When it come to selling selling Real Estate property , there are many factors that determine the sales price, time on the market and your bottom line. There are a couple key areas that will help you get 10% more from your property.
As the old saying goes, when it comes to selling Real Estate, It’s Location, Location, Location. For more sellers this will generally be the primary reason that a property will get top dollar.
There are plenty of nice properties in bad neighborhoods.
Many of these properties will never sell. Or they sell for far less than they would have if they were located two blocks over. It’s simply the reality of the business.
On the other side of the coin there are plenty of really distressed properties in great areas that sell in a matter of days. Many of these “Dogs” will sell for far more than their counterpart two blocks away. Let me illustrate to you how a little unknown or rarely used strategy could get you an additional 10% from your property, I would like to take to you about financing.
The financing options that you consider
when selling your home could dramatically influence the selling price as well as the amount of money that you could earn on the sale of your property.
Let’s look at some examples of how financing will affect your bottom line.
There are many types of financing in the marketplace. Sellers can choose which options they will accept when negotiating an offer on their property. This may sound a little odd, however, it is at the discretion of the seller if they are willing to accept a cash, conventional or FHA/VA loan. The accepted type of financing can be a determining factor for getting 10% more from the property.
Here’s the quick explanation of what I am talking about
. With a FHA/VA loan the cost or potential costs and concessions associated with the government loans can be expensive to a potential seller. On a conventional loan the cost may and probably will be lower. And of course on a cash transaction, the cost are even lower.
Now looking at this from the side of the buyer. He or She may not be in a position to make a purchase without the some or most of the costs associated with the purchase. He or She may need the seller to assume these costs in order to get the transaction to go through.
So with all the costs and fees associated with selling a property, How can a seller earn 10% more on the sale?. It’s really very simple ( If the strategy fits your financial situation) Let’s start with some facts. according to the US census bureau 34% of all properties are free and clear.
There are plenty o Free and Clear Properties. It may also give these sellers an opportunity to get additional income from their investment. Here’s how it works. Say that you have a property that you are wanting to sell and it’s Free and Clear of any mortgages.
Your primary goal is to use these funds to begin to fund a retirement. Consider a child’s education or a trip around the world. Whatever the case may be, you need income. What better way to generate that income with minimal risks. Let’s assume that you have a $200,000 home that you are wanting to sell. You advertise the property at $220,000 with the option of seller/owner financing.
The Buyer puts down 10% ($22,000) you carry ( or play bank on the remainder at a rate of 6%) the approximate payment to you every month is around $1300.00 for the next 30 years. Now you may want to reduce the time to 15-20 years depending on the buyers situation.
Now why do I say that this strategy will get you 10% more?
Well it’s very simple. Buyers that may be self employed, or are new to a job or maybe have gone through some recent financial issues will pay more for the convenience of not to go through what a bank or mortgage company will put them through to get the financing through them.
Additionally, if your property is in need of repair and you can not afford to fix it, this is a great way to attract buyers. Many buyers can and will have the funds and skills to do all the repairs. If you attempt to sell via a conventional loan you will be required to make those repairs. The repairs must be done before a buyer will be granted a loan.
Sure, you would love to have all the cash in the bank.
But for most of us, we don’t live that way. We pay our bills on a monthly basis whether we draw it from savings or weekly paycheck.
Lastly, if you were to “Be The Bank” you can always sell off the income payments in a seconday market at any point down the road.
For more information on this topic, fell free to reach out to us via email or phone.
Note: This article is not to be considered invest nor tax advice. With all investments and property transfers, seek the advice of an attorney, investment professional, or CPA.