Stop trying to sell your home! Invest in your future instead

I've heard this from seller after seller, "I need the equity from my present home to purchase my new home". I tell them "Yes you do, so why are you throwing it away, by selling it the traditional way?"

Let me teach you a better way! Offer your home with owner financing or lease-option. The fact that you need the equity for you new purchase is exactly what you are going to get plus! Offer your home for sale with owner financing. Tell a new buyer with 5% down, you will finance them at 7.5% for 5 years and then at the end of 5 years there will be either a balloon payment due or a .5% interest increase per year until the loan is refinanced or paid off. The key to this is making it a win-win for everyone involved. No one loses in this process. The buyer saves money! With traditional bank financing they have to get a 90%-10% loan. The first loan is usually at 7% and the second 10% loan is at 11% or 12%. By buying through a owner they are usually saving between $100-$150 per month. So it is a win-win for everyone.

Why 5% down? This will pay for your current closing costs if needed on your new home purchase and have a little bit of security for you. Second the 7.5% interest rate (assuming this is higher than your present interest rate will earn you $400-$500 per month in interest above and beyond what you owe on your current mortgage. Would you rather have one lump sum of equity or have and extra $400-$500 a month to help you out for the next 5 years? Below is a table to show you the math and how it works.

List price = $200,000 @ 7.5% interest and 5% down
remaining mortgage = $140,000 @ 6% interest (Original loan $145,000)
Payments on $190,000 loan at 7.5% = $1328.51
Payments on $145,000 loan at 6% = $869.35

Would an extra $459.15 per month in your household income help you in the purchase of your new home more than the immediate equity? You bet it would! An extra $30,000 + net to you the seller over just selling it out right on traditional bank financing. That doesn't even count the amount of time that you are paying your original mortgage while your home sits on the market. Every month that your home doesn't sell in the traditional selling model used by most Realtors, you will end up paying 2-3 more mortgage payments. As an added bonus, you can usually add another 3-5% to the list price to the home if you use owner financing. The reason for this is because the normal buyer who needs to use owner financing realizes that you are saving them money and taking a risk on them. They are willing to pay more to say thanks for taking a risk on me.

If you are thinking of selling your home, STOP and start investing in your future! For more information on Lease-Options or Owner Financing please free to contact me anytime.