The good old days were refreshing. You could put up a sign in your yard and get quick replies from interested potential buyers, or hire a real estate agent and not worry about their commissions eating up your money. The times have changed.
Real estate has become competitive. In some areas it is a seller’s market. In others, buyers are taking the reins. In any case, there are many thousands more people in real estate today than there were then. As investment seminars and flipping shows become more mainstream, the real estate pool is growing by the day.
But what if you are in a hurry to sell? Does that mean you are motivated? Let’s take a look at what makes a motivated seller and whether or not some of these seller techniques will work in your situation…
You are threatened with foreclosure
Times can be tough. You may have been fired from that job and not been able to replace income in time. The bank sent you a letter telling you a Lisa Pendens (the start of foreclosure, also known as a preforeclosure) You are out of options and don’t want foreclosure to destroy your credit.
You are in arrears with taxes
This is still an immediate situation that can destroy your credit. Taxes are collected no matter what, so there’s no need to add bad credit. Tax back payments not only eat up your equity, but are also related to your future wages.
You have bad tenants
You keep getting complaints about tenants in one of your properties. Police become a common sight in front of the property. Perhaps the tenants are turning your intended investment into a drug house. They don’t want to deal with the situation and would rather take money from the investment and walk away.
they get divorced
Let’s be honest. Not many are fair in divorce proceedings. Who keeps the house? None of you? So you have no choice but to sell fast so you can avoid your soon-to-be ex like the plague and get some cash to start over.
You are retiring
Whether you’re a landlord going out of business 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 house or a multi-unit property but would rather have cash instead. You want to sell quickly and not worry about maintenance.
You are an out-of-state owner
You thought you could manage the California investment property while relaxing in your Maine home. Unfortunately, good help is hard to find and the caretakers all turn out to be drunks. The grass is high and you get letters. It causes more headaches than it’s worth.
They just want some extra money
You have no need for the property in question and just want to top up your bank account.
All of these are valid reasons that would make you a motivated seller. The only question I have for you in this case is… are you greedy?
A number one real estate killer is an owner too proud to accept that the market won’t support his fancy property valuations. The fair market value may be high, but nobody bites. How is this quick sale going for you? The first step to selling your home fast is acknowledging that you need to have an open mind. If you are open-minded about the price of the sale or the terms, the sale quickly becomes a no-brainer.
Where are my target buyers?
You have a few options. Some will take longer than others. Finding a wholesaler is probably the best way to sell quickly. A wholesaler is a real estate investor who searches for discounted real estate, writes an offer, and then assigns the contract to one of their many cash buyers. Often the wholesaler will have hundreds or even thousands of investors in their contact list who are ready to buy immediately. Your investment partners have been qualified by the wholesaler with proof of funding and have shown the wholesaler several deals they have closed in the past.
There are wholesalers that buy real estate in multiple states, while other wholesalers are limited to a single state. Some even stick to a specific city or region. They are known for using phrases like “We buy homes, any area, any state.” While many wholesalers are sticking to deeply discounted properties, others are working with low-equity deals where Subject2 and seller financing can come into play. These are some of the techniques that require you to be an open-minded seller who is truly “motivated”.
Another option for a quick sale is Craigslist and other classified sites. If you go down the classifieds route, you’ll have to anticipate the reactions of the “tire kickers.” There can be a lot of new investors, and people just looking will take a lot of time weeding them out before they find a real buyer. When posting a classified ad for your home, make sure you include as much detail as possible in the ad. Skipping bedrooms, bathrooms, parking lots, and other features just means you have to spend time discussing those things when you’re taking the multitude of calls you’ll be receiving.
If classified ads aren’t your thing, you want to find buyers in a more direct way. Go where they are. 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. By listing your home in these professional member areas or marketplaces, you can get responses from interested buyers fairly quickly.
Determining the real estate value 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. Search for your property on each of these websites and write down the appraised value for each of them. Add all 3 of these values together and then divide by 3. The result is your ARV.
After you have your ARV, you want to determine what repairs the new buyer will need to put into the property. If your home is in great condition, you only need to consider simple things like paint, appliances, and other things that suit the buyer’s tastes. You would multiply your square footage by $10 to get the total credit the buyer wants. If the property needs updating, e.g. B. Flooring, new toilet, etc., multiply the SF by $15. Broken windows, doors, etc. cost $20. If the house is a disaster and a complete rehab, then the multiplier is $30. Now subtract that number from the ARV.
Regardless of whether the buyer is a wholesaler or a pinball player or not, they need to make something 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 stick to the price tag of $10,000 or close to it. So take your new ARV and subtract the buyer’s profit to get an expectation of how much money you’re being offered for the property.
Creative financing for a quick sale
Assuming the final figure from the above calculations wasn’t even close to how you take care of your debt on the property, then you need to learn to be creative. Some wholesalers and fins will still take over a property with little to no equity.
Topic 2 Funding
Theme 2 is a technique that allows the new buyers to take over their mortgage payments and take control of the property. Sub2 investors are looking for leverage to not tie up their loan but still get a rental property.
A seller may have concerns when dealing with a Sub2 deal. For example, what if the buyer defaults on the mortgage and the seller has bad credit? Well, there are protections that apply to sellers during existing financing deals related to issue 2.
A single late payment can be a deal breaker. It can be done so that in this case the buyer defaults and loses ownership back to the seller. That single possibility is reason #1 for this being a rare scenario. Most Subject 2 investors are experienced. They’ve been doing this for years and have made millions through rentals from deals like this.
Statutes of limitation, such as the buyer’s obligation to refinance the property in their own name within a certain period of time, further reduce the risk. Let’s assume that the buyer has to refect in 2 years. By then, you will have accumulated enough equity by paying off your loan to be able to do this through traditional lending methods. Even in the worst case, they can secure hard cash after this time to use extra time to sell the property or get other financing.
Contract for deed or rental option
If you’re not in a hurry to make a bunch of money, you can sell a contract for the deed or a lease option. This ensures that the buyer is responsible for upkeep, insurance, taxes and everything else, while still giving you a low-risk monthly income. Both techniques will get you a quick sale. The best part is that you keep the title deed until the buyer’s obligations are fulfilled. If they default, you can just evict them and start over with a new buyer. Best of all, you earn interest on your equity at a rate that you agreed upon when you sold it.
FSBO (for sale by owner) doesn’t have to be difficult. It can be very lucrative and amazingly quick if you learn to be open-minded and creative.