Who says banks should say who gets to buy a home? Right now, banks are turning away good borrowers, choking home sales. What's the answer? Seller financing. There's just one little problem. Real estate agents need to tell sellers that it's an option.
Why are agents out there losing deals because they're still relying on banks? We as Realtors give them all the power. If a lender can't put a deal together get creative! Everything is negotiable between buyers and sellers.
Here are two examples of deals gone sour.
I read recently that an agent in North Carolina had an investor putting up $50,000 for a $72,000 investment property. Denied by three lenders for not showing enough financial information. When an angry seller calls to vent, she offered to hammer out a deal using seller financing, an idea that allot of agents don't offer as an option to their clients.
Another example was a client with high credit scores that wanted a second home. The deal was killed after weeks of delays by a lender after using HOA financials as an excuse. Go to the listing agent and offer seller financing as an option!
Most Realtors (including me) are not previous loan officers but that shouldn't discourage any agent from trying.
All it takes is a willing seller and buyer and a good real estate attorney to structure the terms and do the contract.
Here are a few things to consider:
1. Immediate cash upfront from buyer to seller (negotiate 3%, 10%, 20%, 30%, 50% ... )
2. Negotiate terms that will benefit both seller and buyer.
3. Tiered interest rate options
4. Negotiate monthly, quarterly, yearly payments
5. Negotiate additional payments to seller quarterly, if long term
6. Obtain buyer asset(s) to add strength the deal
7. Explain seller default options
Advantage for the buyers: They get to eliminate the huge closing costs associated with working with a lender and all the multiple, questionable, and unexplained fees.
Advantage for sellers: Where seller financing isn't risk free, there are options even in default situations, like the seller takes back the house.
Now that's a deal you can take to the bank!
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