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See Lease Option info below...
See Lease Option info below...
Whether you are looking to buy or to sell a home.
One of the most important things that you can do is to be certain that
you are working with professionals. Professionals,
who not only know the ins and outs of current real estate standard practice and
regulation but pros who understand that there are ways other than buying via FHA
and Conventional Loans. They
are hard to find, but they are out there.
If you are in the market for a home and not looking for the super
“Nothing or Low Down Deal” it is likely that you can use most any licensed
agent in the US. As a requisite for
licensing they are required to know the basic, FHA, Conventional, FNMA, etc,
methods of purchasing. If on the
other hand you are looking for a special deal, in a situation with little down,
questionable credit, etc… you will probably need an agent who is well versed
in the principles detailed in the “No Down and
Creative Real Estate Investment Techniques”
portion of this site.
The principles in the Creative Investment site can
also, be used to help you structure the sale of a foreclosure or difficult to
The principles in the Creative Investment site can also, be used to help you structure the sale of a foreclosure or difficult to sell property.
If you are unable to find any sales professionals in your area who
are conversant with the type of creative principles we’ve alluded to Click
at bottom of this page.
We will refer you to an agent in you’re area who is able to help with
your specific investment needs.
The reality is that in today’s markets, some houses simply will
not sell as easily as others. Are
you finding that is the case with your property?
There are many reasons this happens.
it’s price. Sometimes it’s the
agent. Sometimes it is terms. The key is to find the
problem and then find a way to either make up for that problem, or develop a way
to not necessarily make your home more desirable, but rather to enhance the ease
of purchasing. Most of the
issues that make a property hard to sell can be solved by a competent Real
Estate professional. But
what to do if your house is worth less than is owed?
PROBLEM AND A SOLUTION
if you owe $120,000 and the house is worth $100,000? A buyer, who would qualify for this size loan, would, of
course, not pay more than it was worth. Even
if an agent could sell it for what you owed, there is no equity at all so how
does the agent get paid? He doesn’t.
So, you will not get an agent’s help.
What if the agent suggests a “short sale” (where the lender agrees to
take less than was owed so as to allow the property to be sold).
It’s complicated, lenders won’t usually do it, most agents avoid
dealing with short sales, and even if it goes through, due to what I consider
creative accounting by the IRS, you will probably find yourself being assessed
additional income amounting to the difference between the sale price and the
amount that you owed. i.e.
you owed $120,000 you sell it for $100,000 the IRS will add about $20,000 to
your taxable income.
make much sense, but, nevertheless, it happens everyday.
Have a tax problem? Click here.
Have a tax problem? Click here.
if instead of the above, you find a way to expand your
customer base, by offering terms that those who usually can't buy, but
want to, can, in fact, buy your home? Many
people, who have great income, have had credit problems in the past that
preclude them from immediately getting conventional financing.
They may have great income and job stability, but maybe they just had a Bankruptcy
or maybe just went through an ugly divorce.
If they keep their credit clean for about two years from the date of the
credit problem, they should then be considered credit worthy.
A LEASE OPTION?
not sell to them on a Lease Option.
You owe $120,000 It’s now worth about $105,000.
Let’s say fair market rental is in the neighborhood of $900.
Your payment is $1,150. Ask
for a $2,000 option fee (down payment). They
pay rent in an amount equal to your monthly payment.
You give them the right, for having paid the option fee, to exercise the
option anytime within the next three years.
Why would a buyer want to pay more than it’s worth? If they have to wait until their credit is repaired, there’s no telling how expensive the same house could be. Until the option is exercised they know what their payment is and will be. Provided they keep up their payments, they can’t be told to move. If structured correctly, they can even take advantage of the interest write off. Anytime during this period they can exercise the option and take advantage of the lowest rates during the time frame. If at the end of the three years, it is worth $150,000 they can still buy it for $120,000. For the right buyer, a lease option is the perfect way to go. Need to buy a home and a lease option seems to be the best bet? Click at bottom of page for a service provider in your area or Click here for the forms to do it yourself.
would you want to sell it this way? You
get money up front. You have
someone paying more than they would if it were a rental. They will treat it as their own.
You don’t have to deal with the repercussions of a short sale, and you
saved your credit and got out from under what had appeared to be a bad
What if they do not exercise the option? You can extend it if you desire, for another fee. You can treat them as a tenant and increase the rent to reflect changes in the market. You can bring in a new tenant, or optionee. At the end of the 3 years, it is now probably worth more than owed, so you can now sell at an actual profit. The best, is a win win situation where they exercise the option. However, if they fail to live up to their part of the bargain, you the seller will not be hurt. For the right buyer and seller, a lease option is the perfect way to go. . Does a lease option seem to be the best solution to your real estate need? Click at bottom of page for a service provider in your area or Click here for the forms to do it yourself.
Have a question? Need advice? Write to the Forum