Sell Fast In A Slow Market Using Seller Financing

What do I mean by slow market? Well, if you local real estate market has an average days on market of 90 or more days, you are in a slow market. It is in any real estate investors best interest to start making money from any property quickly. The sooner we can generate either an income or get cashed out, the better for any real estate investor. So, how do you sell real estate quickly in a slow real estate market?

If you take into consideration what is occuring in our world today, you will realize that most prospective buyers have some credit issues, income issues, or other problems that will hinder them from acquiring their own loan to buy a home. Also, we know that most lenders today are very conservative with their lending criteria. They require high credit scores, low debt to income ratios, larger down payments, and more conservative appraisals. With that having been said, real estate investors have not only become sellers of real estate, but in many cases, financers of real estate.

Seller financing is when you the seller of real estate offer the buyer of your property financing to buy it from you. You will receive payments over time until it is paid off in full, they refinance and pay the loan off, or they sell it. The buyer will own the property, thus they have the right to take over possession, improve it, and sell it any time they want to. They will have this right for as long as they continue to make their monthly payments to you.

Some of you might be thinking, my money or my credit is going to be tied up now. How is this going to help me do more deals? You are right. If you don't do this the right way, you will have your money and credit tied up for a long period of time. The way to gain relief from this burden is to use one of two possible solutions. One of the solutions is to sell your note to a promissory note investor ornote buyer. The other solution is to team the buyer up with a credit repair specialist who will help them rebuild their credt.

However, if you create a marketable note, you can sell that for a good price, thus you will have the money out of the deal and/or your credit free to go after another property. I will go into the details of creating a marketable note to sell in an upcoming post. Until then, you need to know that there are particular things that you must do when you set up your seller financing deals or else you will have an unsaleable note.

A credit repairs specialist can be a great power team member. They can help you credit challenged buyers build their credit faster, so they will qualify for a new loan to cash your financing out that much sooner. The main incentive for the buyer to pursue credit repair is going to be the interest rate you are charging on their financing and the balloon that you have coming due in a short period of time. It gives them the extra sense of urgency and helps motivate them to work on repairing their credit.

In addition to all of those, a savvy real estate investor should always structure a real estate deal that has a good profit margin for them. What is a good profit margin? It depends on the area and the person, but I would recommend a purchase amount no higher than 70% of fair market value. It is best if there is a larger margin than that whenever possible. You will need a larger profit margin, because if you decide to sell the note, you will be selling the note for a diso**** and you want to ensure you are making your profit needed in the deal. It depends on how you set up the note as to how much of a diso**** you will incur from the sale of the note, as well as the note buyers investment criteria too. Some of your note buyers will be more conservative than others, so they will take a steeper discount on the note purchase than another note buyer.

In all cases, you will want to make sure you require a down payment too. It depends on the area as to how much you can collect, but you need to make sure it is a sufficient amount of money. Essentially, you want to make sure they have enough "skin in the game", so they will pay each month so they do not lose that down payment. It will be immediate cash that you can put into your pocket.

One of the biggest benefits of selling your real estate with seller financing is that you can sell the property for top dollar in any market, because you are offering the buyer to get into a home that they would not normally qualify for in the current market. They are getting terms, so they will not get price. You will be able to sell the property a lot faster, because you are targeting a group of buyers that do not have a lot of other options to buy property. There is a huge demand for this opportunity in our current world due to the financing options being so limited.

It helps real estate investors to start generating a secure and great monthly cash flow. Understanding how to effectively implement this technique will help any real estate investor gain an extra added advantage in any slow real estate market.