Craig 's Blog

What is "PAR" rate and how can I meet or beat it? (Using golf as an example.)

Craig Giles (Graham Welch Associates) — Sat, 07 Feb 2009 12:48:58 -0600

Via Ken Cook - Lender - Investor Specialist:

Golfers already know - par is when you reach balance with the score on the golf course. Many golfers instead of writing down the total number of strokes record the number of strokes over or under the par. In golf par is the standard to aim for. The same applies in mortgage lending and investment borrowing.

Not every golf player "shoots at par". Others actually beat par - they beat the standard. Tiger Woods has a bad day when he shoots a par score on the golf course and I am joyous when I'm within 15 points over par. In fact that is my handicap. I have a handicap of 15. Essentially this means I can reasonably expect to have to hit the ball (add a stroke) on 15 holes and get the other 3 at par.

Par on the golf course is determined by playing a few games and keeping my score then using a weighted set of numbers called Course Difficulty and Course Slope. On a more difficult course I may actually shoot 17 over par and still hit my mark and on a less difficult course I may have to shoot a 13 or even a 12 over par game to keep my handicap.

All of the things that go into course difficulty and slop ratings have to do with the course itself plus a sampling of all the other "scored" games played on that course. To make it really fun the actual hole, called the cup, is moved around on the green, the condition of the turf (the grass), dry weather, wet weather, windy weather, and the list goes on, all effect the golfer's chance of scoring a par. All of those are a part of the risk and all go into the resulting score which is how far you are from par.

I think you probably know where I am going with this, eh?

Par interest rate is the zero rate. It's where the broker is not making any YSP (Yield Spread Premium). It is lower than the retail rate you would get if you called the bank directly. There are some very small but very vocal groups out their claiming the par rate is the rate the borrower is qualified for. Nothing could be farther from the truth. Par is the equivalent of wholesale.

Do you go into a restaurant expecting to pay wholesale for your prepared meal? If you do you must be uncle Posie who bargains with the checker at Publix over a can of peas. Let us look at that prepared meal. The restaurant has paid wholesale for the items and provided all the services needed to put that meal together. They have created a price and placed it on their menu. You have agreed to pay that price and calculate it to be a worthy value. In some ways loans are not too different but that's for another day.

Your interest rate (not the interest rate) is based on the risk you and your home present to the lender. So let's say the par rate is 6% for example. And let's say you are a very good borrower. You have a credit score of 800 plus, a debt-to-income ratio of 35% on all of your credit payments, 36 months of liquid reserves, your home is in a very low foreclosure area where values are still actually increasing (these areas do actually exist) and you only need to borrow 75% of your home's value. Chances are you are going to get the best rate available. If your loan amount is high enough and you are going to be paying your closing costs "out of pocket" you will be able to get the par rate. In fact you can even pay "discount points" to get the rate below par.

Closing costs are paid from somewhere and everybody pays closing costs. You either pay origination, discount or a premium rate. You may even pay a combination of the three. You want par? You will be paying the costs somewhere - either out of the proceeds of the loan, out of your pocket or in the rate.

One last note: the misconception (and it is a horrible misconception) is the brokers add the yield spread to the rate. Absolutely NOT true. If you want to get the broker's wholesale rate then you will have to pay all of the broker's fees out of pocket. The broker's par rate is not your rate, it is the wholesale rate. The par rate is lower than the rate you get from the bank specifically so the broker can be paid by the lender OR by you for part or all of their origination fees. This does not increase the cost of the loan to you over what you would pay at the bank.

If you have been quoted ANY rate with no closing costs you better have a very good understanding of what you are looking at because you can bet you ARE paying for closing costs - one way or another. If you are shopping and nobody has looked at your credit, income, assets, and property value the rate quote is worthless. The rate quote is no good if you do not qualify for it. Unfortunately the mortgage industry is still filled with liars and inexperienced loan officers who do not properly complete the Good Faith Estimate and Truth-In-Lending. And remember, until they have seen your credit, income, assets, and property value that GFE and TIL are still worthless.

When you're ready for the truth and you live in the Southeast call me. I will tell you the truth and if that doesn't sound good enough for you then you can go away. 866-946-0120 extension 101. America's most honest mortgage company. Seriously, we lose business every day because we refuse to lie. Unfortunately we have volumes of stories from people who could have had a great loan, reasonably priced and how we told them who ended up at the closing table feeling forced to sign documents and get a loan that was nothing like the big national lender told them it would. WE WILL NOT MISLEAD YOU but we will give you the choices you need to make an intelligent decision.

99% of borrowers do not understand the mortgage process. Do not be embarrassed to admit you don't. Every loan office who has been in the business can tell within a couple of minutes how knowledgeable you are just by the questions you ask. Least knowledgeable person's most often asked first question? "What are your interest rates?"

Thanks!

-Ken

Ken Cook 866-946-0120 extension 101

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EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

Who do you want on your Real Estate Investment team

Craig Giles (Graham Welch Associates) — Tue, 01 Jan 2008 16:22:17 -0600

I've learned that to really do well investing in real estate, you need to have a team of people you can trust and rely on. Here are some possible team members, and what they need to be on the team.

1. Real estate agent. A licensed agent with experience in the area you invest in and access to the MLS (Multiple Listing Service), can be a great help.

2. Real estate attorney. This should be someone familiar with the laws and legal customs of your area, and have experience with the type of deals you intend to do (If you are buying rentals, she should be familiar with doing evictions, for example.)

3. Accountant or bookkeeper. Keeping proper books for real estate investments is getting more complicated with all the tax-law changes. Find someone that understands the law, and what you want.

4. Mortgage broker or banker. The first can offer many options, but the second can make the loan decision. Each has their advantages, and you could use both. In either case it's important that they understand what you want (fast closings, lower interest, corporate loans?) PS. Do not overlook private money leanding.

5. Appraiser. Not only can a good appraiser give you an accurate valuation of a property, but they should be able to suggest ways in which you can raise the value of a property. Use someone that will talk to you.

6. Inspector. In some areas it is easy to become an inspector with little experience. It's best if you use one that is or used to be a contractor, so he can find the problems AND give you a general idea of the cost of repairs.

7. Insurance agent. A good one will understand what you want, and find ways to save you money. Insure all your properties with one agent, and you're likely to have discounts available, and better service.

8. Escrow officer. They will usually be with a closing company. Look for someone that's efficient, and can explain things clearly to both sides. If he is confused by a slightly creative contract, he should educate easily or be replaced.

9. Contractor. Having a trusted person or crew ready means a fast turn around when you buy a rental or rehab project.

10. Property manager. Be sure that the company you hire has exerience, is responsive, and will have time when you call. A good property manager can tell you BEFORE you buy, what you should get for rent in a given area.

Real estate investment is less stressful and more profitable with a good team on your side.

Who do you want on your Real Estate Investment team

Craig Giles (Graham Welch Associates) — Tue, 01 Jan 2008 16:22:15 -0600

What to Rehab?

Craig Giles (Graham Welch Associates) — Tue, 01 Jan 2008 16:08:46 -0600

You've bought a house, a fixer-upper you can make some money on. What improvements and repairs should you make? First of all, before you buy, you need to have some simple rules with which to start analyzing possible fixes.

Return On Investment

With fixer-uppers, you have do things which give the most "bang for the buck." Aim for a three-to-one return on improvements. If you're going to resurface the driveway for $1000, it better raise the value of the home by $3,000. Even when you're just guessing, keep this three-to-one formula in your head, if you want to invest safely.

How To Fix A Fixer-Upper

With things like new curtains, you can't really estimate the increase in value. What you can do, though, is group together the many small repairs and improvements you are considering, and imagine how the house will look when you are done. Then you can estimate whether you will have increased the value enough to justify the cost.

It often is in the small details that you'll get the best return on investment, so look at these first. A new mailbox, flowers on the porch, a raked yard and trimmed trees - $30 total if you do the work yourself - can make a big difference in the first impression potential buyers have. First impressions are important.

Other small investments that pay big include shiny new switch covers (less than $1 each), shelves, new door hardware, new light fixtures, curtains, new rocks or wood chips on outdoor paths, new faucets, new woodstain on decks, and general cleaning. Stand in front of the house and imagine what it might look like with various small improvements (flowers, wood-rail fence, birdbath, etc.).

The Big Fixes

Obviously, there are things that just have to be repaired. The basic systems must function. Improvements, though, should be subject to the three-to-one rule. You may have to get creative here. An investor client of mine once had a wall put up, and for less than $1000 created a new bedroom, probably raising the value of the house by $10,000. Now that's a good return on investment.

Bathrooms and kitchens are important. A $1000 updating of a bathroom can add $4000 in value to a home. Spend $2000 wisely in the kitchen (New fridge, re-finish the cupboards, add a garbage disposal, etc.), and you can add $8000 to the sales price of the house. Look for changes which are most universally valued (don't paint the kitchen pink because YOU like that color), and be sure you get a decent return on investment.

Depending on the fixer-upper, there are many potential improvements that can be worth doing. The bottom line is the bottom line: be sure anything you do returns more than you spend, preferably three times as much.

10 Tips to the Perfect Flip

Craig Giles (Graham Welch Associates) — Tue, 01 Jan 2008 15:45:47 -0600

Here are 10 tips to help you find the perfect flip from HGTV's The Big Flip renovator's John Stassen and Randy Mackay.

1. Find properties that are diamonds in the rough - homes that are rundown in comparison to those around them - as these often have a low list price.

2. Are the surrounding properties well maintained? This can add value and clinch a sale when your house goes back on the market.

3. Scrutinize previous renovations. Poor quality workmanship can mean you have paid a premium for finishes that you will have to repair or replace yourself.

4. Can you add bathrooms, storage or enlarge a small kitchen to meet the needs of today's average family? If you can't, walk away, as these features often make or break a sale.

5. Ensure you do a thorough home inspection before purchasing properties - this could save thousands of dollars in the long run.

6. Identify your potential buyers (i.e. young professionals or families) and design the house with their needs in mind.

7. Find a real estate agent who understands the market. There are thousands of real estate agents; get one who is experienced and understands the business of flipping houses!

8. Do your research and find areas that are up and coming. Neighbourhoods that are in the early stages of being gentrified often contain homes that offer large returns on their investment.

9. Be realistic with your budget and always leave room for hidden costs. Early budget optimism can mean cost cutting later on, which means sacrificing quality - and profits - in the final sale.

10. Keep your eye out for properties with good layouts that can be easily updated with new paint and trim. You may get lucky and find a home that's a good price and only needs finishing touches, adding tens of thousands of dollars with minimal investment.

Credit Repair: The Truth About What Can and Cannot be Done

Craig Giles (Graham Welch Associates) — Sun, 09 Dec 2007 10:02:59 -0600

Contrary to what the credit bureaus would like you to believe, credit repair does work and can work for 100% of people in most circumstances. This is, of course, provided you are getting the best advice and have an experienced professional working on your case.

Any one with a credit score below 720 can benefit long-term from the advice and information provided through credit repair; however, there are times when your own limitations make adhering to this advice impossible.

The two limiting factors are:
1) your financial situation and
2) the time frame within your need to reach your results.

It is possible to remove anything from a credit report, even accurate items, if the creditor does not adhere to the law that outlines what needs to be done and by when. Just because you have a certain type of account removed at one time does not mean other, similar items are going to be able to be removed, even with the same circumstances. A hit-or-miss aspect exists in credit repair, because credit repair relies not only on the strategies of the person attempting to repair the credit, but also on the effectiveness or ineffectiveness of the creditors and credit bureaus in adhering to the laws. Sometimes you want the credit bureaus and creditors to follow the law, sometimes you don't; it all depends on your particular situation.

The reason credit repair has received such a bad name is due to the abundance of scam artists who flock to the easy money made available by people desperate for this type of service. This unfortunate reality leads the credit bureaus and the FTC to make blanket, untrue statements such as, "Credit repair does not work ever and there is nothing a credit repair company can do for you that you can't do for yourself." Given that more than 90% of credit repair companies are scam artists, promising the world and then disappearing when you pay, the credit bureaus and the FTC are forced to make such bold statements. It would be impossible for them to explain the truth to consumers without causing them to make a bad choice that would result in them getting scammed. As a result, the credit bureaus and the FTC must adhere to the "credit repair does not work" position.

As I have stated, credit repair does work, but don't let anyone tell you that credit repair is effective every time. Its success varies with the number of players in the game, some of whom never perform consistently. Even if you have a true master of credit repair on your side, you have to take into account that sometimes the other players perform in a way that throws your master off his game.

Take Shaquille O'Neal, for example. Although he has the ability to win every game for his team, there are going to be times when the other team has a formation that takes him off his game and causes his results to be less than optimal. Given that fact, you still cannot predict to any level of certainty whether or not he will perform well or poorly the next time he faces that team. Credit repair is similar. Sometimes the opposing side shows up strong, other times they don't. Even if you follow the same approach with every situation that arises when doing credit repair, your results will still vary due to the other players involved. So the next time someone tells you they can get everything repaired on your credit, run the other way, because, at best, the pendulum will swing widely both ways for the same situation.

Credit repair limitations occur almost 100% of the time under the following situations. These situations make it nearly impossible for credit repair to help someone needing results within six months to a year. Please keep in mind that even when you can't be helped in the short term, the advice that can be given now - if coming from a professional - can prevent you from making a mistake in the near future that may worsen your situation. Here are examples of situations where not much can be done within a six to twelve month period:

1. If more than 50% of the negative accounts showing on the credit report appear as unpaid collections, charge-offs, repossessions, or foreclosures and you do not have the money to either pay the accounts in full or settle them. Due to the negative accounts remaining unpaid, these items will simply reappear on your report once removed. Any negatives, even unpaid accounts, can be removed, but unless the negative account is current, paid or settled, it will simply reappear in 10-90 days. The only way to prevent this is to bring the account current by paying the past due amount, or, in the case of a collection, charge-off, repossession, or foreclosure, pay the balance in full or settle it for pennies on the dollar. Unpaid accounts that do not have collection, charge-off, repossession or foreclosure status require only that the past due balance be paid to be considered current. Unless the negative account is a public record, the only way to keep it from being re-reported is to make sure the status is "current, paid, settled, transferred or sold." In other words, if deleted, any negative account that does not show one of those five statuses will most likely get re-reported, unless the account is a public record.

Public records are the only negative items that do not need to be paid to prevent re-reporting. Because they are only reported once, public records, such as unpaid judgments and tax liens, can remain unpaid and yet will not reappear once they are removed. In fact, the only time they reappear is when the initial reason for removal was the public record agency failing to respond the credit bureau's verification request within the 30 day period outlined by the Fair Credit Reporting Act, in which case the credit bureau would reinsert the public record if and when the public record agency responds to the credit bureaus after that 30 day period.

2. Credit repair is nearly impossible if you can't pay your minimum monthly payments and you keep adding new late payments to your report. This is a "spinning wheels" scenario that rarely yields much improvement to your credit score.

In conclusion, you can repair your credit if you hire a pro and listen to his or her professional advice. The effectiveness of the credit repair depends not only on the skill of the professional you hire and your ability to cooperate with his or her advice, but also, a little luck.

How to Raise your Credit Scores

Craig Giles (Graham Welch Associates) — Sat, 08 Dec 2007 20:18:10 -0600

1. GET RID OF YOUR COLLECTION ACCOUNTS.

Did you know that paying a collection account can actually reduce your score? Here's why: credit scoring software reviews credit reports for each account's date of last activity to determine the impact it will have on the overall credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as "Paid Collection". When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payment on a collection account damages the credit score more severely. This method of credit scoring may seem unfair, but it is something that must be worked around when trying to maximize your score. How is it possible to pay a collection and maximize your score? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that the reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase your score and is certainly worth the involved effort.

2. GET RID OF YOUR PAST DUE ACCOUNTS.

Within the delinquent accounts on your credit report, there is a column called "Past Due". Credit score software penalizes you for keeping accounts past due, so Past Dues destroy a credit score.

If you see an amount in this column, pay the creditor the past due amount reported.

3. GET RID OF YOUR CHARGEOFFS AND LIENS.

Chargeoffs and liens do not affect your credit score when older than 24 months. Therefore, paying an older chargeoff or a lien will neither help nor damage your credit score. Chargeoffs and liens within the past 24 months severely damage your credit score. Paying the past due balance, in this case, is very important. In fact, if you have both charged off accounts and collection accounts, but limited funds available, pay the past due balances first, then pay collection agencies that agree to remove all references to credit bureaus second.

4. GET RID OF YOUR LATE PAYMENTS.

Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on your account. Be persistent if they refuse to remove the late payments at first, and remind them that you have been a good customer that would deeply appreciate their help. Since most creditors receive calls within a call center, if the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario. If you are frustrated, rude, and unclear with your request, you are making it very difficult for them to help you.

5. CHECK YOUR CREDIT LIMIT(S) AND EVENLY DISTRIBUTE THE BALANCES YOU ARE CARRYING.

Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is "maxed out".

For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances:

• There are different degrees that scoring software can impact your score when carrying credit card balances.

• Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.

• In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will maximize your score.

6. DO NOT CLOSE YOUR CREDIT CARDS.

Closing a credit card can hurt your credit score, since doing so effects your debt to available credit ratio. For example, if you owe a total credit card debt of $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a

$5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. There are caveats to this rule: if the account was opened within the past two years or if you have over six credit cards. The magic number of credit card accounts to have in order to maximize your score is between 3 and 5 (although having more will not significantly damage your score). For example, if a card was opened within the past two years and you have over six credit cards, you may close that account. If you have more than six department store cards, close the newest accounts. Otherwise, do not close any at all.

7. BECOME AN AUTHORIZED USER.

If you have a short and limited credit history you can ask someone who is a primary account holder to add you to their account as a joint account holder or an authorized user. When added, the primary account holder's credit card will appear on your credit report. Credit scoring software will treat the added account as though it is your account and you will benefit from the low balance and the long payment history for that account. It is important to remember that being an authorized user is helpful for your credit score only if (1) the person is carrying debt below 10% of the credit limit and (2) has had good payment history on the card for seven years or longer. The longer the history, the better. Being an authorized user is potentially detrimental to your credit score if, for example, the primary card holder carries a high balance on the card and has had it less than five years.

8. KEEP YOUR OLD CREDIT CARDS ACTIVE.

15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you've had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down.

An inactive account is ignored by Fair Isaac's credit scoring software, so you won't get the benefit of the positive payment history and low balance that card may have. The one thing all credit reports with scores over 800 have in common is a credit card that is twenty years old or older.

Hold onto those old cards trust me! Preparing credit is a slow and time consuming process.

If you would like to schedule a free, no obligation consultation about how I can do this for you, please give me a call or send me an email. It would be my pleasure.

I look forward to hearing from you.

Watched a little golf today on TV

Craig Giles (Graham Welch Associates) — Mon, 03 Dec 2007 00:44:49 -0600

I just realized today as i saw gofl on TV while checking for teh scores of the Chiefs game (yeah, we lost again) that i have not played golf in about 4 weeks, making this the longest stretch since the begining of the year.

I played 3-4 times aweek this year, it has become a habit and a very good prospecting tool for me. I wish it was not so cold now to paly. Maybe i shoudl consider a move to an all year golf climate...

Fixer Uppers and Rehabs

Craig Giles (Graham Welch Associates) — Mon, 03 Dec 2007 00:26:15 -0600

I just wanted to let everyone know that i have a lot of properties available that are fixer uppers, Some i have listed, soem are from some of my clients and invesotr contacts, and some are homeowners facing foreclosure.

If you are looking for houses for rehab or with equity to earn, from a small amount up to a 50% discount to repaired value, I can help you or yoru clients find what you are looking for.

Craig Giles, Exit Realty Heartland

Rehabbing Business is Profitable

Craig Giles (Graham Welch Associates) — Mon, 03 Dec 2007 00:03:00 -0600

If you are interested in rehab as a real estate business, please contact me. We offer turn key opportunity for investos who want to invest in Kansas City or in the Akron/Canton areas.

Overview

The basic investment strategy is to purchase fixer-upper single family homes, rehab the properties to top condition, and quickly sell the homes for full market value. Only houses that can be purchased at wholesale value will be considered for investment. This ensures that the profits are secured at purchase and do not depend on an inflated market.

To have success with this strategy requires speed in the execution of the entire process, from speed in the acquisition of properties when an opportunity is found, speed from the contractors on the project, and speed in selling the properties on the market. This will be accomplished through aggressive project management, selection of quality professional subcontractors, and marketing and selling the property.

Target Properties

The properties targeted for investment are single-family homes in need of significant repairs and located in decent neighborhoods. Houses in marginal areas are not considered. The attention is on houses in areas where first time homebuyers would want to live.

It should be noted that houses with major foundation or structural issues will not be considered for investment.

Determining Purchase Price

The purchase price will be determined by using a unique formula which will factor in the purchase cost of the property and the work to be done. This is what secures the profits. The beginning point in the formula is the ARV (After Repaired Value) and is determined using actual comparable sales in the neighborhood. This is determined with a licensed real estate agent by using the MLS (Multiple Listing Service). After the ARV is determined, subtract 30% and the rehab costs to determine the maximum purchase price. This will leave a target profit of 20-25% depending on holding time.

Maximum Retail Value x 70% less rehab costs = Maximum Purchase Price

Estimating Repairs

Properties under consideration are inspected using a checklist developed for this purpose. Items needing repairs or upgrades are identified. Based on this information, a Rehab Cost Summary will be developed.

Rehab Project

The rehab plan for each property will pay particular attention to curb appeal, the kitchen and the bathrooms. These areas of the home are critical to the success of every project. All rehab work is contracted to experienced professionals and is closely monitored. The project will be professionally managed with experienced crews performing the scope of work.

Marketing & Sale of Completed Houses

The homes will be listed by a licensed real estate agent to allow for maximum market exposure. The homes will be marketed using a professional marketing system.

Exit Strategy

Refinance the property after the improvements and cash out up to 90% LTV, then either rent the home using a property management company or sell it on a lease option for 1 year (which would also give you another 5% down payment in your pocket up front) the monthly payments would create a positive cash flow.

SAMPLE

This house is a sample of one completed. 3100 Haskell, KC KS

Purchase Price $12,000

ARV $75,000

Rehab Costs $ 20,000

Based on the formula the Maximum Purchase Price is $32,500

Target Profit is $35,000-40,000

Inspection Detailed Form

Craig Giles (Graham Welch Associates) — Sun, 02 Dec 2007 23:45:21 -0600

This is a form that is ery comprehensive. I have used it as a contractor for inspections for my investor clients and rehabbers. This is similar to a NAHI approved inspection in all the areas that are listed

General information
1 Inspector: ____________________
2 Structures inspected: __________________________________________________
3 Type: 1 / 2 / 3 / 4 / Condo / Mfg / ____________ Age: ________
4 Client: __________________________________________________
5 Start: _______________ End: _______________
6 Fee: ________ Payment method: Check / Cash / Invoiced / Escrow / ____________
7 Present: Client / Owner / Tenant / Realtor / Builder / Contractor / ____________
8 Occupied: Yes / No / No, but furnishings present / ____________
9 Weather: Clear / Partly cloudy / Cloudy / Rain / Snow / Fog / ____________
10 Temp: Cold / Cool / Warm / Hot / ____________ Ground: Wet / Damp / Dry / Frozen / ____________
11 Front of structure faces: N / S / E / W / ____________ Entrance faces: N / S / E / W / ____________
12 Foundation: Unfinished basement / Finished basement / Crawlspace / Slab / Post-pier / ____________
13 Excluded: Septic / Security / Irrigation / Pool / Hot tub / Well / Shed / Playground / Sauna / Outdoor lighting / Vacuum / Water filter / Water softener / Sound / Intercom / Generator / Sport court / Sea wall / Outbuildings / ____________
14 Excluded: Furniture, stored items: Many | Some Winterized
15 Utilities not on: Natural gas | Propane | Water | Electricity | Oil
16 General warnings: Gas leak No CO alarms Pre-1979 Abandoned oil tank

Exterior
1 Footing material: Concrete / Masonry / Logs / None / Not visible / ____________
2 Foundation material: Concrete / Concrete block / Post-pier / Brick / Stone / Steel on block (mfg homes) / ____________
3 Wall structure: Wood frame / Steel frame / Concrete block / Pan Abode / Log / Brick / Stone / Straw bale / ____________
4 Wall cover: Wood clapboard / Wood panels / Comp wood clapboard / Comp wood panels / Cement-based clapboard / Cement-based panels / Wood shingles / Wood shakes / Vertical wood / Brick veneer / Stone veneer / Stucco / EIFS / Metal / CAB / Vinyl / Masonite / ____________
5 Driveway: Asphalt / Concrete / Aggregate / Gravel / Dirt / Permeable concrete / Porous pavers / Cobblestone / None / N/A / ____________
6 Sidewalk: Concrete / Aggregate / Paving stones / Gravel / Wood / Brick / None / N/A / ____________
7 Exterior door material: SC Wood / SC Steel / SC Fiberglass / Sliding glass / Wood panel / Glass panel / HC Wood / ____________
8 Excluded: Vegetation, stored items: Foundation and/or walls | Retaining walls
9 Foundation: Cracks: Minor | Moderate | Major Large tree near Footing above grade
10 Retaining walls: Missing or inadequate guardrails above
11 Cracks or deterioration: Monitor, maintain | Repair-replace | Repair-replace w/ engineer
12 Rotten timbers: Monitor | Repair-replace | Repair-replace w/ engineer
13 Driveway: Minor cracks | Repair-replace | Trip hazard Reseal asphalt New gravel
14 Drain: Missing | Inadequate | Clogged
15 Sidewalks and patios: Minor cracks | Repair-replace | Trip hazard
16 Undermined: Minor | Major, replace slabs
17 Fences and gates: Repair-replace | Repair-replace (major) Repair gates
18 Soil contact: Soil w/in 6" of siding/trim | Soil w/in 6" of siding/trim, rot Unlined wood planter boxes
19 Rotten landscaping timbers: Replace | Replace steps
20 Vegetation: <1' from exterior Stump near exterior Large tree, fall hazard
21 Firewood contact Trees against roof | Trees against roof with damage
22 Drainage: Soggy yard or standing water Negative perimeter slope: Soil | Pavement
23 Downspouts: Loose or detached Missing Extensions missing or ineffective
24 Dented, crushed, damaged Terminate above roof surface
25 Gutters: Missing Damaged Leaking Poor slope End caps missing Rusted 26 Crawlspace vents: Blocked
27 Screens: Missing Deteriorated Clogged Wells: Missing Inadequate
28 Siding: Gaps at penetrations Deteriorated Incomplete or missing
29 Composition wood fiber: Minor, maintain | Moderate, maintain/replace | Major, replace
30 Brick veneer: Minor cracks | Moderate cracks/deterioration | Major cracks/deterioration
31 Cement-asbestos: Asbestos warning Deteriorated
32 Stucco: Repair-replace EIFS Repair-replace stucco
33 Logs: Uncaulked up-facing cracks Rot Sealant failed Masonry contact Bark
34 Soffits: Deteriorated Rot Water stains: Dry | Wet
35 Soffit vents: Screens missing or deteriorated Screens painted or blocked
36 Cantilever: No soffit cover | No insulation or soffit cover Unvented soffit
37 Fascia: Deteriorated Rot Rafter ends rotten
38 Deck: Reseal deck | Reseal deck & rail Repaint deck | Repaint deck & rail Narrow spacing
39 Substructure: Excluded Needs bracing Ledger board: No lag screws No flashing
40 Soil at support posts | Soil at support posts with rot Inadequate clearance to soil below
41 Stairs: Wobbly Rot: Base of stringers | Treads
42 Non-uniform risers: Warning | Repair Non-standard: Warning | Repair
43 Hand rails: Missing Ungraspable Loose Not continuous or too short
44 Guardrails: Wide gaps Missing Wobbly Low Climbable
45 Electrical: Cover plates: Missing | Broken
46 Receptacles: Open ground, rewire or replace with 2-prong | Open ground, rewire
47 Broken Scorched Hot-neutral reverse Loose No power Worn
48 Damaged waterproof cover | Not waterproof | Need in-use cover
49 GFCI receptacles: Won't trip | Won't trip with tester Won't reset Energized when tripped 50 Non-GFCI outside within 6'-6" of ground Damaged by paint Bad GFCI, can't verify others
51 Light fixtures: Inoperable No bulb(s) Loose or substandard Deteriorated
52 Not rated for use in wet location No caulk around back plate
53 Wiring: Exposed Not terminated Splices not in box Extension cord Lamp cord 54 Wires run overhead to trees
55 Exposed wiring at disconnect switch: Install lock | Repair (emergency disconnect)
56 Paint & caulk: Caulk missing or deteriorated Paint or stain failing: Entire | Some areas
57 Window glazing putty missing or deteriorated Caulked head flashing
58 Hose bibbs: No anti-siphon No water No handle Need screws Leaks Winterized
59 Supply pipes outside subject to freezing
60 Vents: Vent caps: Deteriorated Missing
61 Plumbing vents: <3' above opening | <10' from opening
62 Direct vent: Inadequate clearance to openings or ignition sources Installed upside down 63 Propane tank: <3' from opening | <3' from electric meter | <10' from ignition source
64 250/500 gal. tank <10' | 1000 gal. tank <25' | Underground 1000 gal. tank <10'
65 Hornet, bee or wasp nest

Roof
1 Roof inspection method: Traversed / From eaves / From ground / From windows / Not inspected / ____________
2 Roof type: Gable / Cross-gable / Hipped / Cross-hipped / Pyramidal / Shed / Flat / Mansard / Gambrel / A-frame / ____________
3 Roof covering: Composition / Wood shakes / Torch down / Built up / Metal / Concrete tile / Clay tile / Slate / EPDM / Rolled / ____________
4 Estimated age of roof: ____________________
5 Gutter & downspout material: Aluminum / Steel / Plastic / Copper / Galvanized / Wood / Built-in / None / ____________
6 Roof ventilation: Adequate / Inadequate / None visible / Unable to determine / ____________ 7 Excluded: Couldn't traverse
8 Snow obscures: Partially | Completely Debris obscures: Partially | Completely
9 Vegitation and maintenance: Clean gutters Clean roof Moss Trees overhanging 10 Trees against roof | Trees against roof with damage
11 Age: Beyond service life < 5 yrs left
12 New composition roof will need: Tear-off | Sheathing | Both
13 Flashing: Deteriorated, rusted Lead improper at top of vent pipes
14 At chimney: Deteriorated, substandard No counterflashing
15 Rubber boots: Deteriorated Lifting or improperly installed
16 Roof design: Slope-slope | Slope-wall | Slope-flat No cricket above wide chimney
17 Siding in contact with shingles below
18 Composition: Deteriorated or missing Popped nails Raised shingles Pressure washed
19 < 3/12 slope Pabco HO25
20 Shakes: Deteriorated | Clean and preserve | Both
21 Metal: Dented or damaged Failing paint Rust Asphalt or tar sealant
22 Concrete or tile: Chipped or cracked Slipped Missing
23 Flat roof: Coating failed Ponding Gaps: Seams | Penetrations | Both
24 Parapet walls: Deteriorated, substandard flashing | Slopes towards exterior
25 Masonite Woodruf: Warning | Repair-replace
26 Vents: Improper B-vent termination
27 Plumbing vent: <6" above surface | <12" from vert. surface Blocked: Caps | Debris

Garage
1 Excluded: Stored items: Perimeter | Perimeter and center | Vehicle door(s) | All
2 Appliances with no protective barrier Walls or ceiling not fire-rated
3 Garage-house door: Not fire-rated | Pet door No auto-close | Repair/replace auto-close
4 Weatherstrip: Missing | Deteriorated | Both Gaps around when closed
5 Vehicle door: Replace | Repair/replace Water stains - caulk, paint Lock inoperable or difficult
6 Not balanced Broken spring No restraining cable on springs Difficult to open or close 7 Weatherstrip: Missing | Deteriorated | Both
8 Vehicle door opener: Inoperable Mechanical auto-reverse inoperable or needs adjustment 9 Lock not disabled Infrared photo eyes: Too high | Inoperable | None
10 Control button: Too low or within reach of children | Loose
11 Entry door: Deteriorated entry Weatherstrip missing or deteriorated Hollow core
12 Attic access: Hatch missing | Hatch not fire-rated Pull-down stairs not fire-rated
13 Stairs: Wobbly Garage-house step missing
14 Non-uniform risers: Warning | Repair Non-standard: Warning | Repair
15 Handrails: Missing Ungraspable Loose Not continuous or too short
16 Guardrails: Wide gaps Missing Wobbly Low Climbable
17 Electrical: Cover plates: Missing | Broken
18 Receptacles: Open ground, rewire or replace with 2-prong | Open ground, rewire
19 Broken Scorched Hot-neutral reverse Loose No power Worn
20 GFCI receptacles: Won't trip | Won't trip with tester Won't reset Energized when tripped 21 Non-GFCI in garage (excluding 1 for freezer) Damaged by paint Bad GFCI, can't verify others
22 Wiring: Exposed Not terminated Splices not in box Loose Extension cord Lamp cord
23 Rodent evidence: Light to moderate | Heavy

Attic
1 Inspection method: Viewed from hatch / Traversed / Partially traversed / Not inspected / ____________
2 Roof structure: Trusses / Rafters / Not visible / ____________
3 Ceiling structure: Trusses / Ceiling beams / Not visible / ____________
4 Insulation material: Fiberglass loose / Fiberglass roll/batt / Mineral wool loose / Mineral wool roll/batt / Cellulose loose / Cellulose roll/batt / Vermiculite / None / ____________
5 Insulation depth: _______________ Estimated R value: ____________________
6 Excluded: No attic | No access hatch | Hatch inaccessible | Some areas inaccessible
7 <1" clearance to flue Water stains on wood: Dry | Wet
8 Ceiling insulation: Vermiculite, asbestos warning Paper facing on batts exposed
9 Substandard | Uneven | Missing in some areas | None | None at skylight
10 In contect with recessed lighting: Not IC rated | No visible rating
11 Exhaust fans: No duct | Duct broken or collapsed | No vent cap
12 Access hatch: No insulation over | No weatherstrip Uninsulated pull-down stairs
13 Electrical: Cover plates: Missing | Broken
14 Wiring: Not terminated Splices not in box Loose Extension cord Lamp cord
15 Attic fan: Inoperable | Noisy, vibration
16 Vents: Blocked | Screens deteriorated or missing Inadequate ventilation
17 Water pipe insulation: None | Repair
18 Rodent evidence: Light to moderate | Heavy
19 Hornet, bee or wasp nest

Electric service
1 Service type: Underground / Overhead / ____________
2 Protection: Breakers / Fuses / ____________
3 Amperage: 60 / 100 / 125 / 150 / 200 / 400 / ____________ Upgrade to 200 amp service
4 Voltage: 120 / 120/240 / 3 phase, 4 wire, 120/208 / ____________
5 Location of main service switch: ________________________________________
6 Location of sub panels: ________________________________________
7 Location of main disconnect: Top / Bottom / Top bank / All / ____________
8 Service entrance conductor material: Aluminum / Copper / Copper-clad aluminum / ____________
9 System ground: Ground rod / Cold water / Concrete encased electrode / Copper / Rebar / ____________
10 Main disconnect rating: 60 / 100 / 125 / 150 / 200 / N/A / ____________
11 Branch circuit wiring type: NM sheathed / BX / Knob and tube / Copper / Aluminum multi-strand / Aluminum solid-strand / ____________
12 Aluminum wiring present: No / Yes / Can't verify / ____________
13 Smoke detectors: Yes / No / ____________
14 Excluded: Interior low voltage lighting
15 Panel cover not removed: Stored items, debris Paint/wallpaper Arcing noises
16 Shelving, cabinets or structure Equipment energized Water: On floor | Leaking into panel
17 Service drop wires: Frayed In trees
18 < 10' above ground | < 12' above driveway | < 3' from openings
19 <3' above 3/12 roof or steeper | <8' above a flat roof | <18" above roof ridge
20 Service entrance wires: Frayed Loose point of attachment
21 Drip loop: None Substandard
22 Service mast: Loose Bent Broken or damaged
23 Meter: Missing or broken seal Tap before meter
24 Federal Pacific Zinsco panel | Zinsco breakers
25 Service panel (substitute "sub panel" as needed): Inadequate working space
26 Missing or inadequate legend Tap before main >6 switches or hand movements
27 Bushing missing Undersized wire Wires not terminated Contamination
28 Double or multi tap Doubled or bundled neutrals Open knockout
29 Burned or melted wires or insulation No anti-oxidant Old fuses: Eval | Replace
30 Burned or damaged circuit breaker
31 GFCI breaker: Won't trip Won't reset
32 AFCI breaker: Won't trip Won't reset Recalled (blue test button)
33 Service panel cover: None or not installed Not flush Open closure
34 Screws: Missing Pointed or too-long In contact with conductors
35 Grounding and bonding: Plastic pipe Dielectric connectors
36 Clamp on rod: Missing | Loose | Rusted or corroded
37 Clamp on pipe: Missing | Loose | Rusted or corroded
38 Sub panel: Neutrals and grounds bonded at sub-panel
39 Branch circuit wiring: Aluminum solid strand Knob and tube: Energized | Abandoned
40 Incompatible components: Undersized: Meter base | Service conductor | Main service panel
Water heater
1 Estimated age: ____________________ Type: Tank / Instantaneous / ____________
2 Energy source: Electricity / Natural gas / Propane / Oil / ____________
3 Capacity: 30 / 40 / 47 / 50 / 52 / 65 / 66 / 80 / Not visible / ____________
4 Manufacturer: American / American Proline / American Standard / A.O. Smith / AquaStar / Bosch / Bradford White / Envi-Ro-Temp / General Electric / Hotpoint / Reliance / Rheem / Richmond / Row Con / Rudd / State / Takagi / U.S. Craftmaster / Vanguard / Whirlpool / ____________
5 Model: ________________________________________
6 Water temperature: ____________________
7 Excluded: Shut off
8 Obscured by: Insulated jacket | Stored items | Permanent enclosure
9 Temp > 120 Flame or source of spark <18" from garage floor Reverse plumbed
10 Undersized No catch pan or drain Circulation pump installed
11 Age: Near 8-12 years | 8-12 years or older | Unknown, may be old
12 Corrosion: On tank | Water stains below | Both On fittings
13 Earthquake straps: Missing | Substandard
14 Supply valve: Missing | Handle missing
15 T-P valve: Missing | Leaking
16 Drain line: Missing Routed up >6" from floor <6" from floor Undersized In crawlspace >4 elbows
17 Electric: Substandard wiring No insulated pad
18 Gas: Inadequate combustion air Melted insulation by draft hood
19 No drip leg Scorch marks Scale on burner, pilot assemblies or at draft hood
20 Flame: Yellow | Noisy (whistling) | Floats | Too high
21 Flame sheild missing or loose: Inner | Outer | Both

Heating and cooling
1 Estimated age: ____________________
2 Primary heat energy source: Natural gas / Electric / Oil / Wood / Propane / Solar / Coal / ____________
3 Primary heat type: Forced air / Heat pump / Baseboard / Fan wall units / Radiant / Hot water / Gravity / Circulating pump / Steam / Up draft / Down draft / Horz draft / Standard / Medium / High / Gas fireplace/stove / ____________
4 Primary A/C energy source: Electric / Natural Gas / Propane / N/A / ____________
5 Primary A/C type: Split system / Heat pump / N/A / ____________
6 Distribution: Sheet metal / Flex / Metal pipe / Plastic pipe / Not visible / N/A / ____________
7 Manufacturer: Amana / American Standard / Armstrong / Bryant / Carrier / Coleman / General Electric / Goodman / Heil / Intertherm / Janitrol / Lennox / Luxaire / Payne / Rheem / Ruud / Tempstar / Thermopride / Trane / York / ____________
8 Model: ________________________________________
9 Filter location: Return air above / Return air below / Behind grill / Base of furnace / Top of furnace / ____________
10 Last service date: ____________________
11 Excluded: <60 degrees, can't eval A/C Can't verify heat source in every room
12 No response: Furnace | Boiler | Heat pump | A/C
13 Shut off: Furnace | Boiler | Heat pump | A/C condensing unit
14 Age: Furnace: Near 15-20 years | 15-20 years or older | Unknown, may be old
15 Heat pump condensing unit: Near 15-20 years | 15-20 years or older | Unknown, may be old 16 A/C condensing unit: Near 8-15 years | Older than 8-15 years | Unknown, may be old
17 Service: Now & annually (heat pump or AC) Now & annually (gas or oil) Now & annually (hydronic)
18 Now & every few years Perform heat exchanger CO test
19 Return air: Open in basement - gas & oil Gaps in attached garage No gaps below interior doors
20 Fresh air: Fresh air timer not set Keep air supply ports open 24-7
21 Filters: Replace now | Wash now | Maintain in future
22 Deteriorated | Not secure | Wrong size | None
23 Ducts: Broken or disconnected Broken hangers Lying on ground
24 Flex duct: Sagging | Supports > 5' apart | Narrow support straps | All
25 Asbestos on ducts: Warning | Deteriorated
26 Ducts need cleaning: Debris, dirt, dust | Rodents | Mold | New construction
27 Insulation: None | Deteriorated
28 Combustion air, clearances and disconnect: Inadequate combustion/dilution air
29 Flame or spark <18" above floor in garage <1" from B-vent flue <2" from double wall flue
30 Single wall flue: <18" w/o draft hood <9" w/ draft hood and oil <6" w/ draft hood and gas
31 Cabinet: <6" from top or sides of furnace/boiler <24" from front of oil furnace/boiler
32 <18" from front of gas/electric furnace or boiler
33 Gas: Rusted or cracked heat exchanger No drip leg
34 Gas supply lines: Rust Flexible connector: Through cabinet | Subject to damage
35 Flame: Yellow/orange | Floating | Noisy or dancing | Pop | Rollout | Changes with fan on
36 Oil: Flame not orange to yellow-white, or sooty Oil smell or soot
37 Oil tank: Buy replacement insurance Leaking | Rust
38 Buy contamination & clean up insurance (for tanks still in use in WA state only)
39 Oil supply lines: Leaking Subject to damage No shut-off valve No filter
40 Barometric draft damper: Defective Spilling exhaust gases
41 Air handler: Noise or vibration Loose v-belt No catch pan in attic - heat pump or A/C 42 Evaporator coils: Ice Cooling fins: Deteriorated | Dirty | Both
43 Outside condensing unit: Not level Noise or vibration No disconnect
44 Refrigerant line insulation deteriorated or missing Cooling fins: Deteriorated | Dirty | Both 45 Inadequate clearance: Vegetation | Structure
46 A/C supply air: Not cool enough | Too cool
47 Hydronic: Open system, Legionnaire's disease

Plumbing and laundry
1 Water pressure: ____________________
2 Location of main water shut-off: ________________________________________
3 Location of main water meter: ________________________________________
4 Location of main fuel shut-off: ________________________________________
5 Visible fuel storage systems: ________________________________________
6 Type: Public / Private / Community well / ____________
7 Service pipe: Copper / Galvanized / PE / Lead / Not visible / ____________
8 Supply pipe: Copper / Galvanized / CPVC / PE / Polybutylene / Not visible / ____________
9 Vent pipe: Plastic / Galvanized / Cast iron / Copper / Not visible / ____________
10 Drain pipe: Plastic / Galvanized / Cast iron / Copper / Not visible / ____________
11 Waste pipe: Plastic / Galvanized / Cast iron / Copper / Not visible / ____________
12 Excluded: Laundry appliances Washer had clothes in it
13 Main shut-off not found Meter not found Inspect, pump septic
14 Pre-1986 lead solder warning Lead service pipe Polybutylene
15 Public supply pressure: > 80 psi | < 40 psi, warn | < 40 psi, repair Need expansion tank 16 Galvanized steel supply: Old, advise, monitor | Corrosion, leaks or low flow
17 Copper supply: Pin holes or corrosion Steel hangers
18 Drain and waste: Active leak Stains: Monitor | Repair
19 Oakum packing deteriorated or missing Hanger straps: Broken | Substandard
20 Waste cleanout: Cap missing Bad seal Shows wear: Public sewer | Private septic
21 Laundry: No catch pan or drain for washer | No visible drain Fan timer not set
22 Laundry sink: Unanchored Concrete cracked | Concrete cracked and leaking
23 Dryer duct: Plastic or foil Kinked Broken or disconnected None
24 Needs cleaning Too long Routed vertically Sheet metal screws
25 Water softener discharge: To septic system To sump pump Near foundation
26 Air gap: None or substandard Inaccessible
27 Sump pump: Installed Inoperable Couldn't test No GFCI Not on dedicated circuit
28 No check valve No pit liner

Fireplaces, woodstoves and chimneys
1 Fireplace type: Masonry / Masonry with metal liner / Metal prefab / ____________
2 Woodstove type: Metal / Metal insert / Ceramic / ____________
3 Chimney type: Masonry / Metal / ____________
4 Excluded: Fireplace firebox obscured by ashes or debris
5 Gas: No gas | No response | No controls found
6 Hearth: <18" deep | Deteriorated
7 Clean flue: Annually for all Now: Fireplace | Woodstove
8 Fireplace: Rusted liner Gaps between firebox and face
9 Fireplace firebrick: Minor cracks | Repair, replace
10 Refractory panels: Repair | Replace
11 Damper: Stuck open or closed Deteriorated Missing
12 Woodstove: In garage Replace firebrick Eval and verify safe installation
13 Inadequate clearances: Flue pipe | Stove | Heat shield
14 Chimney: Missing: Screen | Rainproof cover | Both
15 Too short Pie plate Wood burning flue shared with oil or gas flue
16 Repoint mortar Crown deteriorated Cracked flue tiles Major masonry repairs
17 Unlined wood burning | Unlined with gas appliance | Unlined with oil furnace
18 Gas: Vent-free warning Glass: Fogged | Soot
19 Conversion: Damper can close No glass doors

Basement
1 Insulation material: Fiberglass roll/batt / None / ____________
2 Pier/support post material: Wood / Bearing wall / Concrete / Masonry / Steel / ____________
3 Beam material: Solid wood / Built up wood / Laminated wood / Steel / ____________
4 Floor structure above: Wood joists / Engineered wood joists / Wood trusses / 2x6 T&G / Not visible / ____________
5 Structural: Post-beam missing ties Overspanned: Joists | Beams
6 Notches and bored holes: Joists, various substandard | Studs, various substandard
7 Joist notches: In middle 1/3 | >1/6 of depth | >1/4 of depth at end
8 Joist bored holes: <2" from edge | >1/3 of depth
9 Stud notches: >40% of depth | >25% of depth, bearing wall
10 Stud bored holes: Bored hole <5/8" from edge | >60% of depth | >40% of depth, bearing wall
11 Water: Standing water or wet areas | Past water intrusion
12 Entry door: Deteriorated entry Repair/replace lockset
13 Weatherstrip: Weatherstrip missing or deteriorated | Replace
14 Stairs: Wobbly
15 Non-uniform risers: Warning | Repair Non-standard: Warning | Repair
16 Hand rails: Missing Ungraspable Loose Not continuous or too short
17 Guardrails: Wide gaps Missing Wobbly Low Climbable
18 Electrical: Cover plates: Missing | Broken
19 Receptacles: Open ground, rewire or replace with 2-prong | Open ground, rewire
20 Broken Scorched Hot-neutral reverse Loose No power Worn
21 GFCI receptacles: Won't trip | Won't trip with tester Won't reset Energized when tripped
22 Damaged by paint
23 Wiring: Exposed Not terminated Splices not in box Loose Extension cord Lamp cord
24 Rodent evidence: Light to moderate | Heavy

Kitchen
1 Appliances older than 10 or 15 years
2 Dishwasher: Inoperable No water No high loop or air gap | No air gap
3 Loose or missing bracket Water beneath Noisy Kick plate missing, loose or deteriorated
4 Bad door seal Door handle loose or missing Leaking at air gap
5 Refrigerator: Inoperable Ice maker turned off No ice or water
6 Bad door seal Broken or missing shelving Door handle(s) loose or missing Uses GFCI
7 Range hood: None Light: Light inoperable | Missing bulb(s)
8 Fan: Inoperable Noisy Vents indoors Filter(s) missing Undersized exhaust duct
9 Microwave: Inoperable Turntable inoperable No turntable Digital display defective 10 Range/Oven/Stove top: Inoperable: Bake | Broil | Burner(s) | Oven light
11 No anti-tip bracket Knob(s) missing or damaged Door handle(s) loose or missing
12 Bake element standoffs missing or damaged Downdraft exhaust: Inoperable | Noisy
13 Food disposal: Inoperable Noisy Substandard wiring Corroded or at end of life
14 Hot water dispenser: Inoperable Disconnected
15 Electrical: Cover plates: Missing | Broken
16 Receptacles: Open ground, rewire or replace with 2-prong | Open ground, rewire
17 Broken Scorched Hot-neutral reverse Loose No power Worn
18 GFCI receptacles: Won't trip | Won't trip with tester Won't reset Energized when tripped 19 Non-GFCI within 6' of sink Damaged by paint Bad GFCI, can't verify others
20 Light fixtures: Inoperable No bulb(s) Loose or substandard Deteriorated
21 Closet lighting: Open lamp Incandescent <12" clearance | Fluorescent <6" clearance
22 Exhaust fans: Inoperable or inadequate Noisy
23 Plumbing: Shut-off valve handle missing Supply line leak
24 Faucets: Loose or missing handle Leaks when off Leaks when on Reverse plumbed
25 Sinks: Sprayer inoperable or defective Enamel deteriorated
26 Sink drains: Leak Clogged or drains slowly Substandard repair Flexible pipe
27 No trap S-trap
28 Cabinets: Deteriorated Loose Missing shelving or components
29 Hardware loose and/or missing Drawers difficult to operate No pulls or handles
30 Water damage below sink: Minor | Needs repair
31 Countertops: Minor deterioration Deteriorated Loose laminate
32 Needs caulk at backsplash Cracked or broken concrete
33 Tile, stone and grout: Deteriorated Reseal grout
34 Floors: Refinish wood floor Gaps between tiles in wet areas
35 Vinyl: Deteriorated | Deteriorated in wet areas
36 Tile, stone and grout: Deteriorated | Deteriorated in wet areas Reseal grout

Bathrooms
1 Electrical: Switch within reach of shower Cover plates: Missing | Broken
2 Receptacles: Open ground, rewire or replace with 2-prong | Open ground, rewire
3 Broken Scorched Hot-neutral reverse Loose No power Worn
4 GFCI receptacles: Won't trip | Won't trip with tester Won't reset Energized when tripped
5 Non-GFCI within 6' of sink Damaged by paint Bad GFCI, can't verify others
6 Light fixtures: Inoperable No bulb(s) Loose or substandard Deteriorated
7 Closet lighting: Open lamp Incandescent <12" clearance | Fluorescent <6" clearance
8 Exhaust fans: None with shower Inoperable or inadequate Noisy
9 Plumbing: Shut-off valve handle missing Supply line leak
10 Faucets: Loose or missing handle Leaks when off Leaks when on Reverse plumbed
11 Sinks: Enamel deteriorated Cracked or broken Loose Stopper missing or defective 12 Sink drains: Leak Clogged or drains slowly Substandard repair Flexible pipe
13 No trap S-trap
14 Toilets: No water Loose | Loose w/ wet or damaged floor Clogged or weak flush
15 Runs Flapper valve did not reseat Cracked or broken: Bowl | Tank | Tank lid | All
16 Bathtubs: Enamel deteriorated Clogged or drains slowly Tile or grout deteriorated
17 Caulk missing or deteriorated: At floor | At surround | At base of spout | All
18 Jetted tub GFCI: None visible | No access, cannot verify
19 Showers: Clogged or drains slowly Tile or grout deteriorated Diverter valve defective 20 Caulk missing or deteriorated: At floor | Around surround | All
21 Cabinets: Deteriorated Loose Missing shelving or components
22 Hardware loose and/or missing Drawers difficult to operate No pulls or handles
23 Water damage below sink: Minor | Needs repair
24 Countertops: Minor deterioration Deteriorated Loose laminate
25 Needs caulk at backsplash Cracked or broken concrete
26 Tile, stone and grout: Deteriorated Reseal grout
27 Floors: Refinish wood floor Gaps between tiles in wet areas
28 Vinyl: Deteriorated | Deteriorated in wet areas
29 Tile, stone and grout: Deteriorated | Deteriorated in wet areas Reseal grout

Interior rooms
1 Heating and cooling: No visible source of heat
2 Recalled Cadet heaters, FW, FX, LX, TK, ZA, Z, RA, RK, RLX, RX, RW, ZC
3 Registers: Missing Loose or not flush Damaged Weak flow or no flow
4 Baseboard heaters: Baseboard heater deteriorated Electric receptacles above
5 Electrical: Doorbell: Inoperable Button loose or damaged
6 Smoke alarms: None >10 years old Replace batteries Too few | Damaged or missing | Both
7 Cover plates: Missing | Broken
8 Receptacles: Open ground, rewire or replace with 2-prong | Open ground, rewire
9 Broken Scorched Hot-neutral reverse Loose No power Worn Childproof caps
10 Few receptacles | 2-pronged receptacles | Few & 2-pronged receptacles
11 GFCI receptacles: Won't trip | Won't trip with tester Won't reset Energized when tripped 12 Non-GFCI within 6' of sink Damaged by paint Bad GFCI, can't verify others
13 Light fixtures: Inoperable No bulb(s) Loose or substandard Deteriorated
14 Old fixtures Need 3-way switches at both ends: Hall | Stairs
15 Closet lighting: Open lamp Incandescent <12" clearance | Fluorescent <6" clearance
16 Wiring: Exposed Not terminated Splices not in box Extension cord Lamp cord 17 Fans: Whole-house fan: Inoperable Noisy
18 Ceiling fans: Inoperable Wobbly, unbalanced <7' from floor
19 Ceiling: Minor cracks Dry stains, monitor Wet stains: Roof leak | Plumbing leak
20 Pre-1979 asbestos popcorn: Intact, warn | Deteriorated, needs repair or abatement
21 Walls: Minor cracks
22 Windows: Won't open Lock missing or inoperable Springs broken Vents closed 23 Glass: Broken Double pane seal(s) failed Non-tempered w/in 18" of floor
24 Screens: Missing Holes or tears
25 Bedroom egress: Too high | Won't open, or opening too small | Both
26 Doors: Deteriorated interior Won't latch Binds in jamb No gap for return air
27 Keyed lock or deadbolt on interior door
28 Locksets: Missing Loose Damaged Installed backwards
29 Entry door: Deteriorated entry Weatherstrip missing or deteriorated Hollow core
30 Deadbolt: Key-only, no handle Inoperable or difficult
31 Sliding glass doors: Deteriorated Difficult to open/close Lock inoperable or difficult
32 Double pane seal(s) failed Handle missing or loose
33 Sliding screen doors: None for only source of ventilation Deteriorated
34 Holes or tears Difficult to open/close
35 Stairs: Door swings out over stairs
36 Non-uniform risers: Warning | Repair Non-standard: Warning | Repair
37 Handrails: Missing Ungraspable Loose Not continuous or too short
38 Guardrails: Wide gaps Missing Wobbly Low Climbable
39 Floors: Not level Refinish wood floor Squeaky
40 Vinyl: Deteriorated | Deteriorated in wet areas
41 Gaps between tiles in wet areas
42 Carpet: Loose | Loose with trip hazard Needs cleaning Deteriorated
43 Tile, stone and grout: Deteriorated | Deteriorated in wet areas Reseal grout
44 Miscellaneous:
45 Trim: Missing | Damaged | Both
46 Fixtures: Missing | Damaged | Both
47 Rodent evidence: Light to moderate | Heavy
48 Lead paint: Intact | Poor condition

Marketing and the Listing Client

Craig Giles (Graham Welch Associates) — Sun, 02 Dec 2007 23:38:45 -0600

Marketing Can't Sell Overpriced Properties: You might as well be straight up from the beginning. If you're going to take an overpriced listing, have the nerve to tell your seller that it is overpriced in your opinion. Make sure that you make it clear that you hope to see either a market change or a price decrease in a reasonable amount of time.

Be sure that you also make it clear that no amount of marketing will get their home sold, and that some agents may not even show it if they believe it to be out of the acceptable price range.

Newspaper and Magazine Ads are More for You than for Your Client: The industry consensus is that most print advertising is more advantageous to the real estate broker than to their listing clients. These ads generate phone calls and possible buyers, but generally do not produce a buyer for the specific property in a given ad.

With a recent NAR survey of actual buyers stating that less than 7% first saw the home they bought in a print ad, it's clear that the consensus is validated.

Let your client know these facts and that they shouldn't expect a big showing response after ads run.

Internet Marketing is Effective, but it's a Numbers Game: The accessibility of the internet and the ease with which buyer prospects can research properties makes it an excellent marketing media. However, buyers begin their home searches sooner, and with longer time frames between research and a purchase.

If you are reporting web site listing page views or visits to your client, be sure that they understand that there may be hundreds or more that are only mildly interested or are using their listing as research to justify their interest in another property.

No matter the marketing, it won't sell until it's shown. Actual showings will tell the tale.

If Your Home Isn't Showing, More Ads Probably Won't Help: When you think about a real estate agent's job when working for a buyer, they advise them in their best interests. If a home is over the market price of comparable homes, they may have enough to see and choose not to view your home at all.

In light of our previous discussion of who print ads really benefit, running more of them, or larger ads, won't improve on your showing situation. Consider a downward price adjustment or some significant improvement in the property.

The MLS is the Most Effective Marketing Venue: By placing your property into the Multiple Listing Service, we expose it automatically to all the real estate members in the area. The listing is very detailed and provides significant information about your home for easy access. We offer compensation to any agent that brings a buyer, so it's in their best interest to search the MLS, locate and show your home.

In addition, we do various forms of online prospecting and reverse-prospecting functions in the MLS that have the goal of matching properties with buyers looking for their particular characteristics.

Facing Foreclosure?

Craig Giles (Graham Welch Associates) — Sun, 02 Dec 2007 23:35:08 -0600

This is with an investor approach, mbut can be easily used by an agent wanting to help a client facing foreclosure

A short sale is a win-win for everyone involved.

The key to taking advantage of this strategy is to understand the dos and don'ts of working with a bank's loss-mitigation department.

Making the Bank's Loss-Mitigation Department a Friend, Not a Foe As soon as your motivated seller is comfortable with you and your short-sale package, the time has come to work with the bank. So you make a call and ask for their loss-mitigation department. (In some banks, it will be called the work-out department, foreclosure department, short-sale department, loan-modification department, or reinstatement department.)

Once you have the bank's rep on the phone, get to work. This person will make or break your deal, so be very nice. Your initial conversation should go something like this:

"Hi, my name is Sue and I am calling on behalf of Bob and Sally Smith [the distressed homeowners]. I have an 'authorization to release information' form I'd like to fax to you. What is your fax number? Great, I'll send it right over."

Stay on the phone while the rep retrieves the form from the fax machine. When he returns, continue the conversation. It should go something like this:

"As you know, Bob and Sally are in foreclosure. I recently met them and they seem like sweet folks. When I found out about Bob and Sally's dilemma, I said I'd try to help. They would like to sell their property and get on with their lives. I own several rentals in the area, and I am willing to purchase Bob and Sally's property. However, we have a big problem."

"I called a real estate agent friend of mine and asked her to run comps for me. Based on her comps and what I know about the area, Bob and Sally owe much more than their property is worth. As I said, I'm willing to help them out of foreclosure - and help you get a defaulted loan off your books - but I can't possibly pay the mortgage balance. Would you consider some sort of short payoff or something along those lines? Great! What do you need from me?"

By taking this approach, you will not come across as a professional investor out to make a killing on the bank's loss. Many investors choose to present themselves that way, but I think you will have much more success as a friend trying to help Bob and Sally. (I certainly have.)

Use either approach - whichever one makes you feel most comfortable. But never lie to get the deal. Given the above scenario, for example, it would have to be true that I did recently just meet Bob and Sally... that I do have rentals... that I do have a real estate agent friend... and that I am willing to purchase Bob and Sally's property.

In your conversations with the bank's loss-mitigation rep, be certain to refer to your distressed homeowners by name as often as possible. This makes them seem more real. (Keep in mind that you are trying to build rapport with the rep - trying to get him to make an emotional as well as a business decision.)

After you send your short-sale package to the rep, call him at least once a day to follow up. Always ask him how the day is going, how the weather is where he is, how the kids are, and so on. You want the rep to look forward to your calls, not dread them.

Find out who makes the actual decision, how long it typically takes, how long the rep can give you to close once your proposal is accepted, etc. If you maintain a helpful attitude, your loss-mitigation rep will push it through quickly.

When your short-sale proposal is accepted, get it in writing immediately. Find a buyer for the property or arrange financing, and get the deal closed. You don't want anything to happen between the bank's acceptance of the short sale and the closing.

Once the deal is closed, send the rep flowers or a gift basket and write a letter to his boss saying how much you appreciate the professional way you were treated. The rep will remember you - and the next time you call about a short sale, he will be more than willing to help you again.

20/50/30 Rule "How to Know if a Lead is Good"

Craig Giles (Graham Welch Associates) — Mon, 26 Nov 2007 19:11:40 -0600

You've heard of the Pareto Principle right? If not, it's the 80/20 Rule that economist Vilfredo Pareto developed through his research.

I bet you haven't heard of the 20/50/30 Rule, though... right? It works hand-in-hand with the 80/20 rule for leads and is more centered on lead qualification.

The basic premise is this:

20% of the prospects that you contact will do business with you easily. There are several reasons why, but the rules on handling them are the same regardless.

Get out of their way, and make it as easy as possible for them to do business with you.
They believe what you say is true and have an overall good feeling about you.
They believe you are skilled at what you do and trust that you can deliver what they need.
These types of leads are like Gold - get out of your own way and get to the point.
What should you do? Close the deal!!!

The next 50% of prospects are on the fence. They could go either way, and you have to work with them to make sure they fall on your side of the fence. Here are some ways to help your cause:

Make a compelling presentation with confidence.
Make sure you tailor your presentation to fit their individual behavioral style.
Help break the ice with them, so they actually begin to like you.
Make sure that you communicate effectively the benefits that you bring to them.

What should you do? Close the deal so that you can then move them to the 20% that will do business with you easily.

The last 30% of prospects are problems waiting to happen. Their characteristics are:

They are highly demanding.
Usually have limited respect for you.
You will expend tremendous energy with them.
You will expend huge quantities of time with them.
What should you do? Throw these leads away - the conversion rate is too low, and the energy wasted is very high.

How to "find" Listings in your market

Craig Giles (Graham Welch Associates) — Mon, 26 Nov 2007 18:08:37 -0600

One strategy that has the potential to generate instant success is a time-tested prospecting plan. "The 14+14+28 Strategy." I wish the concept was my creation...but I can't take credit for it. The plan has incredible potential to land listings in any neighborhood.

Here is how it can work:

First thing in the morning go to your MLS site and look for the newest listing's in various neighborhoods. The listing can be a listing of any company, it doesn't matter. Pick a neighborhood you are comfortable with and better yet, find a neighborhood with perhaps only one or two listings within a two or three block area of the newly listed property, but for sure, find a brand new competitiors listing that fits the 14+14+28 rule. That is, a new listing with 14 homes on the left, 14 homes on the right and 28 across the street which are not listed. Now, keep in mind that you can deviate from the formula if needed. I mean, if it is 10 on the right, 12 on the left and only 15 across the street, it is okay....this isn't rocket science . More important is implementing this system and just doing it at least once each week. Think about it. If you do visit 50 homes each week, that ends up amounting to more than 2400 contacts a year. No expensive ad in the newspaper, no fancy and pricey giveaways. It will cost you almost nothing....

Now, prepare a CMA for the neighborhood. You want to be the expert. Know your stuff. Next, prepare your own flyer for the newly listed property. Remember, you can prepare a flyer noting that you are a BUYERS AGENT PROFESSIONAL, but you can not prepare a flyer crediting yourself as the listing agent and listring company. The flyer should include a picture(s), features and price of the newly listed home. I always list the listing agent and listing company and the MLS number as to NOT ever give the perception that I am the listing agent. Frankly, the owners of homes in the neighborhood reallly don't care who listed the home.....all they want is information. Your job here is to provide them information. We all know that the first one's to take flyers out of the flyer boxes of newly listed homes are the neighbors, right? They want to know how much the neighbors are selling for. They want to know what features the neighbors home has in comparison to theirs.....come on.....they are nosey. So be the providor of information. They will love you for it. They will remember you.

Next, with your flyer in hand, CMA in your carry-bag and business card in your pocket, get busy. All you need to do is park your car and knock the doors using the 14+14+28 rule. When the door is answered simply introduce yourself by saying, " Hello sir, my name is Joe Realtor of Joe Realtor Realty. I imagine you saw the new FOR SALE sign on your neighbors home (pointing in the direction of the newly listed home) at 123 Apple Street. And I was hoping I could provide you with information on the new listing and ask you if you know of someone today who might be looking for a home like this in your beautiful neighborhood?" If they say yes and have a name your in business. If they say no, we teach our agents to ask, "When are you planning to move?" It begins a dialogue ( actually we use the Bill Nasby 5 question technique ) and the opportunity to find out when they might be moving and where they may be moving to in the future. We ask questions to find out when they may have a need for our services. Think about it....people are moving every three to five years....you may hit when the iron is hot!

This technique is almost a warm call because, honestly, neighbors want to know what is going on in their neighborhood...and you saved them a trip to the brochure box for heavens sake! We always leave a CMA as a bonus and item of value, along with our business card.

Consider leaving something that will give them a reason to call you. I leave, as part of the prepared package, my "Your Home SOLD in 45 Days Guaranteed Or I'll Pay You $1000" offer. I'll even say, " and by the way, if you decide to sell your home I would welcome the opportunity to offer you my guarantee."

Here is what I know. 99% of the agents who list homes in my area NEVER do this when THEY are the listing agent. Most fail to even send out a "JUST LISTED" card. They will list the home, put up a sign and place it on MLS.....and...that is it! Outflank your competition by taking advantage of their ineffectiveness. Take advantage of their skill in listing and their non-skill in marketing.

Goal Setting time of Year

Craig Giles (Graham Welch Associates) — Mon, 26 Nov 2007 17:57:28 -0600

It's All In the Details

The more specific a goal is, the more likely you'll achieve it. Writing out your goals does a few things:

Focuses your mind on the results.
Clarifies what you want.
States to everyone that this is what you want.
Identifies actions to take.
Gives you a way to know when you've reached it.

More Goal Setting ideas to come, if i get a lot of responses to the 1st blog entry

My Introduction

Craig Giles (Graham Welch Associates) — Thu, 22 Nov 2007 10:57:53 -0600

I am a realtor and real estate investor since 2004. Most of what i do is lisetd in my profile.

I love the real estate market, My wife tells me that i treat this like monopoly. Property is bought and sold every day, if you are an investor, you make a deal anytime the numbers fit what you are looking for.

One a personal side, it took my wife and I about 80 showings to find our home, we have been looking to upgrade for almost a year and still ahve not found the perfect home. When it comes along, we will have the offer ion the table in about a minute, most likely.

I love to find undervalued property and make it beautiful again. We have many investor clients who enjoy the same thing. The satisfaction of finishing a project is reward, but there is also the opportunity to make a great income with fixer upper homes.

I also am on a mission to help as moany homeowners in our area avoid foreclosure that i can talk to. Most of the distressed homeowners have no idea what to do when they are losing thier homes. I can help and if you want to help people you can to, whether you are an investor or an agent.

Look forward to working with many of you in the future

Welcome to Kansas City

Craig Giles (Graham Welch Associates) — Thu, 22 Nov 2007 10:47:51 -0600

Our goal is to make thhis the largest group on the Active Rain Real Estate Network. Please Invite all the real estate people in your network and ask them them to join. It will help your business grow. It will help thier business grow.

Kansas City Opportunities

Craig Giles (Graham Welch Associates) — Thu, 22 Nov 2007 01:11:11 -0600

We have a very active market here with invetor property. If you are looking to Buy it, Fix it and Sell it for a Profit,. I owudl like to help.

Home available wholesale and preforeclosure to purchase at 20% to 50% below market values. We have rehab crews ready to start work and we can fund your deals with construction loand available to investors and borrowers from any part of the US.

Craig Giles

Exit Realty Heartland

Why network?

Craig Giles (Graham Welch Associates) — Thu, 22 Nov 2007 00:58:54 -0600

The reason is this, i don't feel that we are so much in competition, this is a huge issue in our business.

Everyone is trying to be a one man (or woman) show and they will limit the success they can have. Rather than be in competition i am working on building my network.

Why? i want to sell listings and i want to get buyers, quite simple really, the more people you know personally the more chance they will try to show your listing to the buyers they haev when you get a new listing.

I work a lot in the investor community in my area and this works very well, the more you nework the better you become and the more your business will flourish.

Craig Giles

Where are all the golf addicts?

Craig Giles (Graham Welch Associates) — Thu, 08 Nov 2007 22:21:05 -0600

i golfed this week, it was 50 degrees, and cold wind blowing on us. I love to golf, and will try to find anotehr day to golf next week if it gets to 50+ again