If you have been involved in real estate for over a decade, you'll get asked several real estate questions on a fairly consistent basis. One might feel it would be prudent to go over some of these questions so you know as well. Following is a list of the top questions from an individual who either wants to get involved in real estate or is already involved and wants to gain even greater levels of profits.

1. How do I determine my starting/low and maximum/top asking price, assuming I know repair costs?

In the ever-changing markets of real estate, and with the uncertainty if we have truly reached a bottoming floor on home prices, 2010 is going to bring a lot of "what-if" scenarios. As a modus operandi if one followed real estate for the last twenty or more years, there is a tried and proven formula that allows safety when purchasing real estate in an uncertain market. A true indicative value of a property is what it is worth in its "top" condition and what it would sell for in today's market.

A good way to establish this MAV (maximum allowable value) of what you should purchase an investment property it can be broken down into a rather simple formula. Take the ARV (after repaired value) x 70% less Repairs = Asking Price. Just as in purchasing anything, you need to know what your line in the sand is and you need to discipline yourself in not going over that number.

How do you determine repairs? While one always recommends getting a home inspection and contractor bids for repairs, over the years a general formula you can use for determining repairs as well. This formula has also proven itself to be pretty spot-on when placed against contractor bids. It is as follows:

- Property needing light repairs $7 to 10 x square feet Includes: carpet, tile, paint, clean-up of property

- Property needing moderate repairs $15 to 20 x square feet Includes: above plus cabinets, landscaping, fixtures, roof repairs, etc.

- Property needing major repairs $30 to 40 x square feet Includes: above two plus windows, new roof, stucco, bathrooms and structural items

Let's take a 2,000 square foot property that is currently listed at $300,000. The house needs carpet, paint and slight cosmetics but otherwise is in good condition. Recent sold houses (less than three months old) that needed no repairs sold from $330,000-$350,000. What is the maximum allowable purchase (MAP)? You should have come in no higher than $225,000.00

Now, the bigger question that is running through all of the minds who are reading this... "How do you get a property at this price then"?

The way I find most of these homes is through marketing to those who are either out of State landlords or properties that are over-encumbered and at least two months behind on payments. You can better establish control over the whole purchasing process when you can be in charge of working directly with the out of State landlord or short sale property.

2. How does one determine where or how to set the wholesale price if I just want to sell or assign my contract to a wholesale buyer?

Use the same formula as above and include your assignment fee within it as well. Expect an average assignment fee anywhere between $5 to 10,000. There are instances where one can assigned their interest for close to six figures as well. On houses that need an immense amount of work, or when you can get the lender to agree to your offer, many times through marketing you can subsequently find an end buyer who is willing to buy that property for 85% of fair market value (FMV). On the $300,000 example mentioned above, when you find an end buyer who will pay 85% of value, there is a potential $75,000 that can be made on this property. Not bad for a few months work!

3. How do we find homes where NOD hasn't been filed?

These homes are found by Bandit signs, newspaper ads, and agents as well as nice other sources. Since an NOD hasn't been filed, this is where indirect marketing comes into play and you are essentially getting in through a back door process. Also, there are a few companies online that can supply you with lists of properties that are only a month or two behind on payments.

4. I have a lien that the bank doesn't seem to want to negotiate before a Notice of Default (NOD) has been filed but they said this often occurs because the bank is overloaded. Is it best to negotiate a short sale before the NOD is filed or after?

A few years ago, I would have said to wait until the NOD was recorded because banks weren't motivated enough to want to discount significantly. However, as we all know, times have changed and the banks are much more receptive to looking at other options, particularly short sales. While it may be a little bit longer of a process when the homeowner is not yet in an NOD stage, banks are in a financial position now where they will strongly consider a short sale on these properties. It is important to remember though that the banks willingness to negotiate becomes stronger the close the property gets to the foreclosure sale date.

5. If I have a title agent searching for NODs for me, why would I need to advertise looking for distressed properties?

So many times, multiple streams of marketing results in your "brand recognition", the likelihood of capturing more leads and credibility. Multiple streams of marketing generate multiple streams of income.

6. What is the "TRUE sweet spot of Listed and Non-listed properties"?

The true "Sweet Spot" of listed properties: The real estate agent is willing to work with you and have your negotiation company negotiate the short sale on your behalf.

The true "Sweet Spot" of non-listed properties: Where properties that are at least three months behind on payments and the NOD hasn't been filed as of yet.

7. How do I find out the names and phone numbers of the loss mitigator for each lender?

No need to. Every short sale package that you get will have an included mortgage statement on it for the most current lenders. Call that number, ask for the loss mitigation phone/fax numbers as well as the fax number for the Authorization to Release form (many times it is a different fax number). Better yet, work with a third party negotiation company such as The Short Sale House who already has years of short sale negotiation experience and has developed relationships with many of these lenders and servicers.

8. How do I deal with a mechanic's lien while trying to negotiate the short sale?

The same way any other junior lien holder is dealt with. Call them, let them know that the house is in foreclosure and they are going be at a loss and offer to buy them out at 10% of the note value.

9. Do I need to have a copy of the Grant Deed for my package to give to lender/servicer? Signed by Seller or not?

Unless you plan on holding on to the property by bringing the loans current or re-working a loan mod with the lender(s), there is no need to get a Grant Deed or Warranty Deed on a property. While this used to be taught years ago, with the over-abundance of properties in foreclosure, I no longer recommend this as a step to success.

10. Are there cover your assets (CYA) forms I should use when speaking to homeowners?

It is always important to disclose, disclose, disclose to the homeowner what you are intending to do when you present your offer to the lender. The two most important items to remember is that (1) you are not making any promises that you can or will stop a foreclosure from happening and (2) that you are in no way acting as a foreclosure consultant. The more you disclose, the less you are at risk. Don't take advantage of a homeowner and you won't have this problem.

Due to word limitations, this article was written into two parts - simply search the title and Part Two will be in the results listed!