Selling Your Property in a Down Real Estate Market
Hi Everyone,
I hope you had a great 4th! Heather and I saw fireworks in a park here in Charlottesville, VA with two friends of ours. It was the first time in several years I’ve seen a show like that. Is it my imagination or have they gotten better with them?
In today’s E-Letter I wanted to talk about a specific strategy to sell your property faster and for a higher price in a down market. I also have some brand new announcements for you that you will want to make sure to see.
******************
Selling Your Property in a Down Real Estate Market
I understand what it’s like to be an investor with a few houses on the market that just won’t seem to sell. You look at the mortgage payment you are stuck making each month and the added expenses for keeping the property maintained. Yuck!
And it only gets worse if you have MULTIPLE properties up for sale at the same time.
I wanted to share a strategy with you about how to sell your property faster and for a premium, even in a down market. Sound too good to be true? Well keep reading.
The key is to separate your property from the masses of homes glutting the market. The best way to do that is to offer TERMS. Most of you have read my books on selling properties on a “Rent to Own” basis. (If you haven’t, I suggest Buying Real Estate Without Cash or Credit as the best “introduction” I’ve written on the subject.)
Today I want to talk about another technique. A strategy designed to get you CASH for you property much faster. The strategy is to sell your property with owner carry financing.
By offering your property with you carrying back a healthy second mortgage you are able to make your property stand out from the pack.
Let’s take the example of a $500,000 house you’ve been trying to sell for 6 months. (I know some of you live in areas lots more expensive, and others live in areas lots cheaper, but hey, I’ve got to start somewhere.)
You can offer to carry back a $50,000 second mortgage to help your buyer out. Now before you say you want your cash, hold on for a moment. I’ll help you get your cash, in fact more cash, if you give me a second.
But first, if you sold the house in a down market, how much would you have to discount the price to finally get it to sell? Maybe $20,000 or more? Let’s assume you have plan A which is to sell conventionally with NO owner second. In that case you sell it for $480,000 (after you buyer negotiates you down from your 500k asking price.) Of course you’ll probably have commission to an agent(s) and closing costs, but the house would be sold.
Plan B is to sell it with owner financing. Now out of a 100 houses for sale how many offer owner financing? Less than 5 percent! So now you already are radically reducing your competition from 100 other home to 5 other homes! In other words you’ve reduced the supply for this type of deal for buyers by 20-fold!
Plus, by offering to carry back a $50,000 second you have made it much easier for someone to get the loan to buy the property (after all, now they need to borrow $50,000 less from the bank!) This means you’ve increased the pool of potential buyers who can afford your property.
In other words you’ve increased the demand!
Now you already know enough about economics that when you reduce the supply and increase the demand the price must go up. In my experience selling LOTS of houses with owner financing I think you’ll get at least a 5-10 percent premium on your purchase price. In our example you’ll be able to sell the property for at least $520,000.
So far your “$50,000” second got you $40,000 more on the price! Now you have two choices. Choice one is to either take payments on the second mortgage at 10-12 percent interest (or higher) with a balloon note due for the balance in 3,4,5 years. Or you can SELL that note at a discount and get $25,000-40,000 cash right away. Both options get you MORE money selling this way, plus you’ll have the sale happen much faster.
Now I’ve had to cover that pretty quick. For those of you who are Maui Mastermind Online members, I did a 20 minute class on this technique that should be up as of Friday, July 6th.
If you are not a member yet, click here for a free 30-day trial membership if you want access to the class (and dozens of other classes on investing, financial fluency, tax strategy, and building businesses).
*************
New Special Report Up On Maui Mastermind Online!
How to Cash In On Your Real Estate ContactsMany investors make the costly mistake of considering real estate agents as competitors. This mistaken belief costs not only time, but potentially thousands of dollars from lost deals. Learn how to build a powerful and profitable relationship with a real estate agent. INSTANT ACCESS!
I hope you had a great 4th! Heather and I saw fireworks in a park here in Charlottesville, VA with two friends of ours. It was the first time in several years I’ve seen a show like that. Is it my imagination or have they gotten better with them?
In today’s E-Letter I wanted to talk about a specific strategy to sell your property faster and for a higher price in a down market. I also have some brand new announcements for you that you will want to make sure to see.
******************
Selling Your Property in a Down Real Estate Market
I understand what it’s like to be an investor with a few houses on the market that just won’t seem to sell. You look at the mortgage payment you are stuck making each month and the added expenses for keeping the property maintained. Yuck!
And it only gets worse if you have MULTIPLE properties up for sale at the same time.
I wanted to share a strategy with you about how to sell your property faster and for a premium, even in a down market. Sound too good to be true? Well keep reading.
The key is to separate your property from the masses of homes glutting the market. The best way to do that is to offer TERMS. Most of you have read my books on selling properties on a “Rent to Own” basis. (If you haven’t, I suggest Buying Real Estate Without Cash or Credit as the best “introduction” I’ve written on the subject.)
Today I want to talk about another technique. A strategy designed to get you CASH for you property much faster. The strategy is to sell your property with owner carry financing.
By offering your property with you carrying back a healthy second mortgage you are able to make your property stand out from the pack.
Let’s take the example of a $500,000 house you’ve been trying to sell for 6 months. (I know some of you live in areas lots more expensive, and others live in areas lots cheaper, but hey, I’ve got to start somewhere.)
You can offer to carry back a $50,000 second mortgage to help your buyer out. Now before you say you want your cash, hold on for a moment. I’ll help you get your cash, in fact more cash, if you give me a second.
But first, if you sold the house in a down market, how much would you have to discount the price to finally get it to sell? Maybe $20,000 or more? Let’s assume you have plan A which is to sell conventionally with NO owner second. In that case you sell it for $480,000 (after you buyer negotiates you down from your 500k asking price.) Of course you’ll probably have commission to an agent(s) and closing costs, but the house would be sold.
Plan B is to sell it with owner financing. Now out of a 100 houses for sale how many offer owner financing? Less than 5 percent! So now you already are radically reducing your competition from 100 other home to 5 other homes! In other words you’ve reduced the supply for this type of deal for buyers by 20-fold!
Plus, by offering to carry back a $50,000 second you have made it much easier for someone to get the loan to buy the property (after all, now they need to borrow $50,000 less from the bank!) This means you’ve increased the pool of potential buyers who can afford your property.
In other words you’ve increased the demand!
Now you already know enough about economics that when you reduce the supply and increase the demand the price must go up. In my experience selling LOTS of houses with owner financing I think you’ll get at least a 5-10 percent premium on your purchase price. In our example you’ll be able to sell the property for at least $520,000.
So far your “$50,000” second got you $40,000 more on the price! Now you have two choices. Choice one is to either take payments on the second mortgage at 10-12 percent interest (or higher) with a balloon note due for the balance in 3,4,5 years. Or you can SELL that note at a discount and get $25,000-40,000 cash right away. Both options get you MORE money selling this way, plus you’ll have the sale happen much faster.
Now I’ve had to cover that pretty quick. For those of you who are Maui Mastermind Online members, I did a 20 minute class on this technique that should be up as of Friday, July 6th.
If you are not a member yet, click here for a free 30-day trial membership if you want access to the class (and dozens of other classes on investing, financial fluency, tax strategy, and building businesses).
*************
New Special Report Up On Maui Mastermind Online!
How to Cash In On Your Real Estate ContactsMany investors make the costly mistake of considering real estate agents as competitors. This mistaken belief costs not only time, but potentially thousands of dollars from lost deals. Learn how to build a powerful and profitable relationship with a real estate agent. INSTANT ACCESS!
posted by David Finkel at 7:01 AM
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