Quick sale of real estate by owner when quick cash is needed
The good old days were refreshing. You can put up a sign in your yard and get quick responses from interested potential buyers, or hire a listing agent and not worry about your commissions eating up your cash. The time has changed.
The real estate sector has become competitive. In some areas, it is a sellers market. In others, the buyer takes the kidneys. However, whatever happens, there are many thousands more people in real estate now than there were then. With investment seminars and flipping programs becoming more common, the real estate group is growing by the day.
But what if you’re in a rush to sell? Does that mean you are motivated? Let’s take a look at what constitutes a motivated salesperson and whether or not some of these salesperson techniques will work for your situation …
- You are facing foreclosure
Times can be tough. You may have been fired from that job and were unable to replace the earnings on time. The bank sent you a letter notifying you of a Lis Pendens (the beginning of foreclosure, also known as pre-foreclosure) You have no options and you don’t want foreclosure to end up destroying your credit.
- You’re behind on taxes
As before, this is an immediate situation that can destroy your credit. Taxes will be charged no matter what, so there’s no need to add bad credit to the mix. Back taxes will not only consume your capital, but will also be attached to your future wages.
- You have bad tenants
He constantly receives complaints about the tenants of one of his properties. The police are becoming a normal sight in front of the property. Perhaps the tenants are converting their planned investment into a drug house. You don’t want to deal with the situation and prefer to take cash out of the investment and walk away.
- You are getting divorced
Let’s be honest. Not many are fair in divorce proceedings. Who gets the house? None of you? So, you have no choice but to sell quickly so you can avoid your ex like the plague and get some cash to start over.
- You are retiring
Whether you’re a retiring business owner or a couple with a home you’ve owned for years, you just want some cash for your equity so you can move to warmer climates and bingo.
- You inherited real estate
You have just inherited a home or multi-unit property, but prefer to have cash instead. You want a quick sale and you don’t want maintenance to bother you.
- You are a landlord from another state
He thought he could manage investment property in California while relaxing at his home in Maine. Unfortunately, good help is hard to come by and all property managers turn out to be drunk. The grass is tall and you’re getting letters. It’s causing more headaches than it’s worth.
- You just want some extra money
You do not need the property in question and simply want to refill your bank account.
These are all valid reasons that would make you a motivated salesperson. The only question I have for you in this case is … are you greedy?
A number one killer of real estate sales is a homeowner who takes too much pride in accepting that the market will not support his outrageous property valuations. Fair market value may be high, but no one bites. How are you doing with that quick sale? The first step to selling your home quickly is recognizing that you need to be open-minded. If you can be open-minded about the selling price or terms, selling fast will be a breeze.
Where are my target buyers?
You have quite a few options. Some will take longer than others. Probably the number one way to sell quickly is to find a wholesaler. A wholesaler is a real estate investor who searches for discounted properties, writes an offer, and then assigns the contract to one of his many cash buyers. Often times, the wholesaler will have hundreds or even thousands of investors on their contact list who are ready to buy right away. Your investment partners have been rated by the wholesaler with proof of funds, and will have shown the wholesaler multiple deals they have closed in the past.
There are wholesalers who buy properties in multiple states, while other wholesalers are limited to a single state. Some of them even stick to a specific city or regional area. They are known for the use of phrases like “we buy houses, any area, any condition”. While many wholesalers stick to deeply discounted properties, others work with low-capital deals in which Subject2 and seller financing can be put into play. These are some of the techniques that require you to be an open-minded and truly “motivated” salesperson.
Another option for a quick sale is Craigslist and other classified websites. If you’re going the classifieds route, you need to be prepared for “tire kicker” responses. There can be a lot of newbie investors, and people who are just looking for that will take a long time to filter before finding a true buyer. When including a classified ad for your home, be sure to include as much detail as possible in the ad. Leaving out rooms, bathrooms, parking, and other features will only mean that you will have to spend time discussing these things when you take the multitude of calls you will receive.
If classifieds aren’t your thing, you’ll want to find buyers through a more direct route. Go where they hang out. There are forums like EquityPaper and BiggerPockets that have premium subscription options for real estate listings and other networking tools. These are forums where investors meet to discuss real estate issues on a daily basis. If you list your home in these professional member areas, or markets, you can get pretty quick responses from interested buyers.
Determining the value of the property for an investor
When listing your property, there are a few things potential buyers will want to know in addition to the standard property details. ARV (after repair value) is one of them. To find your ARV, go to Zillow, Trulia, and Redfin. On each of those websites, search for your property and write down the estimated value of each one. Add the 3 values and then divide the sum by 3. The result will be your ARV.
Once you have your ARV, you will want to determine what the new buyer will have to put into the property for repairs. If your home is in excellent condition, you just need to consider simple things like paint, appliances, and other things related to the buyer’s tastes. You would multiply your square footage by $ 10 to get the full credit the buyer will want. If the property needs some updates, like floors, new toilet, etc., it will multiply the SF by $ 15. Windows, doors, etc. Broken will cost $ 20. If the house is a disaster and a complete rehab, then the multiplier is $ 30. Now subtract that number from the ARV.
Whether the buyer is a wholesaler or a flipper, they need to get something out of the deal. This can range from $ 2,000 to $ 50,000 or more, depending on the location, value, and other factors of your property. However, many good wholesalers will stick to or come close to the $ 10,000 price. So, take your new ARV and subtract the buyer’s earnings by an expectation of how much money you will be offered for the property.
Creative financing for a quick sale
Assuming the final number of calculations listed above doesn’t even come close to covering what you owe on the property, then you need to learn to be creative. Some wholesalers and fins will continue to acquire property with little or no equity.
Topic 2 Financing
Topic 2 is a technique that allows new buyers to take over their mortgage payments and take control of the property. Sub2 investors are looking for leverage so as not to pin their credit, but they can get a rental property at the same time.
A seller may have a concern when it comes to a sub2 offer. For example, what if the buyer defaults on the mortgage and it ends up as a bad credit item for the seller? Well, there are protections for sellers during subject 2’s existing financing arrangements.
- A single late payment can be a deal breaker. It can be done so that, in this case, the buyer is in default and loses the property to the seller. This only possibility is ratio n. 1 for which this is a rare scenario. Most of Subject 2’s investors are experienced. They have been doing it for years and have made millions through rentals with such deals.
- Limitation clauses, such as the one requiring the buyer to refinance the property in their own name within a set period of time, further reduce risk. Let’s say that in 2 years, the buyer must refinance. By then, you will have built up enough equity by paying off your loan for this to be a possibility through traditional lending methods. Even in the worst case, they can secure hard money after that time to take advantage of additional time to change ownership or obtain other financing.
Deed or lease option
If you’re not in a rush to get a ton of cash, you can sell with a deed or lease option. This will ensure that the buyer is responsible for maintenance, insurance, taxes and everything else, while providing a monthly income stream with little risk. With either technique, you will get a quick sale. The best part is that it keeps the deed to the house until the buyer’s obligations are fulfilled. If they default, you can simply evict them and start over with a new buyer. The best part is that you are earning interest on your principal at the rate you agreed to on the sale.
FSBO (for sale by owner) doesn’t have to be difficult. It can be quite lucrative and surprisingly fast when you learn to be creative and open-minded.