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FHA DPA's: Agents earn "sales" bonus of $250.00 to $650.00 using it!

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Services for Real Estate Pros with And the United States of America AZ SA543893000

In a market plagued with agents unaware of shifts in strategy, "know how" with FHA Down Payment Assistance programs could get you a nice bonus!  Best part about it?  It is a WIN-WIN-WIN situation.

trophySELLER sells their home!  BUYERS go from rent to own!   AGENT sells a listing!!

Now that FHA maximums have been increased, raise the price on your inventory and you move a home and get a bonus!

Buyers are looking for opportunity with low risk factors.  Show the market how a home can be purchased easily and you increase your chances to sell.  Show the buyers they can purchase with zero out of pocket and you have eliminated the risk of personal investment loss!

How to market:  Take the existing list price, and as long as you have higher comparables in the area, build in a down payment contribution and closing cost contribution.  Get a lender to calculate out the household hourly income needed to qualify and MARKET AWAY!

For example:  A listing is on the market for $300,000.  Comparables are at $315,000 to $350,000 (and then of course the overpriced ones at $375,000+).  Buyers have been shown to arbitrarily determine what they can afford so show them how to change their mind!!!

math

Here's what you do to build in a down payment assistance of 3% and closing cost assistance of 3% along with the DPA Program participation fee of $375.00:

  • Current list price = $300.000
  • Add DPA Fee = $300,000+$375 = $300,375
  • Divide result by .94: $300,375/.94 = $319,548
  • New List Price = $319,900

Rounding up to $319,900 for a new list price, You can market away as a "Zero to buy" property!

In public comments on the MLS, put in:  Seller to provide 3% for down payment assistance and 3% for closing cost and prepaid assistance.

You as the agent just sold a home and the seller got $300,331 instead of $300,000.  Buyer came in zero/zero.

AGENT BONUS: That extra $19,900 that the sales price was increased to cover the DPA and CC's gets you a well deserved bonus of $597.00 for showing the seller and the market the light!

Posted by

Mark Organek

RE/MAX Excalibur

mark@monopolyman.com

www.monopolyman.com

Thank you for taking the time to read this post.  Hopefully one day we can interact or meet soon.

Show All Comments
Chad Baird
Re/Max Spirit - Dayton, OH
Maybe its late in the day, but I don't get it.  I will have to revisit this one tomorrow morning. 
Mar 25, 2008 09:08 AM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.
Chad, thanks for making the comment.  I appreciate the heads up on the lack of flow.  This is something that I've been trying to get better at.  Basically, if you bump the list price up to cover DPA and Closing Costs in order to have a buyer get attracted to the property on zero/zero, the increase to the price of $19,900 at 3% co-broke commission yields an extra $597.00 to the agent vs. the 3% on only $300,000.  I will look for a better way to revise it.  Sorry and thank you at the same time!
Mar 25, 2008 09:17 AM
Harley Ramsey
Keller Williams - Chatsworth, CA
Chatsworth, CA Real Estate
Hi Mark,  I get the math and it makes sense...the tough part (for me as the listing agent) to get the sellers to agree to market their home for less than the comps say it is worth.  I can see representing buyers and using it in an offer would be easier.  Thanks for the food for thought. Cheers, Harley
Mar 27, 2008 04:41 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.

Harley, thank you for stopping by.  Most of the time, when I present this to an agent, I am arguing that properties need to be marketed with a buyer in mind.  Most buyers out here don't have money to put down.  We actually go the other way on price.

For example, today an agent called me to tell me that the BPO on her short sale listing came in at (let's say $150,000 so as to not disclose).  She was going to drop from $230,000 to $150,000.  Instead, I told her to list at ($150,000 + $375 + $5,000 + $6,000 = $161,375).  This now allows her to market to buyers with a zero out of pocket move strategy.  Furthermore, to qualify to buy, the qualifying income is only $17.00/hour.

Knowing that FTHB's would probably buy, we make it easier for them to "visualize" what it takes to get into the property.

On a side note, before any agent drops list price, we look to see if they can sweeten the seller paid incentives in order to make it more attractive.

Thank you again for the comment!

Mar 27, 2008 06:02 PM
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS
Mark - this is a good one, I plan to use it with a motivated seller that I have.  Win-win.
Apr 02, 2008 03:11 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.
Virginia - It does make the property more attractive than others in the area when people see on paper that they can buy zero/zero.  Good luck with your listing!
Apr 03, 2008 05:58 AM
Don Draughn - Mortgage Professional
High Point, NC
These are truly a great tool to sell homes.  I use it on 80% of my loans.
Apr 08, 2008 07:35 AM
-- Casey Brischle
Columbia Bank - Spokane, WA
Spokane Home Loan Mortgage Professional
A simple math equation to get me lookers at houses?  Realtors should love this!  The market has to support it however.
Apr 08, 2008 08:52 AM
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate
Looks good if you can get the comps in the area to make it work.
Apr 08, 2008 09:12 AM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.
Gene -  That's true!  Fortunately, in our area, the difference between sales price and appraised value is more than enough to compensate for the concession.  We just have a lot of room to go down in price.
Apr 08, 2008 05:41 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.
Don & Casey, sorry that I forgot about you guys and bumped Gene in first.  Our market still has unreasonable list prices which support values.  I've actually started to target areas that have room for decline and I should be able to do 4 to 5 transactions with DPA's before the gravy is gone.  Out of 85 subdivisons we studied, 63 should yield the same number.  Target those in your areas and you could do well!
Apr 08, 2008 05:44 PM
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