I am working on an analysis in the MLS this morning and thought I would share some observations. I am studying a list of 18 homes either for sale or sold recently in Milwood in Austin, TX. A few things I see:
- Agent remarks: "Great house." That's it, nothing more.
- Living room photo (both living room photos): dog & cat on the carpet.
- "Hall bath has FUN, updated wall paper." It is neither.
- Use of less than half the space in the remarks section.
- Assessing a list of 18 homes in Milwood; only 4 have virtual tours.
A very effective method of selling real estate in a buyer's market is to consider offering owner financing, which can offer both the buyer and seller many benefits in the selling and financing of real estate.
Unlike many seller's who may end up giving a deep discount to sell their property outright, owner financing will likely allow the seller to sell their property at a fair price, plus could provide additional income in the form of monthly payments that could either help pay the debt service on their property or go right to the bottom line, potentially adding more dollars to the sales price over time. The buyer's benefit by securing a property that can help them establish or re-establish credit that over a period of time can help them secure a low interest mortgage loan and receive potential tax benefits as well.
Unfortunately, very few property sellers consider offering owner financing simply because of the complexities involved, which include what types of financing to offer, how to qualify potential home buyers, what documentation to ask for, and so on. There are many financial and real estate professionals who offer their services to help sellers get all of the information and documentation necessary to successfully secure owner financing for themselves and their buyers.
There are several types of owner financing currently available, and depending on the seller's current circumstances will determine what type of owner financing they can offer to a potential buyer. The most common types of owner financing available include a Land Contract, Agreement for Deed, Contract for Deed, Lease with Option to Purchase, and a regular promissory note secured by a mortgage.
If a property seller owns their property free and clear, meaning no mortgages are currently secured by the property, the seller can choose any of the financing options listed above. If however, the property seller currently has a mortgage on their property, they are limited to offering all of the financing options listed except for the note and mortgage loan, unless of course the seller can pay off their mortgage and replace it with a seller held note and mortgage. These other financing options could be considered a wrap around mortgage, which encompasses the seller's existing mortgage with the additional loan amount which is based on the sales price and the down payment.
Before a seller and/or buyer considers getting involved with an owner financing arrangement, several steps must be taken and full disclosure from both parties must be acknowledged to fully understand each parties responsibilities to the real estate transaction. The buyer needs to be fully aware that the seller is in a position to offer owner financing, and is not experiencing any financial difficulties with their own mortgage. As for the seller, they need to know that the buyer will be in a position to get their own mortgage in the near future, and eventually purchase the home outright. Depending on the buyer's circumstances regarding their income and/or credit, the exact term of the owner financing must coincide within the timetable necessary for the buyer to complete the sales transaction.
Therefore, it is highly recommended that both buyer and seller seek professional advice to make sure that any type of owner financing that is considered will work for both buyer and seller. This advice can be very inexpensive to both buyer and seller, and can save a lot of headaches later.
Owner financing is a tremendous tool for sellers to help them sell their home quickly and at a better price and could potentially add income benefits as well.
For free information on the benefits of owner financing for both the buyer and seller, please call 941-206-6000.
[PLEASE NOTE: Attorney John Pitrelli continues his series on what home buyers and sellers should know about practical legal matters in the current real estate environment.]
Recently, I have seen a renaissance in the use of owner financing in real estate settlements. This is not surprising, since owner financing can be a powerful tool for buying and selling property, especially when bank financing is difficult to obtain.
One of the most frequently used methods of owner financing is the Contract for Deed or Installment Land Contract. With this method of financing the Deed to the property is held in escrow and not recorded until the Seller (Owner) held financing is paid in full. The buyer will enjoy all the benefits of home ownership recognized by IRS, even though the Deed to the property has not been recorded.
In my next post I will explore common myths about Contract for Deed and the advantages and disadvantages of that method of owner financing.
Another method of owner financing is the Seller held Deed of Trust. With this method of financing the title to the property will immediately pass to the Buyer. A security instrument (Deed of Trust) will be recorded in conjunction with the Deed to the property affording the Seller a foreclosure remedy in the event the buyer defaults on the loan. A carefully drafted Deed of Trust will provide maximum protection for the Seller and still meet the requirements of the Virginia code.
In situations where owner financing is feasible there is extreme flexibility in how a deal can be structured. The settlement costs are substantially less since there are no lender fees. The need for formal appraisal is eliminated. I still urge Sellers to exercise prudent underwriting of their loan, by checking credit and employment, but tempered with common sense if credit issues can be explained. To this end the help of an experienced real estate professional is invaluable.
There are many buyers out there that cannot currently qualify for traditional bank financing. They may be victims of the housing bubble burst, yet they need a place to live and are otherwise viable buyers. Owner financing may be the answer for these potential buyers and for Sellers who are willing to take a risk to sell their property.
[The Kathy O’Neal Team serves home buyers and sellers in Northern Virginia, with special focus on Chantilly, Centreville, and the communities of the Western Fairfax region.]
The option period in Texas contracts is a tool to assist with fair and timely negotiation processes between buyer and seller. It allows a set amount of time for a buyer to perform due diligence and inspect the property while compensating the seller for this lost time in ‘Active Status' for sale on the market. It's a bit of a lemon law approach in real estate and helps protect the buyers from a really bad inspection.
The option period is paid up front when submitting an offer, and it is not refundable if the buyer terminates the contract. The option fee is paid in consideration for this initial time under contract and the home is changed to ‘Pending Status' in the MLS System because it is no longer actively listed for sale on the market. The buyer has their negotiated amount of time to inspect the property and understand these findings. Upon final closing of the property, the buyer is reimbursed for the option fee at closing. This comes in the form of a credit from seller to buyer on the Settlement Statement at closing. If the buyer terminates the contract for any reason, the option fee is the seller's to keep.
As a buyer, the option period in Texas Real Estate specifically offers the buyer the unrestricted right to terminate a real estate contract - for any reason. The amount of time is typically 7-10 days in the Austin Tx real estate market, or it could be longer or shorter depending upon what buyer and seller have agreed upon during the original contract negotiations. The buyer pays the seller a negotiated ‘option fee' up front for this option, and set amount of time. This fee typically runs around $200-$500 on an average transaction. The amount might also indicate how serious the buyer's intent to purchase the home is, as well.
Most often, the buyer uses this timeframe to have the property inspected, to check on homeowners insurance for the home, and to understand the results of the home inspection report. We assist buyers in understanding what the report is detailing and suggesting, as well as what the scope and pricing of those projects would look like. We have several reliable professionals we work with to obtain pricing and bids for projects from miniscule in size to quite large in scale. We help our buyers plan for future repairs and understand general maintenance involved with homeownership, and this empowers our buyers to know when a home is right for them. Of course, most basically, we assist the buyer with repair negotiations and requesting repairs from the seller during this time period.
Every buyer wants to move into a solid and mechanically safe home. This means that the roof, foundation, plumbing system, electrical system, HVAC, and hot water heater are in good working condition. This may not mean they are sparkling like new, but they are performing as intended. If something were awry with one of these systems, that is a repair the buyer might request of the seller during the option period negotiations. All repairs agreed upon between buyer and seller are noted in writing, signed by all parties, and the repairs must be completed by closing date or a date otherwise agreed upon in writing. This agreement in writing takes place on a form called the ‘Amendment to the Contract' in Texas real estate.
To a seller, the option period is not the most anticipated event during the home purchase process. Sellers often feel invaded during the inspection process. Who wouldn't when a person you do not know is combing through the systems of your home looking for imperfections? Sound horrible? Well, it doesn't have to be horrible for a seller.
If you've ever put off a ‘hone-do list' of pesky home repairs, getting to those can be essential if you are getting ready to put your home on the market for sale. Be it the list of chores you'd do for your spouse, or if the in-laws were coming to visit, that distant and overly avoided list of to do's needs to be done. If all of these descriptions sound unfamiliar, this is also the list The Nelson Project will give you when you are getting ready to list your home on the market for sale. Do not negate the importance of this list. Changing out air filters, stopping minor leaky faucets, replacing the dryer vent, tightening the loose toilet bolts, mulching the garden...attending to these details can save you so much headache, and possibly heartache, in the end! Our proactive sellers have better experiences time after time during contract negotiations and during option period negotiations.
Outcomes of the option period are typically an agreed upon list of repairs or an allowance for repairs. When a home is found to be in tip top shape, sometimes the option period is only there for the buyer to make certain of that fact. On the most exquisitely maintained homes, one item or another will be noted by the inspector, so don't let that be a surprise either. For more specifics on option period negotiations, see our blog article: Top 10 Repair Negotiation Tips for Buyers & Sellers.
We are so pleased to announce our latest go-green project in our own home in Austin, TX ... new bathroom counters made from recycled beer bottles! I must add that this works in nicely with our lifestyle in more than one way.
We took a 1980's type bathroom
and put in our cool new Granite Transformations counter ... it is a granite composit, only about a 1/4" thick made from recycled granite and, our particular choice, recycled beer bottles!
And a close-up ... they're actually quite beautiful ... and there is one bright green chip of a Heineken bottle in the mix ...
We wrote this post today to help buyers who are considering waiting to buy vs. buying now. It's a conversation between one of our favorite lenders, the Realtor and the buyer. We think there are buyers out there who may find this helpful:
What is the Texaplex? David Winans coined the term "Texaplex" to describe the triangular region of Texas that contains 75% of the state's population. Watch the video and see why everyone is talking about the Texaplex.
The Texaplex Project The global financial crisis is a vicious cycle. The more we hear and talk about it, the worse it gets. However, in spite of all the national bad news, Texas is prospering! Texas, and in particular the Texaplex, has some pretty impressive facts that most Texans weren't even aware of. This video is part of the Texaplex project which has set out to change that.
Did you know that the Texas Real Estate market is one of the strongest in the nation? Did you know that half of all new jobs created in the US were in Texas?
Watch the video and visit the website for more details.
This Saturday, February 21st-February 25th, Keller Williams is hosting their annual Family Reunion in Orlando.
Liz Moras and I have been planning a place for all of us on Activerain attending the event to get together and meet face to face.
Saturday night the Guess Who concert is from 5:30 to 7:00, so after the concert we are planning an Activerain Meet Up at Backstage in the Rosen Plaza Hotel.
The Rosen Plaza is located close to the Orlando Convention Center so there will be shuttle buses available, and shuttle buses back to your hotel (if you are staying in one of the recommended hotels)
I spoke to the Rosen Plaza and the BackStage can accomodate around 60 people.
Liz and I thought it would be more fun to meet early during the convention so we could recognize each other and connect at other events.
If you have never been to an Activerain Get Together and met fellow bloggers, you will have a blast. It is so much fun to meet your computer friends in real life.
Please reblog this post to get the word out to the agents that follow you here in the Rain coming to Family Reunion.
I can't wait to meet you at the BackStage at the Rosen Plaza Hotel !!!
TIME: 9:00 to 11:00 P. M.
P.S. Chris Griffith and I will be speaking at a Break Out session on Monday at 2:45, on Catch People in Your Web. If you are speaking, just add your name and session in so we can attend.
We try to be green in our own home and have been a little concerned with the efficiency of our furnace lately. We believe we have discovered the source of the problem. See the video:
It's worse when Kirby is on one register and Lucy on another ... at least in this video, they are both on the same one. At least the cats are warm. So much for the dining room.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
The Rosen Plaza
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