Replies (45)
- Mark75NYC
- Contributions:1316
Since you're an agent, care to share any of your ideas?
As a potential buyer, I'll tell you that nothing other than sales price would influence me to purchase a home (other than necessary repairs -- not upgrades -- made to the house, which would at most only have the impact of offsetting the price by the same amount ... six of one, half dozen of the other).
Bottom line: with everyone aware that home prices became wildly overvalued in past years, lowering the price to realistic levels is the only thing that will get a buy interested.
Price aggressively and sell quickly if you must; don't slowly bleed to death with little price cuts riding the market down for the next few years.
As a potential buyer, I'll tell you that nothing other than sales price would influence me to purchase a home (other than necessary repairs -- not upgrades -- made to the house, which would at most only have the impact of offsetting the price by the same amount ... six of one, half dozen of the other).
Bottom line: with everyone aware that home prices became wildly overvalued in past years, lowering the price to realistic levels is the only thing that will get a buy interested.
Price aggressively and sell quickly if you must; don't slowly bleed to death with little price cuts riding the market down for the next few years.
- sunnyview
- Contributions:26843
I want the best house for the best price period. I target my neighborhood, my must have list and make my decision based on that. When I look at houses I always look at the changeable vs the unchangeable. Local school=not changeable, ugly wallpaper=changeable, bad neighbor=not changeable, dated fixtures=changeable. In this market, price is driving the decision bus. Location is important, but within that given location price is what is selling. Houses near me that are not selling at a low price are often undesirable for other reasons like a bad floor plan would require moving bearing walls to make it useable or an ugly 1970's mod ranch house with a jutting roofline in a historical neighborhood of mainly 1940's homes. There price is not the reason that they're not selling, it's other issue with those specific houses that would make them hard to sell in any market.
- Nathan Wolf, "natewolf"
- Contributions:1832
You mentioned that Sellers often Overvalue their homes when they put them on the market.Â
A qualified buyer is usually one with a significant down payment and good credit. But, especially in today's market, those are not the only buyers out there. Buyers often need a first and a second mortgage in order to purchase a home will lower up-front down payment money.
A qualified buyer is usually one with a significant down payment and good credit. But, especially in today's market, those are not the only buyers out there. Buyers often need a first and a second mortgage in order to purchase a home will lower up-front down payment money.
- Nathan Wolf, "natewolf"
- Contributions:1832
For many years these second mortgages have been held by a bank. Usually at a high interest rate, with monthly interest only payments, with a balloon payment at the end of the agreed upon term.
But many sellers are in a position to actually hold a second mortgage themselves. They will likely earn 10-percent to 15-percent annually on their money. And will have the balance paid off within 5-years.
So for instance, using my own home as a reference. My home would sell for approximately $525,000 if I put it on the market. Instead of dropping my price by 10-percent (or $52,500), in the current market, I could "seller finance" the second mortgage of a potential buyer. The buyer is less likely to negotiate harder with my sales price since they will need me to look favorably upon the seller financing.
The buyer will then get qualified for their first mortgage. One thing to note is that the first mortgage bank will want the seller financed second mortgage to have real terms, such as for a minimum of 2 to 5 years, with real interest payments due, etc.
Once the transaction is completed, I can continue to carry the Second Mortgage for the full 5-years, making a 10-percent to 14-percent return on my investment annually... putting off the capital gains on that portion of the money for the term of the loan. OR another choice I would have is to Sell the Second Mortgage to another investor who will PAY ME UP FRONT for the lien.Â
At a 10-percent interest rate on $50k per year, over 5 years I'll earn over $25,000 in interest payments PLUS have the $50k paid to me in the balloon payment.
If I sell off the second mortgage, I may only get 50-percent to 70-percent of the value of my $50k Lien, but that would be at least $25,000 by selling it off. This would be a net gain over dropping my sales price.
- Pasadenan
- Contributions:26010
In a seller's market, there are all kinds of stratigies; even the sign stwerlers on the street corners.
In a falling market, like we have presently, the strategies have to competely change. You have to make the potential buyer believe the opportunity will dissappear if they don't jump for it. That may mean the best strategy is to price 30 to 40% below market to try to get multiple offers to bid the price back up to where it should be.
Trying to convince someone that an ordinary house is worth 20% more than a similar house down the street is a complete waste of time. Curb appeal can only go so far.
One creative person placed an E-bay ad for the house with starting bid of $1; but got no offers as the "shipping and delivery" was set at $550k, and there was a clause that stated the wife and kids come with the property.
I know, you can make it into a secret military base with satalite uplink and a missle silo in the basement, and threaten to detonate it if the government doesn't give you your price...
In a falling market, like we have presently, the strategies have to competely change. You have to make the potential buyer believe the opportunity will dissappear if they don't jump for it. That may mean the best strategy is to price 30 to 40% below market to try to get multiple offers to bid the price back up to where it should be.
Trying to convince someone that an ordinary house is worth 20% more than a similar house down the street is a complete waste of time. Curb appeal can only go so far.
One creative person placed an E-bay ad for the house with starting bid of $1; but got no offers as the "shipping and delivery" was set at $550k, and there was a clause that stated the wife and kids come with the property.
I know, you can make it into a secret military base with satalite uplink and a missle silo in the basement, and threaten to detonate it if the government doesn't give you your price...
- Nathan Wolf, "natewolf"
- Contributions:1832
Sunnyview has a great point.Â
If you love the house, then you will probably be willing to pay for the house you love. Over the life of a loan, the amount of upfront cost compared to the carrying costs over time is somewhat insignificant. Why live in a bargain home you're not in love with?
Buying a home has traditionally been a long-term investment. If you don't intend to stay in the home longer than 7-years then it may not be the best investment for you anyway.Â
In my market, you can rent some home or condos for 1/2 the price of a mortgage. But there are many other factors to home ownership other than building equity towards a future sale.Â
If you love the house, then you will probably be willing to pay for the house you love. Over the life of a loan, the amount of upfront cost compared to the carrying costs over time is somewhat insignificant. Why live in a bargain home you're not in love with?
Buying a home has traditionally been a long-term investment. If you don't intend to stay in the home longer than 7-years then it may not be the best investment for you anyway.Â
In my market, you can rent some home or condos for 1/2 the price of a mortgage. But there are many other factors to home ownership other than building equity towards a future sale.Â
- Nathan Wolf, "natewolf"
- Contributions:1832
Not all markets are affected the same today.
So, listening to the National News may give an over-simplification of the markets. If a market has seen double-digit growth over the past 10-years, then that market should expect that in a down market it will see double-digit declines-- why are they surprised?
The Market in North Carolina has seen steady growth over a long period. That's why the market here is in a slower decline. And will rebound faster. The ones affected hardest are those sellers who have speculated on this and other markets-- such as homebuilders and investors. They had more equity to divest and could actually "afford" to drop their prices significantly.
But once those properties are gone, they are no longer affecting the market.
Locally, a home builder could build a $500k home and see a return of at least $100k. So, "dumping" a property at $400k compared to last year's pricing is still a break-even... even though it is a 20-percent decrease over last year.
So don't just take the sound-bites at face value.
So, listening to the National News may give an over-simplification of the markets. If a market has seen double-digit growth over the past 10-years, then that market should expect that in a down market it will see double-digit declines-- why are they surprised?
The Market in North Carolina has seen steady growth over a long period. That's why the market here is in a slower decline. And will rebound faster. The ones affected hardest are those sellers who have speculated on this and other markets-- such as homebuilders and investors. They had more equity to divest and could actually "afford" to drop their prices significantly.
But once those properties are gone, they are no longer affecting the market.
Locally, a home builder could build a $500k home and see a return of at least $100k. So, "dumping" a property at $400k compared to last year's pricing is still a break-even... even though it is a 20-percent decrease over last year.
So don't just take the sound-bites at face value.
Advising a seller to carry a second in a falling market could possibly qualify as all time bad advice. When the buyer walks, that second will become worthless, and a great number of sellers don't have any equity anyways, so just how do you propose they do this?
- sunnyview
- Contributions:26843
For me it is about value, not love. I love a good value. Value does not mean that I won't be happy there. The house I bought last time was ugly. It didn't sell because of it's yuk factor. I saw what it could be for a reasonable cost and I bought value Now, my house is great. It is cute as abutton and would sell quickly. I chose value over instant love and I am happier because of it.
- Nick Giaccone Broker, "NICKGIACCONE"
- Contributions:107
PRICE SELLS !
Azrob is right. I've seen "Agents" sell their own properties like that in the up market... basically convincing the unrepresented Buyer to overpay for the property "they had to have", well the Buyer ended up not being able to pay the 1st to his Lender let alone the 2nd and 3rd carried by the "Agent/Owner". Guess who has worthless paper.
- Pasadenan
- Contributions:26010
Nathan -
The real question is how many of your sellers are you convincing to carry second mortgages on the property they are selling, and what are you doing for them when the new buyer's have foreclosures due to being over-extended, the recent layoffs in many sectors, the rising health costs, and the fall of bubble house prices causing many to walk away from their underwater loans?
I agree with AZ-Rob, this sounds like poor advice that could end up with you in court; not to mention that if the property is priced $50k more than the similar property down the street, you are leaving the property on the market longer than necessary as the prices in the area continue to plumet.
Now, if the seller carried the first and was situated to foreclose and take the property back??? Still, that would mean it is even harder to sell when you take it back and the values have fallen further, not to mention having to pay all the sales commissions again.
The real question is how many of your sellers are you convincing to carry second mortgages on the property they are selling, and what are you doing for them when the new buyer's have foreclosures due to being over-extended, the recent layoffs in many sectors, the rising health costs, and the fall of bubble house prices causing many to walk away from their underwater loans?
I agree with AZ-Rob, this sounds like poor advice that could end up with you in court; not to mention that if the property is priced $50k more than the similar property down the street, you are leaving the property on the market longer than necessary as the prices in the area continue to plumet.
Now, if the seller carried the first and was situated to foreclose and take the property back??? Still, that would mean it is even harder to sell when you take it back and the values have fallen further, not to mention having to pay all the sales commissions again.
- Pasadenan
- Contributions:26010
And in tight economic times, people choose bills not to pay. If you are carrying the second, what leverage do you have to collect your money? You will not be paid. You will never see more than $100 of that money. Hiring a lawyer won't help either as that will just be more out of pocket expenses with the buyer never paying any more.
- Nathan Wolf, "natewolf"
- Contributions:1832
You have missed my point of selling the second mortgage. You need to actually read my whole post.
1. If a seller is willing to reduce the price by 10-percent, then he will have already "lost" the amount of the Second Mortgage he might carry-- so if there is a default, it's a NET ZERO in terms of GAIN/LOSS as to what he was willing to reduce the house to-- and in the meantime he's sold the house for the 90-percent value he was willing to take.
2. You're right: Not every seller is in a position to hold a Second Mortgage. BUT MANY ARE. I was asked for ideas-- if the idea is not right for you, it does not make it a bad one, it's just not for you.
3. Price does not always sell a house, FINANCING SELLS A HOUSE. Any seller or agent who does not understand this is not selling houses in the current market. You can reduce reduce reduce, but if the financing is not there for the Buyer that wants the house, then the house WILL NOT SELL. AT ANY PRICE.
1. If a seller is willing to reduce the price by 10-percent, then he will have already "lost" the amount of the Second Mortgage he might carry-- so if there is a default, it's a NET ZERO in terms of GAIN/LOSS as to what he was willing to reduce the house to-- and in the meantime he's sold the house for the 90-percent value he was willing to take.
2. You're right: Not every seller is in a position to hold a Second Mortgage. BUT MANY ARE. I was asked for ideas-- if the idea is not right for you, it does not make it a bad one, it's just not for you.
3. Price does not always sell a house, FINANCING SELLS A HOUSE. Any seller or agent who does not understand this is not selling houses in the current market. You can reduce reduce reduce, but if the financing is not there for the Buyer that wants the house, then the house WILL NOT SELL. AT ANY PRICE.
- Nathan Wolf, "natewolf"
- Contributions:1832
Also, this is not a forum to discuss MY IDEAS, this is for YOUR IDEAS. I was asked for one to start off, and all I'm hearing is complaints about my idea. Or "price sells"... what kind of advice is that?
Sure, Price is Important. But if a seller thinks he is going to just put a house on the market at a lower price, then that's not going to do anything to sell his home. ESPECIALLY if he lists F.S.B.O.
One could argue, if price is all that matters, you can save a good 5-percent or more off the sales price simply by eliminating the Realtor. But why is it that FSBO properties sit on the market? Even if they are 5-percent or more below similar Realtor-represented properties?
In my market, over 95-percent of home sold -- even foreclosures and REO properties, are listed and sold through REALTORS. Let me repeat that: 95-Percent. So anyone in my market who thinks he is going to sell his home FSBO and not have his home in the MLS is missing out on having 95-percent of buyers ( and if they're working with a Realtor they are always pre-qualified for their mortgages ).
So what are the 5-percent that are not sold through REALTORS? Some are builder-direct transactions, family-to-family transactions, and corporate-to-corporate transactions such as land deals for developers. There is a truly insignificant chance of selling a property without a REALTOR. Even FSBO have had to resort to allowing "broker protection." Why not list with a flat fee listing agent who can at least help you get into the MLS system?
Sure, Price is Important. But if a seller thinks he is going to just put a house on the market at a lower price, then that's not going to do anything to sell his home. ESPECIALLY if he lists F.S.B.O.
One could argue, if price is all that matters, you can save a good 5-percent or more off the sales price simply by eliminating the Realtor. But why is it that FSBO properties sit on the market? Even if they are 5-percent or more below similar Realtor-represented properties?
In my market, over 95-percent of home sold -- even foreclosures and REO properties, are listed and sold through REALTORS. Let me repeat that: 95-Percent. So anyone in my market who thinks he is going to sell his home FSBO and not have his home in the MLS is missing out on having 95-percent of buyers ( and if they're working with a Realtor they are always pre-qualified for their mortgages ).
So what are the 5-percent that are not sold through REALTORS? Some are builder-direct transactions, family-to-family transactions, and corporate-to-corporate transactions such as land deals for developers. There is a truly insignificant chance of selling a property without a REALTOR. Even FSBO have had to resort to allowing "broker protection." Why not list with a flat fee listing agent who can at least help you get into the MLS system?
- Nathan Wolf, "natewolf"
- Contributions:1832
Obviously if a seller has no equity then they cannot carry a Second. So the advice is in no way affecting that seller.
One has to ask a seller with no equity, why do they have no equity? And why do they want to sell?
The fact is that most homeowners have not lost the value of their homes. Equity is a vague concept based on a future projection of sales. This was a falicy that led to many of the troubles in the market, whereby Banks and Lenders have allowed homeowners to borrow beyond the true value of their properties.
Also, what I find is that many sellers have misconceptions of the values of their homes, even before the market downturn. They are very unrealistic.
Sure, I personally may have been able to sell my property last year for $525k and this year I might sell for less than that-- but I have not actually lost the value of the home. Last year I may have made 4-times what I paid for it, and this year I would still have equity equal to at least 3-times what I paid for it... But I wasn't selling my home last year! So, who's to say I actually would have sold it for the full $525k anyway? This is the falicy of equity... it's based on a future projected sale that may or may not happen.
One has to ask a seller with no equity, why do they have no equity? And why do they want to sell?
The fact is that most homeowners have not lost the value of their homes. Equity is a vague concept based on a future projection of sales. This was a falicy that led to many of the troubles in the market, whereby Banks and Lenders have allowed homeowners to borrow beyond the true value of their properties.
Also, what I find is that many sellers have misconceptions of the values of their homes, even before the market downturn. They are very unrealistic.
Sure, I personally may have been able to sell my property last year for $525k and this year I might sell for less than that-- but I have not actually lost the value of the home. Last year I may have made 4-times what I paid for it, and this year I would still have equity equal to at least 3-times what I paid for it... But I wasn't selling my home last year! So, who's to say I actually would have sold it for the full $525k anyway? This is the falicy of equity... it's based on a future projected sale that may or may not happen.
- Pasadenan
- Contributions:26010
What do you mean no one else gave ideas; I gave 3; you gave one. I like my three better than the one you suggested.
- Pasadenan
- Contributions:26010
And the point is that if they can't get the financing, you don't want to sell to them, ESPECIALLY not financing for them. increasing the price 10% in order to have them pay you money monthly is plain STUPID in this economy. Not only will they not pay it, but you keep the property on the market longer making it worth even less.
And you never answered the question; how many sellers have you actually convinced to do this, and what are you doing when they come back to you stating the buyer isn't paying?
And you never answered the question; how many sellers have you actually convinced to do this, and what are you doing when they come back to you stating the buyer isn't paying?
- SoCal_Engr
- Contributions:6605
Just a thought...
Isn't finding "new and creative ways" to arrange financing for people who would otherwise not qualify, so that they can purchase a house that they otherwise would not be able to afford, pretty much how we arrived at the current state of affairs?
Sometimes, we're just too smart for our own good. In certain situations, "no" is the correct answer. And, learning to exercise patience is not bad either.
Isn't finding "new and creative ways" to arrange financing for people who would otherwise not qualify, so that they can purchase a house that they otherwise would not be able to afford, pretty much how we arrived at the current state of affairs?
Sometimes, we're just too smart for our own good. In certain situations, "no" is the correct answer. And, learning to exercise patience is not bad either.
- Nathan Wolf, "natewolf"
- Contributions:1832
I would disagree. NO, creative financing is not the way we got into this situation.
There are plenty of reasons that people don't qualify for mortgages. Often due to changes in employment-- such as industry changes. Or having some credit issues, which are repairable, but may currently affect a score. This is especially true if a person is self employed. Or 1099-employees.
The reason we are in this mess is that people couldn't actually afford the homes they bought. This is different from the fact that people who ACTUALLY CAN afford a home, are being turned down right now, but could get a loan for a portion of the sales price, and need a second to avoid PMI or other factors.
I currently have a client who has 2-years tax returns as a W-2 Employee making $105k per year. He has no debt, and has a debt-to-income (DTI) ratio within guidelines. BUT, a year ago BofA failed to consolidate his Student Loan as agreed and eventually sent him to collections. He has paid off the loan, and his credit score is 680 middle. Having THREE 90-Day lates on his credit is making him be turned down for a loan. This will drop off his credit eventually, and if he has seller financing he could get into the home he wants. By the way, he even has VERIFIED ASSETS and can put a down payment of $50k!
Assuming a person needs "special financing" cannot afford the home is not actually correct.
There are plenty of reasons that people don't qualify for mortgages. Often due to changes in employment-- such as industry changes. Or having some credit issues, which are repairable, but may currently affect a score. This is especially true if a person is self employed. Or 1099-employees.
The reason we are in this mess is that people couldn't actually afford the homes they bought. This is different from the fact that people who ACTUALLY CAN afford a home, are being turned down right now, but could get a loan for a portion of the sales price, and need a second to avoid PMI or other factors.
I currently have a client who has 2-years tax returns as a W-2 Employee making $105k per year. He has no debt, and has a debt-to-income (DTI) ratio within guidelines. BUT, a year ago BofA failed to consolidate his Student Loan as agreed and eventually sent him to collections. He has paid off the loan, and his credit score is 680 middle. Having THREE 90-Day lates on his credit is making him be turned down for a loan. This will drop off his credit eventually, and if he has seller financing he could get into the home he wants. By the way, he even has VERIFIED ASSETS and can put a down payment of $50k!
Assuming a person needs "special financing" cannot afford the home is not actually correct.
- Nathan Wolf, "natewolf"
- Contributions:1832
PASADENAN, you say you gave three ideas. I only count that you posted two ideas:
1. Sign swirlers.
2. Listing your home on Ebay for $1.
- Nathan Wolf, "natewolf"
- Contributions:1832
Okay here's another idea: AUCTION.
A builder-client who was considering lowering his asking price I convinced to consider holding an auction. We marketed the auction for 45 days. Continuing to market it in the MLS. This allowed brokers to continue to show the property, and also protected them if their buyers showed up to the auction.
We held the auction. And the reserve was not met on auction day, though 15 qualified buyers did show up and bid on the house. After the auction we approached the two highest bidders for final and best offers, and eventually it sold two weeks after the auction to the man who had the highest offer on auction day, and for more than the reserve price.
The auction day showed there was serious interest in the property. The buyers who were actually interested in buying saw in real terms that they were up against other serious buyers. And if they wanted the home, they should "put up or shut up." It also helped the seller see that his price was right on target, since his reserve price was eventually received.
A builder-client who was considering lowering his asking price I convinced to consider holding an auction. We marketed the auction for 45 days. Continuing to market it in the MLS. This allowed brokers to continue to show the property, and also protected them if their buyers showed up to the auction.
We held the auction. And the reserve was not met on auction day, though 15 qualified buyers did show up and bid on the house. After the auction we approached the two highest bidders for final and best offers, and eventually it sold two weeks after the auction to the man who had the highest offer on auction day, and for more than the reserve price.
The auction day showed there was serious interest in the property. The buyers who were actually interested in buying saw in real terms that they were up against other serious buyers. And if they wanted the home, they should "put up or shut up." It also helped the seller see that his price was right on target, since his reserve price was eventually received.
- Tiffany Bond, "TiffanyBond"
- Contributions:3150
Creative financing TOTALLY is how we got here. People didn't qualify under traditional programs, so other programs were invented. Many of these programs had a good purpose, say maybe the self-employed that like to be invisible on paper. Applying these standards to people with ever-declining credit score requirements and no income (as opposed to income that is difficult to document) for large loan amounts is exactly how we got here. Don't get me wrong...I'm all for personal responsibility (you commit fruad and fudge your income on a loan, you should pay the loan). The lax requirements didn't help and do give the lending industry some consequences (hence the huge pull back in lending?)
Nathan, I am not a lawyer - I am however a law student (see a lawyer for actual legal advice). My personal opinion is that your suggestion of a seller finance for a house that wouldn't appraise is a huge legal liability to suggest. (read: you very likely could have legal liability for advising this course of action in a transaction)
If something is icky, non-traditional and goes against common sense, it will probably get you in trouble somewhere down the line.
- Nathan Wolf, "natewolf"
- Contributions:1832
Another idea: Lease Purchase
Before you go off on me for giving another "Seller Financing" option, hear me out. This is only for people who are considering renting their properties until they sell, or until the market rebounds.
Lease Purchase is usually a win to the seller. You tend to get clients who will put down a large down payment (more than a typical tenant who will only put down a one month security deposit). You get income from the rents to offset the mortgage payment. And you get a buyer who wants to purchase your home-- EVENTUALLY.
There are many reasons BUYERS consider a lease purchase. Including, getting a home instead of an apartment, or getting into a school district they are wanting, or they have not yet sold their own residence but need a new home in a new area-- by example due to job transfer to a new city.
From a Buyer's perspective: A current client is moving down from Queens, NY. He owns a home but has not sold it yet. He is considering renting his own home out until it sells. He wants to purchase a home, but cannot carry two mortgages. He is willing to put a down payment of 5-percent of the sales price ($10,000) as a down payment paid directly to the seller. He is willing to make monthly payments equal to the mortgage he will get eventually (positive cash flow for the seller), and he will eventually purchase the home (within 1 year) once his home sells.
Before you go off on me for giving another "Seller Financing" option, hear me out. This is only for people who are considering renting their properties until they sell, or until the market rebounds.
Lease Purchase is usually a win to the seller. You tend to get clients who will put down a large down payment (more than a typical tenant who will only put down a one month security deposit). You get income from the rents to offset the mortgage payment. And you get a buyer who wants to purchase your home-- EVENTUALLY.
There are many reasons BUYERS consider a lease purchase. Including, getting a home instead of an apartment, or getting into a school district they are wanting, or they have not yet sold their own residence but need a new home in a new area-- by example due to job transfer to a new city.
From a Buyer's perspective: A current client is moving down from Queens, NY. He owns a home but has not sold it yet. He is considering renting his own home out until it sells. He wants to purchase a home, but cannot carry two mortgages. He is willing to put a down payment of 5-percent of the sales price ($10,000) as a down payment paid directly to the seller. He is willing to make monthly payments equal to the mortgage he will get eventually (positive cash flow for the seller), and he will eventually purchase the home (within 1 year) once his home sells.
- Nathan Wolf, "natewolf"
- Contributions:1832
Lease Purchase Continued:
So here you have a qualified buyer, a willing seller, and a significant down payment toward a future sale. If nothing works out in the end, the $10,000 is the seller's to keep. The seller has been received more than he is paying in mortgage payments.
ALSO, note that the buyer will be able to actually do a "REFINANCE" instead of having to apply for a mortgage. This means that it is generally easier for him to qualify for his mortgage-- a welcomed benefit for the buyer and the seller since it helps to ensure the transaction can be completed.
The caveat for the seller? If the buyer chooses to back out he must re-market the home for sale. But the seller keeps the $10,000. ALSO, from a seller's perspective, the rental income is able to be used to qualify the seller for a mortgage on a different property. But if the seller must have the equity from his residence to finance his next property, then it may not work for him. But he may be able to negotiate a larger down payment from the Buyer. Requiring $20k (or 10-percent in this case). Since the buyer's down payment is non-refundable, the seller can use this as a down payment on his next property.
So here you have a qualified buyer, a willing seller, and a significant down payment toward a future sale. If nothing works out in the end, the $10,000 is the seller's to keep. The seller has been received more than he is paying in mortgage payments.
ALSO, note that the buyer will be able to actually do a "REFINANCE" instead of having to apply for a mortgage. This means that it is generally easier for him to qualify for his mortgage-- a welcomed benefit for the buyer and the seller since it helps to ensure the transaction can be completed.
The caveat for the seller? If the buyer chooses to back out he must re-market the home for sale. But the seller keeps the $10,000. ALSO, from a seller's perspective, the rental income is able to be used to qualify the seller for a mortgage on a different property. But if the seller must have the equity from his residence to finance his next property, then it may not work for him. But he may be able to negotiate a larger down payment from the Buyer. Requiring $20k (or 10-percent in this case). Since the buyer's down payment is non-refundable, the seller can use this as a down payment on his next property.
- Nathan Wolf, "natewolf"
- Contributions:1832
Part of my post was cut off.
Lease Purchase is not for every seller. So, don't jump on me for offering ideas.Â
Lease Purchase is not for every seller. So, don't jump on me for offering ideas.Â
- Nathan Wolf, "natewolf"
- Contributions:1832
And I don't "convince" any client to seller finance any properties. I present ideas and solutions, but it is ultimately up to the seller to determine their own risk and what's best for them.
As for time on market, in certain price points, the 5-percent or 20-percent reduction will not necessarily reduce the traffic through their property. Buyers and Agents know that the market is such that they can make an offer on a property. So we are seeing buyers shopping for a $300k house also looking at listings significantly higher and lower than that price point. And if they like a home, regardless of the price, they will consider it and consider making an offer. And if that means a lowball offer on a $450k home, they are making them.
And some sellers are considering them.
As for time on market, in certain price points, the 5-percent or 20-percent reduction will not necessarily reduce the traffic through their property. Buyers and Agents know that the market is such that they can make an offer on a property. So we are seeing buyers shopping for a $300k house also looking at listings significantly higher and lower than that price point. And if they like a home, regardless of the price, they will consider it and consider making an offer. And if that means a lowball offer on a $450k home, they are making them.
And some sellers are considering them.
- Nathan Wolf, "natewolf"
- Contributions:1832
Tiffany, I have never suggested to seller finance a property that will not appraise. In fact, the NC Bar Association / NC Realtor Association Offer to Purchase contracts have legal explanations regarding the ability of a Buyer to Obtain a Mortgage, and the necessity for a property to Appraise and/or Financing Conditions whereby the Buyer may receive back his/her earnest money deposits.
As was mentioned earlier there are many reason Seller Financing does make sense. The problem is that most Agents are not familiar with how and why these might be implemented.Â
YOU ARE CORRECT if you are contending that Seller Financing is NOT for everyone. But to suggest that this is why we got into this mess? I beg to differ.
As was mentioned earlier there are many reason Seller Financing does make sense. The problem is that most Agents are not familiar with how and why these might be implemented.Â
YOU ARE CORRECT if you are contending that Seller Financing is NOT for everyone. But to suggest that this is why we got into this mess? I beg to differ.
- Nathan Wolf, "natewolf"
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Beazer Homes, a major national homebuilder who was listed on the NYSE, was fraudulently inflating buyer income, fraudulently approving mortgages through their "in house" mortgage company, and the list goes on regarding their activity... And this is one of many companies that did so... They are now in bankruptcy and facing major cases against them. It's these types of companies and major banks and Wall Street Investors that made lax lending decisions that led to this.
If a Buyer is a quality buyer but simply cannot qualify today... the reasons are many and often are NOT income related... there is no reason that Seller Financing should not be an option for them. If there was something inherently wrong with it, then it would be illegal. And the fact is it IS legal and is a reasonable option for SOME buyers and sellers. NOT ALL.
If a Buyer is a quality buyer but simply cannot qualify today... the reasons are many and often are NOT income related... there is no reason that Seller Financing should not be an option for them. If there was something inherently wrong with it, then it would be illegal. And the fact is it IS legal and is a reasonable option for SOME buyers and sellers. NOT ALL.
- Nathan Wolf, "natewolf"
- Contributions:1832
TIFFANY, my question remains, WHAT'S YOUR ADVICE?
That's the purpose of my post. Not to offer my advice, but to ask you for yours. I only posted advice because someone asked for me to start the discussion.
Case Study:
If you have a seller that must sell because he has been transfered out of state, and he must find a new residence in his new location, what is your recommendation to that client? If they have already reduced their price to the bare minimum, walking away with a net-zero profit after paying the agent and any applicable fees. We will assume he can't take a loss and that his company is not offering him relocation money.
Do you just tell him, too bad, nothing you can do. I can list it for you but that's it? Or do you offer him other options?
That's the purpose of my post. Not to offer my advice, but to ask you for yours. I only posted advice because someone asked for me to start the discussion.
Case Study:
If you have a seller that must sell because he has been transfered out of state, and he must find a new residence in his new location, what is your recommendation to that client? If they have already reduced their price to the bare minimum, walking away with a net-zero profit after paying the agent and any applicable fees. We will assume he can't take a loss and that his company is not offering him relocation money.
Do you just tell him, too bad, nothing you can do. I can list it for you but that's it? Or do you offer him other options?
Lowering the Sales Price Is NOT the Only Strategy
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