Selling it fast


Selling it fast
by James Miller

Selling a home or rental property quickly has become a concern today more than ever. Tight lending and falling home prices are putting the squeeze on investors and home owners alike.

Selling on Terms
While many people are sitting on their homes We have moved people into two of our properties just this month. While technically not a sale, we did turn two non-preforming assets into preforming ones and the tenants are poised and expected to buy within the next two years.  We “sold’ the home to both sets of tenants on a Lease-Option.

The Lease Option can be thought of as a “Rent to Own” scenario.  The tenant buyers put up a down payment, (usually more signifigant than a security deposit, but less than they would have to have with a bank) and pay monthly payments that are typically above market rental rates for a comparable rental home.  Much like a bank, the buyers lose the Down Payment deposit money if they decide to take off in the middle of the night, stop making the monthly payments, or are in default of the lease.  If they follow through and purchase the property, the down payment money, along with any other equity they have built up, is credited to the buyer at the closing.

The lease option is not the only way we sell, but it is one of quickest ways to get people into a property. This brings up the first point; in order to sell fast, you need to:

Make your property easy to buy
Many people spend too much time focusing on the how the home looks and if they should stage it, or which Realtor will do the best job for them.  While all of these things are important in their own right, none of them get the same level of impact as when you  make the home easy to buy.

If you create and easy purchase plan for the buyers, you can also command a premium for the home. Which way would you rather buy a home $100,000 cash, or $100 down and payments of $10 a month for the next two years? How much more would you pay for the property if you were able to get great financing like that $1000? $5000? Some would probably even pay $10,000 pr more above market for this deal.

While the numbers in this example are an exaggeration, you can see that there would be a middle point where it made some sense to sell on terms as you can command a premium for it.

There are other ways to make it easy for them to buy besides doing a lease option. You can offer to take back a second mortgage, or give cash back credits to them at the closing.  You can offer to carry the financing in other ways, such as originating the first mortgage.  When you start to think in terms other than the buyer coming to the table with all cash

Appeal to the hidden market
By selling via a Lease Option or other seller financing we are appealing to people who would likely not be able to get a loan otherwise.  These are buyers who have been discarded or are just plain off the radar of real estate agents and brokers.  There are a lot more of these people out there than you think.   We are offering the dream of home ownership to people who have likely been told “No.” before.  They have seen their friends and family buy homes of their own. They have a taste for their own home. They want a home of their own…. maybe even more than normal since it has been so elusive for them.  When you find a buyer this hungry, and you are able to give them what they want,  price becomes a secondary concern.

A starving man doesn’t really care what a meal costs, only that he is able to obtain it.

Holding an Auction
If you don’t mind spending some money on marketing, Auctioning a house can be a good way to move it fast. The last thing I read said that homes selling at auction were bringing 87% of there Fair Market Value.  Considering the speed at which an auction can take place, and the condition of today’s market, this may not be such a bad hit.  There are also other profit centers built into selling a home this way.

Many people choose to stage a home for an auction and auction off the items inside. Many times, these can be consignment items where the owner of the home is allowing furniture stores, artists and other businesses or individuals to market their wares in exchange for a small commission to the home owner.  This can work particularly well for higher end homes where the furnishings can often bring as much profit as the sale of the home.

Another built in profit center is the list of names of people who registered for the auction.  This is basically a buyers list of qualified leads that many real estate agents, moving companies, and mortgage brokers would love to have. Good qualified leads for home buyers can bring $10 to $25 per lead.

Having a “No Reserve” Auction will get you the highest attendance, but without the safety net. If not done right, it is possible to lose a good amount of money.  It is a tempting idea to hold a No Reserve auction and know that aunt Millie is sitting in the audience, ready to bid the property up to your predetermined price, but this practice is forbidden and if auctioneers catch wind of something fishy will stop the auction.

Yet another way…
While I have not done this myself, I have heard of investors who will throw their own properties into foreclosure, just to get the exposure that foreclosed homes and homes that are on Notice of Default lists are getting in today’s market.  It may sound extreme, but it is positioning yourself with an edge… the very thing that all good marketing should accomplish.

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