Between 2007 and 2010, Fairplay achieved a phenomenal 857 percent revenue growth, which placed it in the upper echelons of real estate firms, including those that specialize in commercial and residential real estate on a nationwide basis.

Fairplay’s financing services is the key factor contributing to this recognition. Inc. Magazine credited Fairplay as one of the “engines of the economy.” But while other companies on the list contributed to job growth, Fairplay has also contributed to the financial success of its clients, many of them regular people looking for a good investment.

Fairplay is able to offer quick and simple bridge financing to clients interested in
purchasing distressed properties at auction, which requires cash on the spot. Bridge loans are an important part of the process, because they can help the investor realize greater potential rewards with the same seed capital, using the power of leverage.

“Customers often come to us with cash from an inheritance or settlement, looking to buy a property at auction,” says Bill Widmer. “By using that cash as down payments for bridge loans, rather than sinking all of it into one investment, they can purchase multiple properties, diversifying their risk and increasing potential cash-on-cash return.”

Bridge loans make it possible for investors to purchase multiple properties, so if one ends up being sold at a loss, the profit from the others could make up the difference. The potential risk in investing in five properties, for example, is less than investing in just one. In the meantime, the borrower can write off the interest and depreciation costs.

Fairplay also offers traditional mortgages, which come with a much lower interest rate. After the client owns the property outright, Fairplay can immediately begin the refinance process so the bridge loan can be paid off quickly.

In addition to lending services, Fairplay also offers its members comprehensive online and personal resources to help bring even novice investors up to speed quickly, so they can invest with knowledge and confidence. They include an exclusive database with both distressed and traditional property listings, which tracks the distressed properties as they move through the foreclosure process, as well as weekly investor meetings and one-on-one coaching. Fairplay representatives will even accompany clients to the foreclosure auction to make sure everything goes smoothly.

“We started Fairplay with the goal of opening up the real estate market to everybody , ” stated Bill Widmer. “We sought to simplify the confusing world of distressed properties by giving people everything they need — from online tools to personal coaching to financing  — to make the same type of smart investments as those of us with years in the business.” If Inc.’s ranking is any indication, Fairplay’s goal has been achieved.

All services are free to members. Fairplay only collects a fee upon purchase of a
property. Fairplay represents clients in Washington and Oregon, with plans to move into selected counties in California, Nevada and Arizona. We invite you to sign up for free on our website (fairplay.com) and attend one of our new investor workshops for a solid introduction to the world of real estate investing.

After the workshop, stick around for our Investor Café, which meets weekly over drinks and appetizers to discuss investment strategies, financing options and more. We also present
“featured properties” chosen by our analysts for their excellent investment potential. It’s a good way to check out one of America’s most promising young companies and come away
with some promising investment opportunities.

About the author:
Ian Morell is a seasoned financial analyst and mortgage expert. Previous to joining Fairplay Financial in 2008, Ian served as both a loan officer and branch manager in the mortgage industry for nine years. As our fund manager, Ian brings his decades of experience to ensure our clients’ integrity and Fairplay’s continued financial strength in the open markets.

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at info@reapsweb.com and be our guest for free!”

Some published authors on real estate investing recommend lease option arrangements as a good way for investors to market their residential properties to buyers who are temporarily unable to qualify for a conventional loan, but whom otherwise are satisfactory purchasers.  And such arrangements can be fine exit strategies for investors.  Under such an approach the investor collects at least enough in the option payment from the buyer to cover the real estate excise tax (yes, an option to purchase a property is a “sale” for purposes of the REET) and sets up the lease payments to at least cover the investor’s mortgage payments during the period of the lease.  The investor expects that when the buyer has repaired his or her credit by making lease payments during the option period, the investor will be cashed out by a conventional loan after the option is exercised.

Since the investor in this situation is both a landlord and a seller, the investor will naturally screen the buyers to make as certain as possible that they will be good tenants and have a reasonable chance to qualify for a loan at the end of the option period.  But what happens if, after all the investor’s due diligence, the tenant-buyer unexpectedly defaults on the rent?  Can the investor declare the option terminated, retain the option payment, evict the tenant-buyer and go on to market the property again?  A recent court case says it all depends on how the paperwork is written up.

In this case, the tenant-buyer of a commercial property under a lease with option to buy had a dispute with the landlord-seller over repairs and refused to pay rent until the repairs were made.  The landlord started an eviction case and won a decision from the court evicting the tenant-buyer.  The tenant-buyer then sent the seller a written notice of exercise of the option to buy, including the option payment as earnest money.  The seller refused to accept the notice and began a lawsuit to declare the option to buy to have been terminated.  The tenant-buyer argued that the lease and the option were separate documents and that there was no provision in the option that required the tenant-buyer to be in compliance with the lease in order to be eligible to exercise the option to buy.  The landlord-seller claimed that the lease and option were so intertwined that a breach of the lease terminated the option.  The trial court agreed with the landlord but the Court of Appeals reversed, saying that there were inconsistencies between the lease and the option that indicated that the parties intended them to operate separately.  The Court of Appeals said that the tenant-buyer still had the right to buy the property at the option price, even though it was in default under the lease and had been evicted.

It is common in the residential setting to write leases and options with an eye toward defending against arguments that tenant-buyers sometimes make in eviction cases that the lease and option are part of the same transaction which is in the nature of an equitable mortgage.   Such concerns mean emphasizing the separateness of the documents.  This case shows that there are also risks to which a landlord-seller is exposed when the lease and option are considered separate documents.  Proper wording of the paperwork can help to protect against such risks in both situations.

The foregoing is for instruction only and is not to be considered as legal advice.
About the author…
Doug Owens practices real estate law and general business law from his office in Seattle.   He offers a 10% discount for REAPS members and he can be reached at (206)985-6679 or dnowens1@clear.net.

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at info@reapsweb.com and be our guest for free!”

Review Your Title Report For ‘Schedule A’  Concerns 

Policy Type: Ensure the Owner’s policy on Schedule A is the proper form of policy per the Purchase and Sale.

Agreement: Example of policy types are Owner’s Standard, Homeowner’s or Owner’s Extended.

Ownership: Ensure the vesting name matches your seller. If the seller is deceased, yet the title company does not vest in the estate of the deceased, look for a pending probate action as an exception to title. If there is not a probate, contact your title company to find out their requirements.

Legal Description: Ensure the legal description matches the map provided with the title report or with your Purchase and Sale Agreement.

Review Your Title Report For ‘Schedule B’ Concerns

Easements, agreements and restrictions should be reviewed by the Realtor, seller and buyer. Is there something listed your buyer can’t live with? Does the property meet the needs for your buyer for the intended use?  Ensure monetary exceptions appear to be correct. Are there valid outstanding Deeds of Trusts, judgments or liens?

Are their questionable judgments or liens that have identity concerns? Does the paragraph contain the words “question of identity”? If so, a Statement of Identity (or Identification Affidavit) will be provided and required to be submitted to the title company. Individuals with common names like Baker and Smith will often have questionable judgments attached to their name.

Is there a recorded survey as a note or exception to title? An encroachment concern may be recorded on the survey. A title company may require a survey be done depending on the type of coverage.

Is there an inspection paragraph to be cleared? A title company may require an inspection based on information found in an Exception.

Exceptions are cause for concern.  Exceptions are exclusions of coverage.

Notes are for information only. There is no question on title.

About the author…
Since 1983 Elizabeth Peterson has provided her clients with a level of professionalism and expertise that sets her apart in the title industry. Her years of experience and commitment to client advocacy means Real Estate Agents, Lenders and Investors receive the support necessary to successfully close more transactions for buyers and sellers and refinance loans.  If you are looking for a title and escrow partner you can count on, Elizabeth is here to help you provide your clients with the added measure of service so essential in today’s competitive market.  Elizabeth is a senior account manager at Chicago Title of Washington. She can be reached by phone at 206-618-6786 or send an email to:  Elizabeth.Peterson@ctt.com

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at info@reapsweb.com and be our guest for free!”

Perhaps our greatest achievement this year was making the Inc. 5000 list of America’s Fastest Growing Companies. We ranked #398 overall, and #11 in the real estate category, measured by our growth between 2007 and 2010. Considering how housing prices peaked in 2006 before beginning their steady decline, it’s no surprise that Fairplay  by a phenomenal 857 percent during this time.

Fueling our growth was the increase in distressed property transactions, which we helped hundreds of our customers navigate successfully this year. These transactions are popular because they allow investors to purchase real estate at rock-bottom prices. As both a real estate company and a lending firm, Fairplay can purchase properties on our customers’ behalf while arranging bridge loans on a very tight timeline. In some cases, we have put deals together in 24 hours. Bridge loans are an important part of the process, allowing clients to purchase distressed properties at auction, which requires cash on the spot. We also offer traditional mortgages, which come with a much lower interest rate. This transitional service gives our clients a huge advantage, as we can immediately begin the refinance process into a traditional mortgage.

As Fairplay has grown, we’ve also expanded our vision beyond the Northwest. We’re currently conducting feasibility studies in Los Angeles County in California, Clark County in Nevada and Maricopa County in Arizona — all prime markets for distressed real estate that we plan to service in the future.  To help achieve our goals, we’ve added a new executive team member: Realty Sales Manager Gary Gray. Gary is the former CEO of Mortgage Reduction Group, LLC, and spent years as a consultant to real estate upper management teams developing processes and refining business metrics. At Fairplay, Gary will perform many of these same tasks, helping us achieve our vision as we grow and expand.

This year, we will continue to host our Thursday new investor workshops, which introduce people to the basics of foreclosure investing. Also, our weekly Investor Café meets over drinks and appetizers to discuss investment strategies, home improvement, financing options, and “featured properties ” selected for their investment potential.  In addition to these regular events, we’re holding two special classes. The first, titled “Maximizing Funds from Self-Directed IRAs,” will show you how to easily diversify your retirement accounts beyond the stock market by using funds to invest in real estate, all while avoiding taxes. The second class, “What You Need to Know About Title,” will address your questions about these legal documents that prove ownership of a property and often pose issues for the distressed property investor. I encourage anyone interested in learning more about the amazing potential in distressed real estate to give us a call or attend one of our investor meetings. All are free, as are our membership services, which include access to our exclusive database, online tools and personal coaching. We only charge a fee when you purchase one of our properties or borrow money.

As we wrap up another exciting year, I wish you and your clients tremendous success in real estate, and in life. Here’s to a happy holiday season and a prosperous new year.

About the author…
Bill Widmer is the CEO and founder of Fairplay Financial, Inc., and its operating entities. He has 19 years of experience in finance, management, real estate sales, investment and development. He is also licensed as a loan originator and real estate agent in Oregon and Washington.

The most important goal of telemarketing is not to buy the note, but to get the note seller to send you the appropriate documents. We have found that if a note seller will go to the trouble of finding the documents on the note, we can close the sale about 2/3 of the time. The problem is, what do you say to potential note sellers when you get them on the phone? The chances for rejection are astronomical, and your tolerance for that rejection will determine your success.

This is a game of numbers. And the more phone calls you make the more success you will have. If you have the telephone numbers of one thousand note holders, a good list of note buyers, and the skill and perseverance to telemarket, you are on your way to huge profits. The structure of a successful telemarketing campaign has four phases:

The Opener

First, develop credibility with the note holder. This must be done within the first minute. We like people who are like ourselves. The first thing in telemarketing is to demonstrate that we are like the party with whom we are speaking. The odds are very good that the person will “like us back,” and we’ll be rewarded with a possible note to purchase.
Evidence shows that people can tell with 90% accuracy whether we are smiling and whether we have a positive or negative attitude toward them, simply by listening to our voices!
There are a variety of ways to make the opening very effective.
You can mail people things. (“We have a special report on how to profit on your note. Would you be interested in a free copy?”

You have sent them something already. (“We sent you a special report on how to profit from your note. Do you have any questions?”)
The Market Study Approach. (“We are conducting a market study on note holders. Do you mind if I ask you a few questions?”)
The Urgency Approach. (“We are buying notes this week only for a special price. Is there any reason you would not be interested?”)
The New Idea Approach. (“We have new and interesting way to buy notes that can give you extra cash, AND you can still keep the note. Is there any reason you wouldn’t be interested?”)
An effective opener depends on your credibility, your manner and your approach.

The Description

The second step is to describe what you can do for the note holder. I have found that it pays to mention only two to four benefits. Note holders have short attention spans and tend to be impatient. They will allow you to move to the close based on the importance of a few benefits.
This is where your active listening skills combine with your ability to communicate the advantages of selling their note to you. A good description is concise and directly meets the needs of the note seller based on your evaluation of why he needs the cash. If you can determine the note seller’s needs, you can craft an offer that will meet them.

“Mr. Note Seller, if we could give you $48,000 now, and you would receive the next eighty-four payments as well, is there any reason you wouldn’t be interested in letting us evaluate your note? We can fund the note quickly, give you best price and service the note for you. Is there any reason you wouldn’t be interested in knowing more?”

The Close

This is the most important part of the telemarketing session: getting the note seller to commit to bringing you the documents. This is not the time to have him sign a contract or commit to any money transaction. It is

sufficient to have him agree to locate the original note, closing statement and mortgage or trust deed and to meet with you, mail, or fax them to you.

Three types of closes are very effective over the phone, according to Dr. Gary Goodman in his book You Can Sell Anything By Telephone!

The “Assumptive” Close

ou assume agreement; you put your self in control of the conversation, so it is relatively difficult for the note holder to say “no.” You might say, “What we will do, Mr. Note Holder is set up a meeting, so we can evaluate the note you wish to sell. We can give you your money in three weeks.”

Notice you didn’t ask if he would sell the note. You assumed it. Unless he says, “I do not want to sell,” you can continue to get him to commit to finding the documents and send them to you or meet with you.

The “Check Back” Close

If you find the “assumptive” close too aggressive, you can soften it by checking back with the note seller to assure him that you are proceeding based upon genuine desire. This is not difficult to do. You can say, “So, I’ll drop by your house tomorrow at 4:00pm to pick up the documents. Is that okay?” The word “okay” is a very persuasive word because the note seller is conditioned to respond positively when they hear it, and they can decline if they want to.
The “Choice” Close

This is the most common type of close, and it is very effective. It offers the prospect the choice between one thing or another. When being asked to select an option, it is unlikely that the note seller will walk away from the conversation with nothing.
The “choice” close is useful in setting appointments by telephone. You can say, “My schedule shows that a good time for me to meet with you would be on Tuesday morning between 9:00 and 10:00, or will Wednesday be better for you?”
It becomes difficult for the prospect to decline an appointment at some time because we have phrased the request in the manner of a choice. If we had asked if we could come by at all, this would make it easy for the prospect to decline altogether.
The Confirmation
When the note seller agrees to meet with you, confirm his

wisdom and understanding of what you expect. You should:
1. Repeat that you will meet him on Wednesday at 7:00pm at his house to look over the loan documents
2. Congratulate him on a wise decision
3. Clarify what you will do and what you expect of him
4. Allow him to ask questions
5. See if you can gauge how likely he is to find the papers and follow through on the meeting
End the conversation on a positive note

“Fine, Mr. Note Seller, we’ll meet at 7:00pm on Wednesday at your house. You will have a copy of the note, deed of trust, and closing statement for me to review. Once again, we work with national companies. We can get you your money in less than three weeks and you can still retain the payments for the next two years. Are they any questions you would like to ask me? Great, I want to thank you for your time and your patience. I will let you get back to Monday Night Football, and I will see you on Wednesday.”

Telemarketing

If you have a scripted idea of what you want from each phone call, you will have a much better chance of getting the results you want. If you have some knowledge of how to make people like you and can develop rapport with the seller, you will be closer to doing a deal.
Remember, the point of the telemarketing program is not to buy the note, but to get the documents. If a note seller will go to the trouble of finding the documents on the note, you can close the sale about 66% of the time.

About the author…
Jon Richards was the founder of NoteWorthy Newsletter, the major newsletter for buyers and brokers of cash flows on the secondary market. It has been published monthly since October 1989 and is the largest paid subscription newsletter in the industry. Jon was the publisher of the NoteWorthy Newsletter until his death in 2003. Jon was a licensed real estate broker, long time real estate investor and an expert in finding, appraising, buying and brokering discounted notes and mortgages. He was the professor and tenured instructor of Real Estate at the College of Alameda in California.

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at info@reapsweb.com and be our guest for free!”

As part of our transition to our new home page, we have a new BLOG.  You’ll be able to comment and rate (!) posts by our REAPS volunteer team of bloggers.

We’re going to have pieces of interest from other sites, commentary and opinion, member announcements and other interesting information.  It’s all new, so as we settle in, please feel free to give us feedback!

If you’re interested in becoming a REAPS Blogger, then we’d like to hear from you.  Contact me at dugald@reapsweb.com and we can chat.

I look forward to hearing from you and wish you a successful and rewarding 2010!

Dugald Allen
Webmaster