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In this challenging real estate environment, which may be as nerve-wracking to navigate as playing a high-stakes game of poker, buyers seem to hold all the good cards.
But be it luxury property or a rustic retro residence you are looking to find a purchaser for, the key to "beating the house" and effectively unloading homes in due time today is knowing the best techniques for success. Here are the five proven ways nowadays to market property fast, steer clear of the foreclosure process, and perhaps even money in more chips than you came to the table with.
The traditional sale
The tried-and-true approach to hiring a real estate agent and listing around the MLS continues to be popular. As the advantage to a traditional sale is you get paid at closing as quickly as possible, the disadvantage is that you probably reached the closing stage since you had to accept less cash. Keeping your asking price low at the start of the sport can result in a faster sale, but a steep price slash can be hard to stomach.
Following the traditional sale route could be frustrating in today's market for reasons beyond high supply and low demand. It is also about who's setting the terms of the deal. Within this market, the lenders dictate those terms. When banks impose stringent stipulations and lending requirements, you receive fewer qualified buyers. They can't get much wiggle room from lenders, so instead purchasers demand painful concessions from sellers in the form of a lower price, more favorable terms, and freebies added too the offer.
The lease purchase
An overlooked and underutilized tactic that may greatly benefit buyers and sellers alike may be the lease purchase agreement, which essentially turns your property right into a rent-to-own real estate by owner. And when seller financing is offered, it completely eliminates the bank lender middleman, too.
Whenever you book your house inside an imaginative lease purchase arrangement, you're likely to attract worthy candidates to purchase, as their intention is to own, not only rent. These prospects are prepared to invest non-refundable option money as a deposit that's applied toward their cost, providing the tenant using the option although not the obligation to buy the property within a predetermined time. Within this transaction, you usually get a better price for your home because you're extending better terms towards the tenant/buyer.
A twist on the lease purchase may be the owner-financed home-which amounts to an upfront sale from the property whereby the vendor holds a promissory note in the buyer that's secured by the property as collateral, like a bank would, and title immediately transfers to the customer. As with a rent-to-own home, the price and terms should be clear and mutually accepted in advance.
The problem with lease purchase agreements is that they require the buyer to be proactive, resourceful, and creative in generating a chance that otherwise doesn't exist. Additionally, the terms and contract need to be carefully negotiated and structured to avoid legal problems.
The "pure" option
Another inventive method to attract the right buyer is to pursue a "pure" option. With this particular approach, you provide an "optionee" (who, in many cases, is definitely an investor seeking to sell the house to some 3rd party) having a no-obligation, elective chance to buy your property in a predetermined price and inside an agreed-upon time frame.
In return for finding the option, the optionee should provide you with some form of predetermined consideration, which may be upfront money and/or commitment to help promote your property (including any associated marketing/advertising/listing costs involved). The optionee can gain selling his/her option to someone else should you agree upfront that this option is transferable.
The professionals from the pure option are you don't need to recruit a real estate agent and pay a sales commission, saving you as much as 6 percent or even more on the transaction. In addition, the optionee does the legwork of selling to and finding a buyer for you personally, assuming she or he doesn't personally buy the home.
The cons are that you, the seller, need to fuel this opportunity yourself-in other words, the choice is yours to attract and attract prospective optionees, most of whom turn out to be investors. Another disadvantage is that you normally cannot sell your property for an outside party once your optionee has acquired the choice on it.
The short sale
Inside a short sale transaction, the lender agrees to accept less on the property than happens to be owed on the mortgage. Banks would rather negotiate a short sale with you than engage in foreclosure because they typically net as much as 15 percent more, normally with the former approach.
If you are suffering serious financial constraints and risk having your home repossessed, you need to unload your property fast. The advantages of selling your home using a short sale are that you don't have to endure the social stigma, stress, and severely damaged credit rating that accompanies foreclosures, plus you're eligible to buy another home in two years versus up to seven years should you have had been foreclosed on. Additionally, thanks to the Mortgage Forgiveness and Debt Relief Act that expires after 2012, you won't need to pay income tax around the amount of money the bank writes off as a loss.
However, there is no guarantee your bank will accept a brief sale offer or work quickly with you, and when you don't have the assistance of a skilled short sale specialist to guide you through the process, the chance increases that your short sale will fail.
The "subject to" sale
A "subject to" sale involves you drafting an agreement to some buyer, who acquires your property's deed although not the mortgage loan, which remains in your name.
Here's how everyone benefits: The buyer makes your monthly loan payments in return for using a controlling interest within the property. The lender is paid promptly entirely every month and satisfied. You can preserve your credit. Plus, after you tell your lender that you are engaging in a "subject to" arrangement, you lessen the chance of the lending company invoking a "due on sale" clause that normally comes about when a property is sold. This provision permits the lender to demand immediate payment from the mortgage balance, which would be terrible timing for you.
Aside from the anxiety about an impending due for sale demand, the primary caveat from the "subject to" sale is payment uncertainty. While the buyer is liable for that title in a "subject to" arrangement, if the buyer doesn't spend the money for monthly mortgage on time, they're not prone to the lender-you are. It might be wise to secure an intermediary just like a loan servicing or trust company that can collect and disburse the mortgage payments. More often than not, a buyer who is a professional investor may have these services in-house or perhaps a company that leverages these services.
Don't go it alone
Smart sellers are a good idea to consider utilizing creative real estate ways of unload properties in 2011 and beyond.
However, you don't wish to pursue these maneuvers without the guidance of the real estate and investment expert you never know how you can properly structure the transaction. A skilled professional can help you determine a great way that fits your risk profile, comprehend the complex mechanics involved, and compete and succeed in a hard and competitive market.
