Home : Real Estate Investing: Creative Ways of Selling a Home to a Buyer

Real Estate Investing: Creative Ways of Selling a Home to a Buyer

Posted by Tina Merritt on 7/2/2009 at 10:58 AM
Posted in Real Estate Investing

Many in residential real estate investing found that in a buyer's market, the buyer's have a buffet to choose from and the sellers are always looking for new and innovative ways to stand out as the better choice in the line.

Sometimes, offering creative ways of financing can open the property up to a new consumer or offer attractive financing terms the competition may not be offering. Below are a few examples of these creative financing terms.

Rent with the Option to Buy. Commonly known as a Rent-Option, this type of financing usually has the buyer sign a lease to rent the property, and then a portion of their monthly rent payment will go toward a down payment, closing costs, debt payoff, etc. At the end of the lease term, the buyer has the "option" to purchase the home and have that portion of their rent go toward the sale. Generally, the rent amount is higher than current market rent. If the buyer decides not to exercise their option, they lose all or a portion of the amount that was supposed to apply toward the purchase.
Lease/Purchase. This type of financing has the buyer rent the property; however, they also sign a purchase agreement obligating them to buy the property at the end of the lease term. The rental amount may be at, below or at market rate depending on how long the buyer leases the property and how quickly they can consummate the purchase.
Buyer Possession with a Delayed Closing. In this scenario, the buyer signs a purchase agreement and takes possession of the property prior to closing. This may be attractive to buyers who need a place to live ASAP while their loan is being processed. Or, if the owner has not owned the property long enough to allow the buyer to get an FHA loan, this type of purchase will allow the buyer to reside in the home until the property qualifies.

A few thoughts on the above:

Keep in mind that a purchase and a lease are 2 separate transactions. Do not use a rental security deposit for a earnest money/escrow payment for a purchase or vice versa.
Some real estate agents do have the paperwork to draw up these agreements; however, due to state laws, I recommend having a real estate attorney review the documents at the very least, if not prepare them.
If you want to sell your property, don't rent it. Some "buyers" are eternal renters and will never complete the purchase.
The more money the buyer has into the transaction, the more likely they are to close the purchase. If the buyer will only lose a few hundred dollars by walking away, they probably will walk.
Always, always, always, pull the buyer's credit if you are going to have them take early possession or rent the property. A history of a blatant disregard for paying bills on time should be a red flag and require a higher cash investment on the part of the buyer/renter. A mistake before the papers are signed could mean headaches for the duration of the transaction.

Tina Merritt is an 11 year veteran Real Estate Agent and Trainer based out of Virginia Beach, Virginia. She holds a degree in economics from Virginia Tech and post-baccalaureate from Virginia Commonwealth in real estate and land development. As an avid social networker and internet marketer, Tina helps real estate agents, loan officers and affiliated industries embrace technology. As a real estate agent, Tina primarily deals with marketing and selling properties deemed "hard to sell" and also works with real estate investors helping them build and/or liquidate their portfolios for maximum profit.

Please log in or join to comment.

7 Comments

Posted by member1989276 on 07/03/2009 1:29 AM

Very interesting post! Success of business depends on the powerful marketing strategy. I had been exposed into business too when we were still in college as part of our curriculum. You really have to think out of the box, think what will best attract to the buyers. That is the key points in the pedestal of success. You have to give the best in you to satisfy the seller and to convince that your business idea is greater and brilliant than others. All it takes is the guts to meet the demand of the customers/buyers. But being into business you need to have a knowledge some laws, the norms and the ground so as any lawsuit or litigation. This is what happened to Children's Place. The company has lawsuit insurance, so they are settling out of court, and might not need personal loans to cover the damage. The company has been having fiscal difficulties over the past few years, and has been cutting costs as fast they can to restore some profitability. If the actions were taken as policy it might constitute securities fraud, which would mean the Children's Place would need more than installment loans to get out of trouble.

For more info visit: http://personalmoneystore.com/moneyblog/2009/07/01/childrens-place-ag...
-12-million/

Posted by member1936481 on 07/03/2009 3:54 AM

Thanks for sharing you idea about real state investing and about the creative ways of selling a home to your buyer or customer. This will help us a lot. Maybe did you also hear about the death of Jacko? Well, for sure his Neverland isn’t off for real state selling but if ever it is, I think it will cost a lot. Recently I hear that OK magazine Michael Jackson covers is part of a tribute issue to the recently deceased singer. The Ok magazine Michael Jackson cover isn't going to require an all black cover and no one is forced to smell a metaphorical glove, but it's what's inside the cover that has people up in arms. The magazine is rumored to have the last picture of Michael alive, or perhaps just after death, as the possible post mortem photo taken of the King of Pop. Well if this is true the strategies in selling magazines and real state is quite similar.
See more at: http://personalmoneystore.com/moneyblog/2009/07/01/magazine-michael-j...

Posted by member1992392 on 07/05/2009 2:59 AM

There are lots of things to consider when entering in the real estate investing business. Here are some advise

Wholesaling generally refers to the process of buying a property for below market price, and then selling it to another investor, usually without fixing up the property – it’s a procedure also sometimes described as "flipping properties"
Buying and selling wholesale real estate property can be difficult and challenging as sellers are instinctively inclined to sell their property for more if they realize you are a wholesale investor.

I have search so many websites in the internet and I think http://www.finestexpert.com is on those websites that offers great information when it comes to residential real estate investing

Posted by member1982261 on 07/06/2009 12:03 PM

Here is Canada is a sellers market once again. I guess cheap money is perpetuating the Canadian housing bubble.

John,
http://www.canadabanks.net/Mortgages.aspx

Posted by Rachael Sutton #1253595 on 07/06/2009 11:16 PM

Ms. Merritt Thank you for a good post. I would love to see a printable download on this subject.

Posted by member1994267 on 07/13/2009 2:35 PM

Thank you for this information. I read it at the best time as I am leaving in a few days to see my new grandson :) as well as to check on an unsold home. It has been on the market for over a year with a heartbreaking $20K price reduction. A house down the street is for sale (again) and they have created a price war even though they have little equity. Any other thoughts would be welcome.

Posted by member1996607 on 07/20/2009 10:58 AM

Great post on real estate investing, lots of great info.

For more info visit: http://www.yuckyhouseleads.com

Please log in or join to comment.

Newer

Older

Home