Ola’s good early days were refreshing. You can put up a sign in your yard and get quick responses from interested potential buyers, or hire a registration agent and not worry about their commissions eating away at your money. Times have changed.
Real estate has become competitive. In some areas, it’s a sellers’ market. In other cases, the buyer takes the lead. No matter what, there are several thousand more individuals on real estate now than there were then. With investment seminars and flipping shows becoming more popular, the real estate pool is getting bigger on a daily basis.
But what if you are in a hurry to sell? Does this mean you are excited? Let’s take a look at what constitutes a passionate seller, and whether or not some of these seller techniques will work for your situation…
Motives:
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You are facing foreclosure
Times can be tough. Perhaps this job has been given up and you cannot replace the income in time. The bank has sent you a letter to let you know Pending lawsuits (beginning of foreclosure, also known as pre-foreclosure) You’re out of options, and you don’t want a foreclosure to end up destroying your credit.
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You are behind in taxes
Just like before, this is an immediate situation that can destroy your balance. Taxes will be collected no matter what, so bad credit need not be added to the mix. Not only will your refunded taxes eat up your equity, but it will also be tied to your wages in the future.
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You have bad tenants
You frequently receive complaints about tenants at one of your properties. The police became a landscape in front of the property. Perhaps the tenants will convert your intended investment into a drug house. You do not want to deal with the situation and would rather withdraw the money from the investment and walk away.
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You are divorcing
Let’s face it. Not much fairness in divorce proceedings. Who keeps the house? none of you? So you have no choice but to sell quickly so you can avoid being close like the plague, and get some cash for a fresh start.
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You are retired
Whether you’re a retired business owner, or a spouse who’s owned a home you’ve had for years, you just want some cash for your equity so you can move to warmer climes and bingo.
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I inherited real estate
You just inherited a multi-unit home or property, but would rather have cash instead. You want a quick sale, and you don’t want to be bothered with maintenance.
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You are an owner outside the country
You thought you could manage your investment property in California while relaxing in your home in Maine. Unfortunately, good help is hard to find and it turns out that all the estate managers are drunk. The grass is high and you get the letters. It causes more headaches than it’s worth.
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You just want some extra cash
You do not need the property in question and simply want to add your bank account.
These are all good reasons to be an enthusiastic seller. The only question I have for you in this case is.. Are you greedy?
The number one killer of real estate sales is the owner who has a lot of pride in accepting that the market will not support their outlandish property valuations. The fair market value may be high, but nobody bites. How is this quick sale for you? The first step in selling your home fast is recognizing that you need to keep an open mind. If you are open minded about the sale price, or terms, a quick sale will be a breeze.
Where are your target buyers?
You have quite a few options. Some will take longer than others. Perhaps the first way to sell quickly is to find a wholesaler. A wholesaler is a real estate investor who searches for discount real estate, writes an offer, and then assigns the contract to one of his many cash buyers. Often, a wholesaler will have hundreds or even thousands of investors in their contact list who are ready to buy right away. Their investment partners have been qualified by the wholesaler with Proof of Funds, and they will show the wholesaler many deals they have closed in the past.
There are wholesalers who buy real estate in multiple states, while other wholesalers are limited to one state. Some of them even stick to a specific city or regional area. She is known for using phrases like, “We buy homes, any area, any condition.” While many wholesalers stick to deeply discounted properties, others operate low-stock deals where Subject2 financing and seller financing can be triggered. These are some of the techniques that require you to be an open minded and really ‘passionate’ seller.
Another quick sale option is Craigslist and other classified sites. If you’re going the classifieds route, you should be prepared for “tire kick” responses. There can be a lot of novice investors out there, and people who are just looking for it will take a lot of your time to delete before they find a real buyer. When listing a classified ad for your home, be sure to include as much detail as possible in the ad. Leaving out bedrooms, bathrooms, parking, and other features just means you have to take the time to discuss these things when you get the many calls you’re going to get.
If classified ads aren’t your thing, you’ll need to find buyers through a more direct route. Go where he hangs 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 topics on a daily basis. If you list your home in the professional member areas, or marketplaces, you can get fairly quick responses from interested buyers.
Determine the value of the property for the 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 Fix Value) is one of them. To find your ARV, go to Zillow, Trulia, and Redfin. On each of these sites, find your property and write down the estimated value of each. Add all these 3 values, then divide the sum by 3. The result will be your ARV.
After you get your ARV, you want to determine what the new buyer should put into the property when repairing. If your home is in good shape, you only need to account for simple things like paint, appliances, and other things related to buyer tastes. You can multiply your square feet by $10 to get the total credit the buyer wants. If the property needs some updates like flooring, a new toilet, etc., SF will multiply by $15. Broken windows, doors, etc. will be $20. If the home is a disaster and a complete rehab, the multiplier is $30. Now subtract this number from the ARV.
Whether the buyer is a wholesaler or a flipper, they need to make something out of the transaction. This can range from $2,000 to $50,000 or more depending on the location, value, and other factors of your property. Many good wholesalers will stick to a $10,000 price point or close to it. So take your new ARV and subtract the buyer’s profit to predict how much money you’ll be offering on the property.
Innovative financing for a quick sale
Assuming the final number from the above calculations was nowhere near as interesting as what you owe on the property, you need to learn to be creative. Some wholesalers and flippers will still acquire property with little or no equity.
Topic 2 Funding
Subject 2 is a technique that allows new buyers to take over your mortgage payments, and take control of the property. Sub2 investors are looking for leverage so they don’t tie up their credit, but can take out rental property at the same time.
Seller may have concern when dealing with sub2 transaction. For example, what if the buyer doesn’t pay the mortgage and it ends up as a bad credit item for the seller? Well, there are safeguards in place for sellers during existing financing deals subject to 2.
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A one-time late payment can be a deal breaker. It can be done so that in this case the buyer defaults and loses the title to the seller. This single possibility is the first reason why it is such a rare scenario. Most of the Top 2 investors are seasoned. They’ve been doing this for years, making millions in rents through deals like this.
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Restricting clauses such as those requiring the buyer to refinance the property in their own name within a specified period of time reduces the risk further. Let’s say that in two years the buyer has to call back. By then they will have accumulated enough equity through your loan repayments for this to be a possibility through traditional lending methods. Even in the worst case, they can secure hard cash after that time to take advantage of extra time to flip the property or get other financing.
Deed contract or lease option
If you are not in a hurry to get a bundle of cash, you can sell under a contract for a bond or a lease. This will ensure that the buyer is responsible for maintenance, insurance, taxes and everything else, while giving you a monthly income with very little risk. With either method, you can get a quick sale. The best part is that you keep the title to the house until the buyer’s obligations are met. In the event of a default, you can simply evict them and start over with a new buyer. The best part is that you earn interest on your equity at the price you agreed to sell.
FSBO (For Sale by Owner) doesn’t have to be difficult. It can be very profitable and amazingly fast when you learn to be open minded and creative.