I read a LOT from all of you, plus see what is happening in my own environment, as well as what is in the news & documentaries. I just have had a thought & please don't shoot me for asking....
What does everyone think about trying to merge the part that is the dreaded lease/rental market with your listing opportunities? I guess I have seen a LOT of properties stay on the market, & people are shy for many reasons about making those commitments. I just have felt that may be a way to bring about a win-win for everyone may be to bring back (or dusting off) a very, very old practice of Lease/Purchase. I know it is not the "immediate" commission that everyone is looking for, & I know that it delays the seller having an actual closing to move on with their life. However, if they are receiving income that can help bridge that time that properties are sitting vacant anyway, & may be it would be a way to realize less of a loss.....
would it not make a way to create yet another level....to your volume of business??
I have had this thought many times in my speaking to friends & my other sphere...we discuss what is going on in the economy & even going on with some of them (my friends) & their homes. Many of these people want to make transitions & they can't.
They can't make a purchase because may be they have had to short sell their home, or relocate & aren't sure of the areas yet.
Not all people out there are not able, or are shy about purchasing, nor are they 'all' dead beats. I don't think they are "all" trying to string anyone along....there may be several for sure, but I "know" for the most part there is a HUGE volume of people that are trying to just re-group after this cycle we have experienced..... and are 'still' experiencing. They are trying to see where they will fall....where they will be able to "fit" now...here and now in the "present" world.
I know that years ago... this practice existed because it gave creativity during a troubled time that many haven't referenced too much. (I am dating myself again...) I will say it was at least 30 years ago, as it was my first house at 21 years old. We didn't have much, but we had our income taxes & a little deposit we were able to put down. Well back then the builders were REALLY hurting. I mean it was incredible the interest rates!!! When I tell you these interest rates, some of you may remember...but they were staggering!! The builders rate was 21% on his construction loan & my home loan wound up at 18%...(as a 1st time homebuyer)....now the prices of homes were MUCH less, but those were the rates.
We were not sure how we were going to do it, but we had been married about 4 years & we felt that before we moved forward with our family growth that this was the wisest planning. We wanted to have a home for our child before we decided to conceive. Well we took upon the task of looking & there was a builder who was willing to do a lease purchase on a brand new home for 8 months. He applied all the payments to the down payment & we closed in 8 months. The basics were (& these principals may not be allowed any longer)...but the bank would allow him to escrow the funds for our closing & down payment. He in essence raised the purchase price to cover the 8 months, but only for the amount of our down payment....& the house had to appraise, which it did without any problem for the increased amount. Shortly thereafter our daughter was born.
The guts of the story is to bring up the question, is there a way to turn these properties that are sitting vacant into lease/purchases for the owners that are in transition for some of the reasons above:
- First Time Home Owners
- Relocation or Job Transfer
- Short Sale/Foreclosure on their prior home...(may be one of the spouses lost their jobs, had a medical hardship, or reduction of income) but were not always in trouble. May be they purchased their prior home between 2004-2009?
I found this program link on line & I don't know much about it, but it looks as if the may be trying to "dust off" a program that I personally experienced over 30 years ago?
Okay, so don't shoot me for bringing this up....but there have been a few times I have calculated the math on vacancies & thinking to myself.....well this may have leased for $_______ say it is smaller $900 - $1100...& it sits for 6 months without income....well the owner has already reduced the price whether he realizes it or not??
I saw one listing that had refused to do a lease/purchase & had previously rented for $850. The unit is still empty after 6 months? The agent lowered the price $250 twice.... I am NOT criticizing the agent, as the instructions I am sure are coming from the owner, but this was the math in my head. My head may be wrong...so again, don't shoot me.
- $900 x 6 = $5400, plus the owner even if mortgage free has paid association dues on this property @ approximately $400 per month. $1100 X 6 = $6600, etc.
I am just not sure if they have looked at the vacancy for the properties in the area & the time on the market & thought of this consideration?
I just thought that it may be a way to:
- expand your business market...even if deals close a little later, may be they are more likely to close with you?
- gain a loyalty in helping people make the transitions that are going on today with "both" sellers & buyers?
- get more return if you are showing rentals... if you can find properties that have committed that they would consider a lease/purchase offer?
I think I promised the link I found. http://www.self-help.org/neighborhood-stabilization-program/Self-Help%20Lease%20Purchase%20Programforwebsite.pdf
I know that a lot of counties have stabilization programs going on right now. In Miami-Dade County there is one called the Home Buyer's Club. http://www.miamidade.gov/hfa/home_buyers_club.asp The Home Buyers Club walks buyers through the entire step of the home purchase of a home within Miami-Dade County....but is not a lease/purchase plan. I know there are tons of programs, but this is one you don't see much of & I have just wondered, if it were yet another option that may just need "dusting off"?? Or if the masses just felt it would not work??
I know that interest rates are a lot less than when we were looking at trying to purchase, but the circumstances are a lot different still. You can't buy that type of house for $52,000 anymore, it is more like $200,000 even in this market & people can't afford those interest rates & keep the values from going down even further. I am not sure how many have looked at median & starting salaries for your counties?? Ours is very interesting to see....even "if" you double it for a two income household.
I know that it was a common practice with equipment purchased when we had our business. We did lease purchases with dollar buy outs at the end. I am not sure what the feedback will be with property & this practice? It just came to mind as a possible solution for the frustration I have seen with the market & with more clients wishing to lease & their confusion, or lack of commitment. It also seemed viable for the seller who is hoping for an offer...it may be a more gentile way to have someone take over in this bit wobbly market.
Okay, I hope you don't shoot me for the question....but I wondered how many may have considered this with their listings or when they are considering the ones that are out their leasing?? Have a GREAT Week!!
I would also think it would incorporate some loyalty as well as both parties would feel happy to be able that you "rescued" them during difficult times when they were the most vulnerable??
Thanks so much!
Land contracts are hazardous to the buyer and seller. If the buyer fails to make all of the payments, then the payments are just rent, and the buyer has no house and no equity to sell. The seller is locked into what is essentially a very long term lease. The seller can't accelerate their receipt of money from the buyer, nor sell, nor get an equity loan. Thirty-year mortgages are what replaced land contracts because of these drawbacks.
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