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The Problem
When it comes to selling real estate, one of the
most difficult and frustrating situations for sellers is when market conditions
make it nearly impossible to sell at the desired price point. A high initial
listing price might be because the seller simply has an unrealistic idea of how
their house stacks up against the competition in the area, or because the owner
needs to sell for a set minimum price in order to pay off their loan against the
property.
With traditional property sales methods, the only
way to prevent the property from sitting on the market indefinitely is to keep
dropping the price. Unfortunately, this technique doesn't always work -
especially if the seller is unwilling to "discount" their house by much.
In areas flooded with homes for sale, reducing the
asking price slightly will not bring the desired result. In fact, it's common
that the property will continue to sit on the market without offers, alongside
the multitude of other unsold properties with similarly reduced prices.
Anyone experienced in sales understands that making
your product stand out from the crowd is a critical technique for success. But
if there's too much competition offering the same attributes, the only logical
way to attract the attention of serious buyers is to drop the price so that your
property is a much better value than the competition.
In cases where the seller is too inflexible with
their asking price, this is not a practical solution. Without an alternative
strategy, the seller is forced to keep the house on the market for an extended
period of time with an unrealistic asking price, hoping for the right buyer to
come along. And as you know, that "Mr./Mrs. Right" might NEVER materialize!
The Seller Finance Solution
Property sellers who want to both obtain their
desired price and close on the deal quickly should consider seller financing.
Seller financing is a powerful tool to remedy real estate situations that
otherwise look grim.
Many home sellers (and their real estate agents) do
not see seller financing as a viable option. In actuality, seller financing can
bring new attention to the listing and invite a different group of potential
buyers - thereby opening up a unique, untapped market.
A large percentage of people throughout the country
cannot get approved for bank funding to buy real estate because of their credit
situation. Many of these people are still in the market to buy a house, however.
The "credit-challenged" are often frustrated with the limitations of apartment
living or being renters; as a result, many are willing to pay a higher price
just for a chance to get seller financing and improve their quality of life.
A savvy property seller who recognizes this
opportunity can salvage an unfavorable situation and turn it into a bonafide
seller's market. By using this type of creative financing, the seller could
actually end up getting more than the original asking price - without resorting
to the questionable strategy of patiently waiting for the "right buyer".
Seller finance can enable homeowners to receive a
favorable selling price despite bad market conditions. In addition, the real
estate agent (if any) gets to close a deal and move on to other sales, while a
home buyer with poor credit is able to become a home owner. It's one of those
rare situations where everyone at the negotiating table gets what they want.
Paper Tigers
Many home sellers never consider seller financing
because they don't understand the benefits. There are also common misconceptions
that it's much too complicated to attempt to orchestrate a seller financed deal,
or that there are no buyers willing to sign a private note.
Once a property seller takes the time to learn
about the basic process, the advantages of offering financing instead of a lower
price to sell their property become very clear. Plus, a little education about
seller finance will make it apparent that drafting a secured private note is
actually a very straightforward process.
The bottom line is seller financing can enable a
home owner to "have their cake and eat it too" - i.e., sell at the desired
price, close the deal quickly, and even receive additional income from interest
payments as well. |
