Profit-Lesson #2:
"The Step-by-Step Process"

Bud has been looking for a house and he has $20,000 to put down. However, Bud has had some problems with his credit and he hasn't been employed with his current employer long enough to qualify for a regular bank loan, (ouch).

Sally Decides To Sell Her House OK let's assume that Sally Seller (the seller) has decided for some reason to sell her house and she puts it up for sale. For this lesson we'll stick with residential real estate, but the real estate involved could be anything - commercial, apartments, mobile homes, raw land, etc. Sally may try to sell her house herself or list it with a Realtor. We'll assume, that she goes ahead and lists her house with a real estate agent, like most of us would do in her situation. Let's further assume that Sally is asking $110,000 for her nice 3 bedroom 2-bath house that's located in an average neighborhood in Anytown USA, that she has lived in for the last 11 years. A month goes by and she has not gotten an offer on her house. As you know, real estate isn't always easy to sell especially in smaller communities or if the seller is looking for close to full price. So Sally is having a little difficulty selling her house. Two months go by, but still no offers. Sally is getting a little bit worried and a tinsy bit desperate by now, and wonders if she's ever going to get her house sold. So after two months on the market without an offer, Sally decides to lower her asking price. She reduces it from $110,000 to $100,000. Bud Makes An Offer Two weeks later she gets an offer from Bud Buyer (the buyer). Bud has been looking for a house and he has $20,000 to put down. However, Bud has had some problems with his credit and he hasn't been employed with his current employer long enough to qualify for a regular bank loan, (ouch). Bud decides to make a full price offer to Sally if he can get her to carry the note (to act like a bank). So he makes an offer to buy Sally's house for $100,000. However, because he is not able to get a bank loan he proposes the following to Sally. He says he has $20,000 cash to put down and asks Sally to act as the bank and to carry back a mortgage note for $80,000. Bud will pay her 10% on her loan for the next 30 years, which amounts to a monthly mortgage payment to Sally of $702.06. Sally's #1 goal is to sell her house! She realizes that it's a tough real estate market where she lives and she is anxious to sell her house so she goes ahead and accepts the offer from Bud Buyer. After all it's a full price offer! That's it for this lesson. In Lesson 3 I'll explain how we rescue Sally from here predicament. Next Lesson: "We Come To The Rescue!"