How to Do Everything Wrong In Real Estate and Still Be Successful. Franklin Cruz

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      → You need to stay on top of the points. Points are how a mortgage broker gets paid, and each one is equivalent to 1% of the loan amount. This is very important, because if the broker charges too many, he is taking equity out of your pocket. The norm is two to four points, meaning two to four percent of your deal.

      → You need to become well schooled in looking for hidden fees. Study and familiarize yourself with a ‘HUD.’ There are many itemized fees there for you to review before a closing. Sometimes a processor will put a fee separate from the mortgage broker’s on the closing documents to the tune of an extra two to three thousand dollars (a processor’s fee can range from $750-$1500) even though the processor is working directly with the mortgage broker. This is just another way to squeeze more money out of you.

      → If a mortgage broker tries to charge you an application fee just say, “Thanks, but no thanks.” There are many mortgage brokers who need the work and will do the job without charging such a fee. Ask them for all of their fees in writing so you can compare them to other brokers you are considering.

      → Most important of all: Do not let them pull your credit until you know this is the broker you want to do business with. Keep in mind, every lender will need to pull your credit. A good credit score will mean the difference between saving five hundred dollars to ten thousand dollars. It is always a good idea to maintain a copy of your updated credit report. Sign up for a service, or personally request a copy from the credit bureau.

      Questions to ask:

      “Treat people the way you want to be treated!”

      Title Company: This is where your deal will close. You need a good one, because they will order your survey and make sure your deal is closing properly. Your title company must have your best interests in mind when closing a transaction – so you need one you can really trust. Title companies are usually run by a law firm, and charge approximately 1% of the contract sales price. On the HUD statement it will itemize all costs incurred, including title insurance. If you plan on being a real estate investor who does more than one transaction a year, this is where relationships come into play. You’ll soon see the mortgage broker has his favorite title company. Why? Because that title company will break their back to make sure deals close!

      “Which would you rather have protecting your investments - a Pit Bull, or a little Chihuahua?”

      I would rather have a pit bull that goes for the jugular. You need one, because they are tenacious. Your team will work together because no one cares about your property more than people who stand to make a profit from it.

      Questions to ask:

      

How long have you been in the business?

      

How many deals do you close in a month on average?

      

Will you come to my home to close?

      

What is your turn around once you receive a request for title?

      Appraiser: The person who sets the value of a property. The best way to find a good appraiser is through referrals. The real estate agent or mortgage broker will often have a list of appraisers you can interview. You can also ask around to see who other people use.

      Questions to ask:

      

Can you tell me some of the properties you have appraised?

      

How many comps would you provide for a property I’m considering buying?

      

How wide is the range of comps you provide and how relevant are the neighborhoods you are comping compared to the property I’m considering?

      

What is your turn around time?

      Real Estate Attorney: A good real estate attorney is invaluable. Keep in mind that you are operating as a real estate investor, and having contracts written up which can be worth a million dollars or more. Getting a real estate attorney to look them over to make sure you are not walking into a lion’s den can save you untold trouble and profit down the road. Simply trusting that contracts are well written, and that you are doing business with honest people, is not the way to ensure your profit margins remain high. An attorney may find an error which could cost you thousands of dollars, and it is crucial for such mistakes to be found in the contract development or negotiation phase. Be smart and protect yourself!

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