figures on the HUD from the insurance company, termite inspection, home inspection, survey, realtors or any other fee that should be carried to the HUD are correct. There have been many times when these figures were either incorrect or there were fees on the HUD that I had already paid out of pocket before the closing. If there are home owner association fees, make sure the pro-rated amounts on these are correct. If there is a home warranty to be paid for the buyer, make sure it shows up on the closing statement. These are all errors I have personally experienced on closing statements.

Check to make sure that the pro-rated property tax figures are correct on the HUD and appear on the correct side of the HUD. If you are due pro-rated taxes from your seller, make sure they show up as a credit on your side of the HUD. If you owe pro-rated taxes to a buyer, make sure these show up as a credit on the buyer’s side of the HUD. If there is a new loan amount or a payoff figure from a lender make sure these figures are correct. Make sure that any pre-payment penalties have been properly credited or charged. If you are paying off a mortgage, also make sure you are not charged a pre-payment penalty when none is due. This is another error I recently encountered on a closing statement.

There are other areas where I have frequently found errors so make sure you check your documents carefully before the closing. It’s much easier to deal with problems at the closing table than have them show up later and have to be corrected. If you are assisting a buyer with closing costs, make sure they don’t charge you more money in closing costs than they are entitled to. If you are assisting a buyer with closing costs and you see a big pay day on their side of the HUD, you need to open your mouth and protest it. Most lenders will not allow a buyer to take any more than 500.00 away from the closing table, especially when it is your money. If there is money left over from seller assisted closing costs, it should be credited to the seller who assisted with closing costs. It shouldn’t result in a big payday for the buyer.

Make sure you also check loan documents carefully. Check the interest rate, the balloon date and amount, and the amount of the note. I had a note and mortgage just recently where I was funding the deal for the buyer and the payee of the note and mortgage was the seller instead of me. They also had the balloon date wrong on the note. It showed a ten year balloon instead of a one year balloon because someone accidentally added a zero.

If there is an interest only payment to be made each month, make sure this is clearly stated in the note and mortgage. Also make sure that terms for late fees are clearly stated if you are the person holding a note for your buyer. Make sure names and addresses are correct and spelled correctly. Make sure you get an amortization schedule whether you are the mortgagor or the mortgagee. This is the best way to track a loan.

All of these are important points to check before any closing occurs. Don’t assume the title agent or attorney will catch the errors. They do many closings each day and they usually are unable to catch every mistake. In addition, very often the title agent or attorney is transferring figures they got from other people such as the Realtor, the lender or the insurance agent so they my not be aware that these figures are incorrect. It’s your deal and your closing, make sure the documents are correct so you don’t leave thousands at the closing table or create title problems later that could have been solved at the time of the closing of the deal.

Make sure all the documents that are to be signed and notarized are done properly. Make sure social security numbers or Tax ID numbers are correct on the 1099 so you are taxed correctly. I just recently had a closing where they put my social security number on the 1099 instead of the corporation that was supposed to absorb the income from the sale of the property. These are all real errors that occur all the time. Make sure you protect your interests when closing on properties whether you are buying or selling or simply holding a note so you don’t leave thousands on the table at the closing.

For more information on all the tools you need to find deals and automate your real estate investing business, visit my website at www.marketingmagiclady.com. While you are there be sure and sign up for my free monthly newsletter.

 

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The 3 Things Investors Need Most in 2019

By Fuquan Bilal

Do you have the three things you need most out of your investing for this year and beyond?

Many are finding it hard to make sense of the market right now. The media headlines proclaim the economy is awesome and supercharged with growth and low unemployment. Yet, the hard data and other signals suggest there are some corrections in the works. The bottom line though, is that you need these three things to get you through.

1. Passive Income

Time is the most precious and scarce resource we have. The only way to really get more time is with passive income. We can only become so productive. Then it is up to passive investments to make money so we can spend more time on other things. That’s true whether you are already making millions a year, or are in a high paying career, but are still trading your time for a wage. This is going to be even more critical over the next couple of years. And it doesn’t matter whether or not you own rentals right now, or you think your company is well insulated from a recession. If you’re not getting truly passive income, then it may be time to consider a fund or other vehicle.

2. Downside Protection

Who knows, we may really be in the best economy ever, and real estate prices, stock values and incomes might just keep going up. Of course, the odds are that there is some type of temporary correction in the works. That means it’s just smart to have some tangible, underlying hard assets and to be overcollateralized in order to protect wealth and capital during the months and years ahead.

3. Stable Performance

No single asset is going to perfectly and consistently perform the same forever. And it’s those fluctuations that are really tricky and usually come at the worst times. By diversifying and harnessing great management, we can keep our total portfolio performance steady, and yet without being so over-conservative that we end up with negative yields.

We believe we’ve achieved all this, and the ability to future proof your portfolio through our hybrid fund. Check out how we’re doing it today…

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

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This is the Best Day of the Year for Real Estate Investors

By Fuquan Bilal

What is the best day of the year for real estate investors?

I think Mother’s Day is a strong contender. It’s hard to beat from both a business point of view, and in being personally meaningful.

If you’re not a mother yourself, then you’ve got mothers in your life. Either they work with or for you, rent from you, support you in your investing, or are your grandmothers, daughters, cousins or just your neighbors. Everyone can relate.

The Start of a New Season in Real Estate

Mother’s Day really marks the start of a new phase of the market each year. New property listings are popping up to get ahead of the peak buying season. Serious buyers are coming out to sign contracts and set up their summer moves so they are all settled before school starts again in the fall. It can be a fantastic time for Mother’s Day themed open houses.

What Real Estate Investors Can Do For Mothers

The first and most obvious thing we can all do is celebrate and honor the mothers in our lives. That can be in your office, at home and out in the community.

Housing them is a huge deal. One of the best benefits of being in real estate for me is what I can do for my mom. I can house her, and recently bought her a car. I’ve also really enjoyed just taking time to intentionally spend quality time with her to learn from her years of wisdom.

Housing and keeping a roof over their family’s heads is a top concern for moms out there. It keeps them up at night, and working hard. I love giving them a chance to put their families in a safe, healthy and attractive looking place in our rentals and when we sell properties.

As a real estate investor, I believe one of the greatest gifts you can give is sharing your knowledge and experience, and giving the mothers out there the chance to own those benefits for themselves and their children. Host an educational lunch, or turn them onto the PFREI podcast, or take them to an industry event with you.

The workforce and housing market is changing a lot in many cities. That can mean some transition time while getting reskilled for modern jobs, and trying to hang onto homes, and keep up with all the mail and mistakes that some lenders, insurers and tax authorities make in their paperwork. This can all lead to loan defaults and distress, that could have been avoided. If you are investing in mortgage notes this is a great time to do a cash for keys deal, or to modify loans and help moms have a fair chance to get back on track and have a fighting chance to keep their homes.

Let us know what you are doing in real estate around this Mother’s Day on your favorite social media networks and tag us so we can like your posts!

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

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Investing Insights from a REAL BLACK BELT

By Tim Houghten

Sensei Gilliland just kicked the real estate bandwagon in half. If you want to lead, get to the gold, and keep it – read this… Real estate master Sensei Gilliland has never claimed to be a real estate investing ‘guru’. He has just put in the work, stayed focused, and refused to be knocked out.

This warrior spirit didn’t just lead him to become one of the youngest martial artists to be ranked in the nation’s top three, for five straight years. It has earned him the title ‘Sensei’ from his students, and makes him one of the few REAL Black Belt Investors.

For nearly 20 years Sensei Gilliland has been investing in real estate and he may be one of only a handful of notable trainers that still makes money from investing in real estate today. So what makes this guy different?

GOOGLE LOVES THIS REAL ESTATE INVESTOR

Sensei is the founder of 12 Rounds – ‘The West’s Top Ranked Investor’s Club for Successful Cash & Wealth Building’. We asked Sensei why people keep flocking to his meetup group, and why people should do business with Black Belt Investors. He said: “In 2007 there were over 100 real estate clubs in Southern California alone. When 2008 hit that number was slashed to around a dozen; and two of those left standing were mine. Now there are even more clubs. But who will be standing when the markets flex next time?”

Of his ability to withstand the second most severe recession in our country’s history, and how that is contrasted with the other 90% who folded, Sensei says: “They were very linear in their business models and thinking, and were too busy selling retail. Everyone was just jumping on the bandwagon of these copycats.”

If you really want to try to put Sensei Gilliland to the test in today’s ring he suggests you pull out your phone and see what Google says. We couldn’t resist the challenge! Try it…Talk about ‘mission impossible’. There are pages, upon pages of Google results for Sensei Gilliland, and everything is positive. And this is a guy who says he has never worried much about SEO. Seriously, even your teenager’s toughened video gaming thumbs would probably fall off before you run out of positive reviews of this guy.

Why does Google love Gilliland? He’s got depth. He is established. He has a rock solid reputation. And he has been in the ring since before most people even thought about ever using the internet to search for a home or a home loan.

WHERE IS THIS REAL ESTATE NINJA INVESTING NOW?

Most might have heard of Sensei Gilliland for his power packed, hands on, real estate training. Yet, he is still an active investor and is in the market doing deals every day. Sensei says that while you still might catch him helping distressed homeowners and serving up sweet wholesale deals close to home in sunny Southern California, he is also working with serious investors in re-emerging markets such as Cleveland, Kansas City, Indianapolis, and Phoenix, Arizona.

Investors can check out more details and find in-depth research on these markets at: http://RemoteRehabs.com

BECOME A REAL ESTATE CHAMP

For new investors, intelligent experienced investors, and even new gurus who don’t want to get KO’d and go belly up, Sensei extends the invitation to step up, and check out the 12 Rounds Investment Club. For information visit: http://www.meetup.com/bbinvestors/. This meetup is for those who want to enjoy long-lasting personal and financial success from their real estate investments.