Selling Owner Financed Homes Better As A Business Or Investment Quickly Selling Real Estate by Owner When Fast Cash Is Necessary

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Quickly Selling Real Estate by Owner When Fast Cash Is Necessary

The good ole days were refreshing. You can sign up your yard and get quick responses from interested potential buyers, or hire a listing agent and not worry about their commissions eating up your cash. Times have changed.

Real estate has become competitive. In some areas, it’s a seller’s market. In others, the buyer takes the reins. After all, there are thousands more people in real estate now than ever before. With investment seminars and flipping shows becoming more mainstream, the real estate pool is getting bigger on a daily basis.

But what if you are in a hurry to sell? Does that mean you are motivated? Let’s take a look at what constitutes a motivated seller, and whether or not some of these selling techniques will work for your situation…

Motivation:

  • You are facing criminal charges

Times can be tough. You may have been let go from that job and may not be able to replace the income in time. The bank has sent you a letter informing you Lis pendens (Initiation of foreclosure, also known as preforeclosure) You’re out of options, and you don’t want foreclosure to destroy your credit.

  • You are behind on taxes

As before, this is an emergency situation that can destroy your credit. Taxes will be collected anyway, so there’s no need to add bad credit to the mix. Back-taxes will not only eat away at your equity, but will also attach to your future wages.

  • You have bad tenants

You are constantly receiving complaints about tenants at one of your properties. Police are becoming a common sight in front of the property. Perhaps the tenants are turning your intended investment into a drug house. You don’t want to compromise the situation and instead walk away with cash out of the investment.

  • You are getting a divorce

face it Most divorce proceedings are not fair. Who keeps the house? Not one of you? So you have no other choice but to sell quickly so you can avoid exes like the plague, and get some cash for a fresh start.

  • You are retiring

Whether you’re a homeowner retiring from business, or a couple with a home you’ve owned for years, you’ll want some cash for your equity so you can head to warmer weather and bingo.

  • You inherited real estate

You recently acquired a house or multi-unit property, but will instead have cash. You want a quick sale, and don’t want to be bothered with maintenance.

  • You are an out-of-state owner

You thought you could manage an investment property in California while relaxing at your home in Maine. Unfortunately, good help is hard to find and property managers all tend to be drunk. The grass is tall and you’re getting the letter. It’s more headache than it’s worth.

  • You just want some extra cash

You don’t need the property in question and just want to pad your bank account.

These are all valid reasons that make you a motivated seller. In this case I have only one question for you… are you greedy?

The number one killer of real estate sales is an owner who is too proud to admit that the market does not support their foreign property valuation. Fair market value may be higher, but no one is cutting it. How is that quick sale going for you? The first step to selling your home fast is admitting that you need to be open-minded. If you can be open-minded about the sale price, or terms, then selling quickly will be a breeze.

Where are my target buyers?

You have many options. Some will take longer than others. Probably the number one way to sell quickly is to find a wholesaler. A wholesaler is a real estate investor who looks for discounted properties, writes an offer, then offers a contract to one of his many cash buyers. Often, a wholesaler’s contact list has hundreds or thousands of investors who are ready to buy immediately. Their investment partners are qualified by wholesalers with proof of funding, and will show many deals to wholesalers they have closed in the past.

There are wholesalers who buy properties in multiple states, while other wholesalers are limited to one state. Some of them even stick to a particular city or regional area. They are known for their use of phrases such as “We house, any area, any condition”. While many wholesalers stick to deeply discounted properties, others work on lower equity deals where Subject2 and seller financing come into play. These are some of the techniques you need to be an open-minded salesperson who is truly “motivated.”

Another option for quick sales is Craigslist and other classifieds websites. If you are going the classified route, you should be prepared for ‘tire kicker’ reactions. There may be many new investors, and people who are just looking will take a long time to screen out before finding a true buyer. When listing a classified ad for your home, make sure you include as much detail as possible in the ad. Leaving out bedrooms, bathrooms, parking lots, and other amenities means that you have to spend time discussing these things while taking the rush of calls you receive.

If classifieds isn’t your thing, you may want to find buyers through a more direct route. Go to where they live. There are forums like Equitypaper, and BiggerPockets that have premium membership options for real estate listings and other networking tools. These are forums where investors gather to discuss real estate topics on a daily basis. If you list your home in these professional member areas, or marketplaces, you can get very quick responses from interested buyers.

Property valuation for investors

When listing your property, there are a few things that potential buyers will want to know in addition to the standard property details. ARV (after repair value) is one of them. To find your ARV, visit Zillow, Trulia, and Redfin. On each of those websites, search for your property and write down the estimated value for each of them. Add all 3 values, then divide the sum by 3. The result will be your ARV.

After you have your ARV, you’ll want to determine what the new buyer will have to put into the property in repairs. If your home is in good condition, you should only account for simple things like paint, appliances, and other things related to the buyer’s taste. You’ll multiply your square footage by $10 to get the total credit the buyer wants. If the property needs some updates such as flooring, new toilets, etc., then you will multiply the SF by $15. Broken windows, doors, etc. will be $20. If the home is a disaster and full rehabilitation, the multiplier is $30. Now subtract that number from the ARV.

Whether the buyer is a wholesaler or a flipper, they need to make something out of the deal. It can range from $2,000 to $50,000 or more depending on the location, value, and other factors for your property. Most good wholesalers will stick to the $10,000 price point or close to it. So take your new ARV and subtract the buyer’s profit for how much money you expect to be offered for the property.

Creative financing for quick sale

Assuming that the final number from the calculations listed above was not even close to what you would pay on the property, then you need to learn to be creative. Some wholesalers and flippers will still take properties with little or no equity.

Topic 2 Financing

Title 2 is a technique that allows new buyers to take over your mortgage payments and take control of the property. Sub2 investors are looking for leverage so that they don’t tie up their credit, but can acquire a rental property at the same time.

Dealing with a sub2 contract can be a concern for the seller. For example, what if the buyer doesn’t make mortgage payments and it ends up being a bad credit item for the seller? Well, there are protections that exist in Title 2 financing agreements for sellers.

  • A single late payment can be a deal breaker. It can be made that in this event, the buyer is in default and they lose the property back to the seller. This singular possibility is the #1 reason why this is a rare scenario. Most Topic 2 investors are experienced. They have been doing this for years, and have made millions in rent with such deals.

  • Limitation clauses such as requiring the buyer to refinance the property in his own name within a certain time period further reduce the risk. Let’s say that in 2 years, the buyer needs to refinance. By then, they will have accumulated enough equity from paying off your loan to make this a possibility through traditional lending methods. Even worse, they can secure hard money after that time to leverage more time to flip the property or get other financing.

Contract for work, or lease option

If you’re not in an absolute rush for a bunch of cash, you can consider a work-to-work contract, or a sell-to-lease option. This will ensure that the buyer is responsible for repairs, insurance, taxes, and everything else, while providing you with a monthly income stream with little risk. With any technique, you’re getting sales faster. The best part is that you keep the work on the home until the buyer’s obligations are fulfilled. If they default, you can remove them and start over with a new buyer. The best part is that you are earning interest with your equity at the rate you agreed to sell.

FSBO (For Sale By Owner) doesn’t have to be hard. It can be quite fascinating, and surprisingly fast when you learn to be open-minded and creative.

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