Menomonee Falls Creative Financing - Connect your Buyers and Investors!
There are many forms of seller financing out there:
- Wrap-Around Mortgage
- First Mortgage Held by Seller
- Seller Financing with Subordination
- Joint Venture
Also some 'unconventional' ways:
- Rent 2 Own
- Land Contract
- Land Trust
- Lease Option
- Hard Money
Typically my daily clients are investors. They help bring stability to the frequency of paydays and life. Two of my investor clients are helping everyday Buyers obtain homeownership through creative - or not typically practiced - financing options. Both investors 'qualify' their clients by doing a credit and background check. They are not so much concerned with credit scores, but more of a 'how are they progressing and making strides' attitude. If the Buyer has too many credit issues, they help the Buyers by getting them into credit repair/rebuild programs. Then their client should be able to proceed in 3-9 months.
Both investors are alike in that they allow the Buyer to pick out a home. Unlike alot of Rent2Own programs, they can pick from almost any property that is currently listed for sale - whether it is on the MLS or a FSBO. But... both investors approach things differently. One likes to just 'control' the property, while the other actually buys the property from the initial Seller. I will concentrate on the second.
The Buyer is allowed to pick out the exact property they would like (that is where I come in). Once they determine what property they would like then the investor begins the negotiations with the Seller. Once they have negotiated a proper price for the property, they proceed to closing. After closing, they allow the Buyer to occupy the home on a Rent2Own, Lease Purchase, Occupy2Own.... (there are many different ways). Also... to note - the investor always has this contract in writing with the Buyer before the investor closes on the property!
Typically you will find that the terms of the 'creative financing' vary case to case. One of the typical terms in the contracts is the time allotment. They usually either give the Buyer a 'full' 30-yr term, or a shorter 1-2 yr window. Within that shorter window, the Buyer should be able to rebuild their credit so that they can refinance the property on their own.
This is truly a win/win/win situation.
The Seller is able to sell and move on.
The Buyer is able to gain an interest in a property when normally unable to do.
And the Investor has multiple benefits:
- Holding Costs - typically an investor will buy, fix and then sell. While they are fixing and trying to find a buyer they have holding costs to cover.
- Easier negotiations - Since they don't have holding costs, they have more room in negotiations with the Seller (who also is able to net a higher price)
- Rehab/Fix up - If the property needs work, the Investor will typically have negotiated with the Buyer a remodeling plan. The investor (or me) can coordinate the fix up to the Buyer's tastes.
- Profit - They already have a set amount agreed upon with the Buyer. (which is fine for the Buyer since their price is normally at appraised value) The investor can determine whether or not the property will work upfront with negotiations with the Seller.'
Hopefully this has been somewhat informative and maybe even enlightening for some creative Realtors out there who are looking for more ways to help their Buyers and investor clients.
I look forward to helping any credit challenged Buyer obtain the creative financing they need to be able to purchase their first or next home in Menomonee Falls or SE Wisconsin!
Thanks for reading!
Matt Yogerst - Realtor - Menomonee Falls and SE WI - RE/MAX Realty 100