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Recently I have noticed that there are a lot of people out there overpaying for property and I can help but to ask myself why. The reason that I have come up with is lack of education that is given to prospective buyers. As a buyer, you rely on your realtor to protect you. In Webster's dictionary it defines the word client as:

1: one that is under protection of another: DEPENDENT 2 a: a person who engages the professional advice or services of another b: customer c: a person served by or utilizing the services of a social agency

As buyers, we look to professionals such as lawyers, realtors, title companies, appraisers, and banking officers to look after our best interest because we trust that they are looking out for our own well being as their client. Now clearly we feel that is their job, their responsibility to look after us, don't you agree?

Well, under some state laws buyers are considered buyer beware states. What does this mean to you? Well, it is simple – Let the Buyer Beware. In other words, your realtor cannot tell you that you are paying too much for a property. If they did, they put their job at risk. So in this report we will discuss steps you can take to insure that you are not paying too much for your property. We start by explaining the appraisal process.

Appraisals Explained

Now before you get a loan, your lender will require an appraisal on the property. This is simply to check the value of the home to make sure that the lender is protected with the money that they lend you. The lender will send the sales contract to the appraiser to get the appraisal done. Here is what the appraiser will do: they will look for sales that are in your neighborhood that are similar in size and style. Then they will give their opinion on what the homes are worth. Now, an appraiser can look for homes that have sold for less, for more, or about what you are paying. They will look for homes that support your price on the sales contract. After all, they want the loan to go through so that they can get paid, the loan officer is pushing for the loan to go through so they can get paid.

So where does this leave you?

Just for a moment, imagine that you are in the market for a house. You have been looking, then you find one that is what you want. The seller is asking 0,000, you tell your realtor that you are going to offer ,000. But in actuality the homes in the area that are similar to the one you are buying are selling for ,000, but you are not aware since you are relying on your realtor for protection. Now you buy the home at ,000 feeling good about your purchase. Now, in one year, imagine you lost your job and was forced to relocate and sell the property. If the homes in the area have been selling for ,000, guess what? You now owe more than what your property is worth. For the average home in America, there is a 4-6 month time that it takes to sell the property and sellers typically get 95% of the value of the home.

This is not a make-believe scenario. Just last week I had someone to call me wanting me to purchase their home. They had bought it only 1 year ago for ,000. They were 4 months behind on their house payment. The house was falling apart and needed serious repairs. So, I check the comps to see what has sold in the area and the homes that did not need any repairs were selling for -K. She paid K for one that needed serious work! She overpaid by at least K. Now, in 1 year the home is not suddenly going to be in need of all these repairs. If she had done her homework she would have not overpaid.

Now the bank is threatening to foreclose, here is what will happen if they foreclose The bank will hire an attorney to foreclose, thus running 3 - 4 ads in the newspaper to auction of the house. In most cases the bank will take the home back. Now, everyone knows that there are people looking for foreclosed property that they can pick up cheap- right? Now if the bank takes an amount less than what was owed, then you (the homeowner) are still responsible for the remaining debt.

The bank will then seek for a deficiency judgment. If they get a judgment, they can then possibly garnish your wages and the judgment will attach to anything you own for up to 10 years. After that they can re-file for another 10 years.

The bank can also forgive the debt that you owe. You are thinking this would be great – right? Well there is a catch- if they do this they will send you a 1099 for the difference for unearned income. I witnessed a seller get a 1099 for unearned income for the remainder of the debt that was owed for over K!

Many of these scenarios would not happen if people would just not overpay for their property to begin with. What about the Realtor? I hear you ask. The realtor's job is to sell houses. That is what they are there for, they sell. They will rely on you and your inspector to look things over. When you go get a loan, the loan officer's job is to sell the loan to you. When they call the appraiser, their job is to see that the appraisal comes in enough to support the purchase price. In some States, the Law requires for appraisers to even see the contract. So, the appraiser knows up front what the house should appraise at and they will search for the comparable home sales that will support your purchase price. This does not mean that your house is worth what they say. I have seen 2 appraisals on the same house come back with a difference of over K!

So how can you know?
Here are the steps that I would take 1.Drive the neighborhood that you are looking in.
2.Write down all the names, addresses, and phone numbers of all the properties that are for sale.
3.Find out the following:
·The age of the home
·The condition
·The price that they are asking
·How long it has been listed on the market
·Feature of the home 4.Go to the courthouse and look at the tax assessor's value. This is usually a little low but will give you a ballpark figure. Look at the other properties tax value and compare them all with the amount of land, square footage, buildings, etc.
5.Compare the homes to the one you are looking at.
6.Go in and look at everyone of the homes that are listed 7.Make note of everything that the other homes have that yours don't.
8.Look at how many days the home has been listed.
This part can be tricky. On all the data sheets of the homes that realtors list there is a section in the top for DOM (days on market) that tells you how long it has been listed. Now, if the seller only signed a 90-day contract with the realtor to sell the home, after the 90 days this number is reset. Point blank ask the realtor to find out how many TOTAL days has this house been listed. If you see that the home has been listed for over 120 days, there may be a chance that they are asking a little too much for the property. So keep this in mind when making an offer.
9.When making your offer, you want to figure in, if you were forced to sell in 6 months, what would you be able to get out of the home? When you calculate this figure consider the following expenses a.4- 6 months of mortgage payments b.4-6 months Utility c.4-6 months of insurance d.6 % commission to a realtor e.Closing Fees f.Advertising Cost if you do not list with a Realtor g.5% - 10% discount. Rarely do people pay full asking price, so count on taking at least a 5% discount.

10.You can also hire another realtor to do a BPO. This stands for Brokers Price Opinion, very similar to an appraisal without the expense. You typically can get a realtor to do a BPO for - . When you do this, get a realtor from a totally different organization. Usually Realty companies have 1-2 people allocated to do these BPO's.
11.Now make your offer according to your research that would support you and your family. I once heard that when you make an offer if you are not embarrassed by the offer, you may be offering too much. I don't know if this is true, however it is something for you to consider and think about when you are constructing offers.

The reason that I wrote this is because I felt obligated, compelled, and duty-bound to offer the advice that I have learned from years of buying and selling homes. I have seen good markets and bad markets; these are the same methods I use to make sure that I am not overpaying. After I met with the lady that over-paid for her property that I mentioned earlier, I felt responsible to educate the market on how anyone could easily get into this situation and how you can avoid it with a little bit of research.

About the Author

Now you can stop your home foreclosure.

Free Report Tells you "How to Win The War Against Your Lender and stop Foreclosure!" at http://www.48hourclose.com

John Davis owns 48hourclose.com: a website devoted to helping families that are facing foreclosure.