A Simple Example Of "Earned Income"

 

My buddy Joe wants to buy a house but he doesn't have any money saved up and his $8.00 per hour job won't let that happen. 

So, Joe gets a second job at the local high end car dealership and on his fifth day at work a guy walks in and buys a top of the line Bentley and Ferrari from Joe. Right then Joe earns $30,000. 

That night Joe called his realtor and made an offer on a house.

Joe's commission check is "Earned Income" and would be accepted by any lender in the market.  Joe's only obligation for that money is that he must pay taxes on that additional income.

Stop Foreclosure Get Paid!

Start Here!

Congratulations and Welcome. This page will start you along the path of utilizing the unique Buyers Account, LLC Earned Income Purchasing System.

In this program 4 main steps must be completed.
  1. One person (Home Buyer) becomes an independent contractor of Universal Direct Sales, LLC.
  2. One person (Home Seller) purchases a membership in the Owners Alliance program.
  3. The Customer arranges for payment for the membership to UDS.
  4. The independent contractor must pay their tax burden on any commissions earned.
There are a few more things to do of course but these are the main 4 processes that are going to occur.

You will start the process at the bottom of this page in the "Submitting Your Application" section.


Important Information

By reading this you are one step closer to becoming a Universal Direct Sales, LLC Independent Dealer. As an Independent Dealer you will be able to earn a commission by selling Owner Alliance memberships.

Below are the steps that you should take to understand your role as a Residential Dealer.

1. Understand the benefits that an Owners Alliance Membership provides.
    Key Benefits of an Owners Alliance Membership are
  • The Owners Alliance is one of the largest Property Owners Associations.
  • The Owners Alliance membership conveys with the property enrolled. If the property owner sells the property within the membership period they will have the opportunity to enroll the other property in the Owners Alliance membership, at no costs, for the duration of the membership term.
  • Savings on over 350 name brand stores and companies provide thousands of ways to save with free services, discount services, discounts on products and rebates on purchases.
  • Property Ownership Rights Advocacy – Owners Alliance is an advocate for property ownership rights. In time of need our members will have the piece of mind knowing that Owners Alliance will support and guide them through the long and sometimes confusing fight, if their property ownership rights are threatened.
For a full list of Owners Alliance benefits, please visit www.ownersalliance.org.


2. Understand the Membership Fee and Commission Structure.

Membership 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 18 Year 20 Year
Fee 3% PV 4% PV 5% PV 6% PV 11% PV 17% PV 20% PV 22% PV
Commission 2% PV 3% PV 4% PV 5% PV 10% PV 15% PV 18% PV 20% PV
PV=Property Value      

3. Understand the Buyers Account Application Forms.

  • Independent Dealer Agreement: This document will set forth the terms of your employment with Universal Direct Sales, LLC. As an Independent Dealer you will work for Universal Direct Sales, LLC as a salesperson who has the opportunity to earn a commission with every sale of an Owners Alliance Membership. You will be an independent contractor and will incur all expenses in marketing Owners Alliance memberships. You will be issued an IRS 1099 Misc. Commission. You will be responsible to pay any and all Federal, State and Local income taxes on your commission. Please consult a tax advisor for how this will effect your tax position.
  • Substitute W-9: Before any commission is paid out we need you to authorize our reporting your income to the IRS.
  • Account Setup Form: As a convenience to our Independent Dealers, we provide a service for their commission pay out. Due to Universal Direct Sales, LLC position as a national marketing company, our paychecks is issued from a Florida or Maryland bank account. Sometimes this creates a delay in our Independent Dealers receiving their commission checks and cashing an out of state check. By signing this form and paying a $99.00 Account Setup Fee your commissions will be placed into an account that we establish on your behalf. From this account we will be able to instruct the bank to wire the funds from that account to anywhere in the world for your benefit. We will need a clear copy of a photo ID to setup your account.
  • Property Enrollment Form: This form is the order form for the sale of the Owners Alliance membership. The property owner must sign.
  • Assignment of Funds: Universal Direct Sales, LLC allows the property owner to defer the payment of the Owners Alliance membership for up to forty five days by signing the Assignment of Funds. Since the membership conveys with a transfer of property ownership, it is mandatory for the Owners Alliance membership fee to be paid at the closing of any property transfer. Property owner must sign.
 

The Buyers Account Transaction

Sale of the Membership

  1. Steve is a single man making $70,000 per year and he wants to achieve his dream of owning his own home.
  2. Steve signs up as an Independent Dealer for Universal Direct Sales, LLC. (UDS) and works very hard making his first sale.
  3. Steve finds a home owner (Andrew) who is interested in buying a membership to the Owners Alliance (OA) in order to "Alternatively Enhance His Home" to make it stand out and get sold.
  4. Steve sells a membership to the OA to Andrew for $27,500.00.
  5. Andrew agrees to pay $27,500 for the membership in the OA at closing from the proceeds of the sale of his house.
  6. Steve notifies UDS of the sale and forwards in all appropriate paperwork.
  7. UDS pays Steve a commission of $25,000 for the sale of the membership in OA.
  8. Steve has increased his yearly taxable income by $25,000 and now has the money for his down payment.
    His dream of home ownership is at his fingertips.

Sale of the home

 

Sale of the home appraised at $250,000


  1. The market has slumped and Andrew is willing to sell the home for less than the fair market value (FMV) and views the OA membership as a good additional selling point for his house.
  2. Andrew knows that selling his home in this market will be hard.  He believes that selling his home with a membership in the OA will separate his home from the myriad of home sellers negotiating over an arbitrary price when the FMV of a home is established by a valid appraisal and appraisal reviews.
  3. Andrew's home and neighborhood values will remain level if he sells his home with the Buyers Account system and be artificially lowered when sales below FMV occur.
  4. The Independent Dealer job and commissions can not be used to qualify a borrower.
  5. Steve agrees to buy the house from Andrew at the listed sales price but only if it comes with the OA Membership valued at $27,500.
  6. Instead of reducing the sales price to $225,000 Steve's realtor writes up a sales contract for the full listed sales price $250,000 with a 10% down payment provided by Steve and a OA membership fee paid by Andrew at closing from seller proceeds.
  7. The membership into OA conveys with the house for 10 years bringing additional value to the home and separating it from other similar houses for sale now and in the future.
  8. A Verification of Deposit is provided and wiring procedures are finalized.
  9. UDS deposits Steve's commission of $25,000 into a company sponsored account ready to wire to the title company at Steve's direction.
  10. 1 to 2 days before closing Steve's directs UDS to send his commission of $25,000 to the title company.
  11. At closing Andrew receives $225,000 from Steve's lending institution and $25,000 from Steve.
  12. At closing the title company sends $28,000 ($27,500 + $500) from Andrew's proceeds to UDS for the purchase of the membership to the OA.
  13. Closing finalizes and Steve moves into his new home and starts taking advantage of the services and products available to members of the OA.
    Steve firmly holds his dream in his hands.


At the end of the year


  1. At the end of the year UDS sends Steve a US Tax Form 1099 showing his $25,000 commission for the sale of the OA membership.
  2. Steve includes this 1099 in his standard income tax package and pays taxes according to his tax bracket.
  3. Steve's yearly income is now $95,000 which put's him into the 28% tax bracket.
  4. Since Steve was an Independent Dealer for UDS the "Tax Liability" for his commission on the sale of the membership to OA is $7,000.00.
  5. By using the Earned Income Program Steve has "Earned" the income required for his down payment and was able to purchase his dream house.
  6. Within 90 days of buying his new home Steve receives his Welcome Package from OA and begins his multi-year membership to some of the industries best services, products and discounts for home owners.
  7. By using Buyers Account, LLC. Steve's cash requirement for buying his dream home is not $25,000 at closing but instead $7,000 at years end.
  8. 30 days after the registration of the membership Steve is contacted by OA Tax Helper, LLC and his $7,000 tax burden can be converted to a 2 year note with payments of $323.01 per month.
    Steve is living his dream and we are proud that we helped.
 

Compare The Buyers Account Earned Income System Against The Conventional Loan Model When You Have A Motivated Seller

 

 
Conventional Mortgage
Using Buyers Account
Appraised Value:
$250,000
Appraised Value:
$250,000
Sellers "Hard Number":
$225,000
Sellers "Hard Number":
$225,000
Sales Price:
$225,000
Sales Price:
$250,000
LTV:
90%
LTV:
90%
Loan Amount:
$202,500
Loan Amount:
$225,000
Down Payment:
(From Buyers Pocket)
$22,500
Down Payment:
(From Buyers Account, LLC)
$25,000
Closing Costs:
$5,000
Closing Costs:
$6,000
Seller Concessions:
$5,000
Seller Concessions:
$6,000
Actual Cash From Buyer:
$22,500
Actual Cash From Buyer:
$0
Net Cash to Seller:
$225,000
Net Cash to Seller:
$225,000
Net Retained Equity:
$0
Net Retained Equity:
$25,000
Effect On Local Property Values.
Negative
Effect On Local Property Values.
Positive
  • As you can see the Seller get's the same amount in both deals but by using the Buyers Account system the seller get's his house sold.
  • The Buyer get's his house with little to no money out of pocket (providing him with needed reserves) and owns a home with $25,000 in equity.
  • The home benefits because it retains its Fair Market Equity of $25,000 that disappears in the other example.
  • The bank benefits because it has a 90% LTV loan on a home worth $250,000 and a new, motivated home owner paying a mortgage they can afford, which is exactly what the bank was told it was getting.
  • Neighborhood values benefit because this house sold for its fair market value (FMV) of $250,000 (as reflected by the appraisal) instead of the artificially low price of $225,000.

    Buyers Account, LLC will actually smooth out the market fluctuations caused by temporary pricing down turns or individuals who dump their properties at below market value. This business model ALWAYS assumes that a valid appraisal is the true "fair market value" for the home. In cases where multiple appraisals are obtained the lowest amount or a blended amount can be used.