Owner Financing: The Key to Selling Your Home Fast in Good or Bad Markets (Part 1)

Owner financing is a strategy that is rarely used. Sales agents won’t tell you much about it. If they do, they will loose listings because with owner financing, no sales agent is needed. The government says that only 15% of home sellers use owner financing sales strategies. The rest are at the mercy of soft … Continue reading “Owner Financing: The Key to Selling Your Home Fast in Good or Bad Markets (Part 1)”

Owner financing is a strategy that is rarely used. Sales agents won’t tell you much about it. If they do, they will loose listings because with owner financing, no sales agent is needed.

The government says that only 15% of home sellers use owner financing sales strategies. The rest are at the mercy of soft economies, or slow Real Estate markets. Homes in the 15% category sold via owner financing always sell quickly in spite of market conditions. Home sellers in the 15% category of those offering owner financing don’t work much harder selling their homes than sellers selling by conventional means. Once you apply this tested strategy, you’ll begin to produce anxious buyers. These buyers are eager. They want to make a deal quickly. You could have the finest home on the block, but if you try selling it the slow, aggravating conventional way the average home seller uses, you may be in for a long, slow, frustrating ordeal……particularly in a slow market. Almost as frustrating as riding a tricycle on the freeway. Don’t worry. Stay with us. We’ll teach you how to sell your home quickly. Just like the fast selling 15%. It’s a unique sell-it- yourself method and its quick, easy and safe.

This course will teach you the proven, and probably the most powerful strategy for selling your home fast. Plus, you can sell it on your own without using an agent. The strategy will give you the tools you need to produce an all cash sale. Or, you can use it to get a gigantic lump sum of cash at closing. If you’re a real estate agent, you can apply all of these methods in selling your current listings quickly.

We hope you’re excited as you begin to discover this phenomenal way of selling your home, which gets sales action in record time. You’re about to be introduced to a real estate sales technique that is over looked far too often by home sellers. This technique will dramatically increase the number of eager buyers for your home, even in generally soft economies and slow housing markets. It is responsible for getting more homes sold faster than any method used today.

The process is simple. Your phone will be ringing off the hook with lots of interested buyers. You pick the best buyer from all the calls received, close the sale, and collect your cash. To do this, all you have to do is apply the proven methods you learn from this course.

What do you feel is the best way to sell your home? Perhaps have an open house. Improve the looks inside and out. Advertise the special features of the home (number of bedrooms, bathrooms, big back yard with a deck, a pool, double garage) and so forth. Maybe the best way to sell your home is to adjust the sales price so that it compares to others that have sold in your neighborhood. Or maybe even sell your home at a price that is a little less than other homes being sold in your area. How about cinnamon rolls baking in the oven when you show the home. That aroma certainly gives the home a nice touch. We could go on and on with more sales suggestions, however, we think you get the idea.

These sales methods have their good points. But most home sellers over look the most powerful method for selling a home quickly. We’re going to give you the method right now. We call it the “Secret Sales Weapon”. It produces buyers instantly. The strategy consists of three magic words….

“OWNER WILL FINANCE”

Imagine going through the classified section of the paper. You see several ads of homes for sale. Most of the ads stress the unique features of each home. All of a sudden you come across an ad that says the following.

“OWNER WILL FINANCE — FOUR BEDROOM TWO BATH COLONIAL. JEFFERSON PARK”.

We can promise that this will be the first ad that most people call. In fact, more buyers will call this ad than any other ad. The reason is very simple. The words “Will Finance” sends a message to every potential homebuyer. The message is that this house can be bought fairly easy, and there won’t be lots of red tape.

Think about it. Home sellers wanting all cash will eliminate a huge percentage of buyers. Cash buyers are hard to come by. All cash requires most buyers to qualify for a loan. Bank loans are time consuming. They require homebuyers to meet lots of rigid guidelines. Sellers asking for all cash sales actually block people from buying their homes. Those stiff bank qualifications create a sales barrier. Most buyers may have reasonable credit and decent incomes. But the stiff bank requirements stop a lot of buyers in their tracks. However, when you eliminate some of the stiff requirements, the financial obligation of paying for the home is really no problem for a large number of these buyers. You and I ought to be selling to these people, yet the banks are the barriers standing in the way. Owner financing blasts away this barrier.

Let’s review what we have learned so far

The fastest way to sell your home is to offer owner financing. This means you sell your home on contract. Your buyer puts down 10 to 20 percent in cash. They sign a contract that obligates them to pay you the remaining balance over a period of years. Five, ten or maybe fifteen years.

We know what you’re thinking at this point. Your saying to yourself, “you told me you have a method for selling my home fast and that I can get all cash. If I offer owner financing, how will I get all cash?” We’ll answer that question in the following example.

Let’s say someone has a home they want to sell. The house is put up for sale with an all cash price. There is some response from buyers, but most of them are having trouble securing financing. Weeks and months go by without a sale. The home seller starts to feel depressed. One day the home seller receives a phone call. The person introduces himself or herself as a contract buyer. The contract buyer purchases real estate contracts and mortgages for cash. The contract buyer says, “Your home will sell fast if you offer owner financing.” The contract buyer tells the home seller, “If you will structure the contract with the right terms, I will buy the contract from you for CASH a few days after the sale.”

This is how simple it can be to sell your home quickly and get all cash. You offer to sell your home on contract. Pick the best homebuyer and close your sale. A few days later you simply take your contract and sell it for CASH to a contract buyer. Owner financing will instantly multiply the number of eager buyers for your home. It gives you the ability to sell fast, because you’re offering terms rather than requiring all cash.

If you’re in a financial position where you don’t need all cash, a contract can be a great investment. Home sellers usually want to invest the money they get from their home sale. Our reply is, “why not invest in something you already know about?” In this case your own home. You can defer paying taxes on the gain, plus you’ll get a better interest rate than banks pay. You get a nice income secured by your home. You understand it. You know the value of it. If you need to raise cash in the future you can always sell the contract. The homebuyer benefits by getting terms that are favorable. They have cut out the hassles of bank red tape. They have also saved the cost of paying points and loan origination fees.

There are so many ways people can benefit from owner financing. Home sellers can sell a house quickly on their own. Real estate agents can sell listings faster. Owner financing solves problems with homes that don’t qualify for bank loans. For instance, the zoning may not be right or there may be an easement or access problem. We recently visited with a home seller who had a house located on a street that wasn’t paved. The bank wouldn’t loan on that house because of the unpaved street. The sellers offered owner financing, and the house sold immediately. When the sale closed the former owner instantly sold their contract for cash.

Developers and contractors can use owner financing to sell property fast. Raising cash is no problem. Just sell the contracts. Owner financing can solve problems with couples involved in divorce that need to sell a home. When the home sells the contract can be sold for cash. The proceeds can then be divided between the couple. This is something that can be useful to attorneys who handle divorces. It can also work for people dissolving partnerships.

The bottom line is owner financing solves more problems, and gets homes sold faster than any technique we know of. We’ll cover more strategies for selling your home fast in part two of this article.

Financing Requirements When Purchasing a Home

There are four main areas that lenders scrutinize when considering an application to provide financing on a home purchase.

The first one is employment. You must prove that you have full time permanent employment. If you work part-time, we need to establish a pattern over two years showing that you are a permanent part-time employee. Therefore, so salaried people, proving employment is relatively easy. You must ask your employer to provide you with a letter of employment on a company letter head showing such information as your employment status, your title, your income and how long you have worked there. The lender will follow up and call your employer to verify to authenticity of the letter. Lenders go through great lengths to avoid fraudulent applications.

Where things get a bit blurry is if someone is self-employed. Generally speaking, lenders will not entertain your application if you have been self-employed for less than two years. The type of documentation requirements are, any one of the following: Business License, GST/HST Return Summary, T1 Generals with statement of business activities attached for a minimum 2 years prepared by an arm’s length third-party or Audited Financial Statements for the last 2 years, prepared and signed by a CA. In addition to the above, a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears.

The second area is Income. We use gross annual income to qualify deals so other than the regular pay stub for salaried people, we can use other sources such as pensions and child credits. For salaried people, things are pretty straight forward and again, things are more complicated with self-employed people. We can use an average of the last two years of notice of assessments (NOA) from Canada revenue agency (CRA) or we can use we call “Stated Income”. That is, we basically make up a number that we feel is reasonable for the type of work some one does. This is then scrutinized by the lender to make sure that it all makes sense. For example, if I say that I make $100,000 per annum washing windows, it likely will not fly but if I was to say that I make $35,000 per annum for the same employment type, it would probably work. There are countless checks and balances in the approval process that lenders will examine before granting a loan to self-employed people especially when stating income.

Besides regular income, rental income can be used when applicable. Lenders have different rules on how this type of income is used. For example, some lenders will use an 80% rental offset policy which reduces or offsets the principal, interest and tax portion of the monthly payments on the subject property. Others will add 50 or 80% of the rental income to the client’s gross income. The rental offset strategy is the best to use so it becomes important to visit a mortgage broker who has access to many lenders and knows which lenders use rental offsets and those who do not.

The third area is the Down Payment. In most cases, a 5% down payment is required however if your credit is impeccable, we can still look at no down payment options. Gifted down payments may be accepted and a three month history of your savings is required to show and prove that the money is indeed yours and not borrowed.

The last item is closing costs. These are costs associated with the purchase and include legal fees, property tax adjustments, appraisals, property inspection, home insurance and property transfer tax.

Legal fees usually range in the $750 mark for a purchase. Appraisals are required for conventional deals and cost approximately $350. They are not required for high ratio deals as they are covered under the CMHC, Genworth or AIG premiums. Home inspections are approximately $350 and home insurance range between $600 and $900. The most costly item is the property transfer tax which is calculated like this: 1% of the 1st $200,000 and 2% of the balance of the purchase price. All together, this is amounts to approximately 1.85% of the purchase price.

There is one important exception to the property transfer tax however and it is if you are a first time buyer. In this case, you are exempt from this tax if you never owned a home any where and if the purchase price is less than $425,000. If the purchase price is over the $425,000 mark, there is a scale from $425,000 to $450,000 that applies where you will pay a percentage of the tax and when you reach the $450,000 mark, the full tax amount is payable, first time buyer or not.

There are many variables that apply to the above but this overview gives you the just of what is required. Everything must be analyzed on an individual basis as no two people have the same circumstances.

Guide to Forestry Equipment Financing and Leasing

As a general rule the most common place to get forestry equipment financing is your local dealership. Due to the recent recession however, most dealerships are losing their finance sources left and right. With the extinction of so many large investment banks, lines of credits have been drastically scaled back. You may now have to use alternative finance methods to get your forestry equipment loan.

I still believe the first place to find a finance source will be your dealership or supplier. If you are buying from a brand name dealer like Deere or CAT, then they should have no problem providing finance at good rates. If you are at a local dealership, you may get lucky and they will have in-house financing. If not, most dealerships have a list of finance companies for you to call or fill out an application. I believe it is best to call them first to make sure they are still offering finance for logging equipment.

Another great place to find finance sources is online. The internet has come along way in the last decade and you can now find information on anything from spec sheets to places to reviews of equipment. There are a few good companies that you can find simply by doing a Google search. The online sources are usually small to mid-sized finance houses with access to their own lines of credit. These companies have pretty good sources and can refer you elsewhere if they can’t get the deal financed themselves. The best thing about finance houses is that they can be a lot more flexible than the local dealerships and banks. If anything else you can compare their rates to your local bank.

Your local bank or credit union may help you get an equipment loan. This can be tough though as your credit union has no interest in repossessing a delimber if you can’t make the payments on it. It is why banks and credit unions shy away from giving loans. You may get lucky though and if you are in good standing with the bank, this would be the way to go. They are going to require a lot more paperwork than the other sources but it may pay off in a cheaper interest rate.

In conclusion, you have far more options now than you did 25 years ago for financing and leasing. Try to get at least 10% of the equipment price together before approaching any of the sources I mentioned. Most will require 20% if your credit is only fair. It also really helps to be a home owner of have some substantial assets to back your loan. This may seem like a tedious process but it is in your best interest to make sure you understand the loan as it is going to be one of your largest investments in life. The finance company has a vested interest in you as they want you to succeed in business so you can pay back your loan. Hopefully, this guide will help you find the right source for financing.