Many investors and homeowners will be shocked by that statement. But if you are an investor of equity financing, the next three to five years will give you enormous opportunities.
Sellers used to hire a real estate agent, the agent would place the house in MLS, and then the homeowner would start packing and the agent would start spending his commission control. Because they only had to sort through the offers, and choose one that offered the best terms and most money over question. Just like the spaghetti west these days are gone, along with many real estate agents and mortgage brokers who flooded the market under the real estate boom.
Now sellers are desperate for an offer - any offer. Buyers who could have qualified last year are now completely out of the market. Fed s could lower the interest rate two full points and it will still not save the current market.
It is not the interest rate that affects buyers, it is the new stricter standards that require full documentation, repayments, two and even three assessments or real estate value assessments and the potential buyers qualifications and many come up short.
Heck, even buyers coming to the finish line have to worry about whether the mortgage broker they use will be on business until the release closes, and if the lender they use will be able to finance the deal.
This provides an incredible opportunity for investors who understand ownership financing to get great deals. And homeowners who understand ownership finance will sell their properties much faster and do not have to discount them as much - if at all.
Ownership funding essentially refers to some technology where the property owner helps the buyer to finance the purchase. This may be in the form of a sellers second where the buyer generally receives a loan on the bulk of the purchase and the seller accepts a portion of the purchase price in a listing paid by the buyer. In essence, the seller becomes a lender.
An example would be a seller who had a house worth $ 500,000 and is very motivated to sell or they are in a financial position where they do not have to receive all cash benefits. They can offer to finance 5-20% of the purchase price, which helps the incoming buyer to qualify for a loan. If the seller really needs money, they can also take the other they create in this transaction and sell it to a listing buyer at a discount.
The discount amount depends on a number of variables including the buyers, the credit score, the amount of spice on the loan and the loan to evaluate, among other things. While you take back the other, and then sell it to the secondary market, the seller can get more money overall, in this market it would almost let the property be sold faster.
Other common finance techniques include leasing options, sandwich agreements, contractual actions, submitted and cover or all-confidence documents AITDs and these will be future articles, including examples of when or not to use them.
If these techniques are so good, why are they not known? Because mortgage brokers and real estate agents do not make a commission on these offers, they do not have an incentive to promote these technologies and because so many agents are new - they just do not know about them.
Examples of a few offers that can be made with Ownership Financing:
Ownership financing can help in all these situations and with a little creativity everyone can win in these types of transactions.
Ownership funding is not a paradise, but is a very real option for many people who currently do not know their options. Considering that there are more than 150,000 homes that are more than 30 days late in Los Angeles County alone, although it only helped that 10% of these owners would be 15,000 families.
Given the millions of families in the United States facing foreclosure, or having problems selling their homes, there will be great opportunities for investor finance owners for a few years to come.