SELLING First Rehab... How to Best Approach? - Posted by BrandonT (So.IL/St.Louis)

Posted by MicheleCO. on April 10, 2002 at 18:52:23:

I am checking an opportunity to become an associate with Clarion Mortgage company right now. I have a meeting with an representitive on Friday morning. I will keep you all posted. It would be great to also get an origination fee for all the T/B’s that I line up with financing! MicheleCO.

SELLING First Rehab… How to Best Approach? - Posted by BrandonT (So.IL/St.Louis)

Posted by BrandonT (So.IL/St.Louis) on April 09, 2002 at 19:30:03:


I’ve already posted once in a couple weeks past with a topic very similar, but I’m here now to ask on a bit more detailed level about dealing with the entire aspect.

This is essentially the first property I’ve sold on what I suppose is basically a ‘for sale by owner’ scenario though, MLS not included, I’m marketing the home more heavily than any realtor would without a doubt.

The situation is in about a week of advertising I already have had numerous calls, 30 or so flyers dissapear from my ‘info-tube’, and two different couples/people tentatively make offers. What I’m discovering though and where the need for advice comes in, is that I’m seeing these are all people who are not pre-approved, and frankly don’t have a clue how to get financing.

Obviously that means what I need to get used to doing for this rehab and the many that will follow, will be to come up with an approach to most easily get these people with sub-par credit financed as quickly as possible.

I’m assuming the biggest advantage I could set myself up with at this point would be a good mortgage broker, and I have one that I’ve already thrown both leads at for her to break down but she talks about how difficult it is to get people financed with imperfect credit and how ‘first time homebuyer programs really aren’t that easy to qualify for as you’ve heard’ and I’m just wondering what I really need to look for in helping these people get loans.

Thanks in advance,

Southern IL/St. Louis

Re: SELLING First Rehab… How to Best Approach? - Posted by Loreita

Posted by Loreita on April 11, 2002 at 02:24:49:

Hi Brandon,

Have you considered doing a lease option or do you have to flip it right away for cash?

If you don’t need the cash right now you could lease the house to one of them with a downpayment of $5000 and ask a premium price for your monthly payments. Make sure you put in the contract that the downpayment is non-refundable. That way they have something to loose. With this option you have positive cash flow also, because your expenses are less than they are paying. These people probably know that they will have a hard time to get into the house because of their credit or debt to income ratio problems. They probably expect to pay more for rent but you can put a percentage of that rent into the purchase price at the end of the lease. You need to raise your purchase price 2 to 4,000 due to appreciation in a year, than if you were to sell it right now. Also you put the downpayment towards the purchase price if the buy. You can give them the option to buy in a year and in that time they could repair their credit and get financed on their own, or you could renegotiate with them at that time. If they don’t decide to option for buying then you could start it all over again. Getting a new tenant in the house that is high risk and willing to pay more for rent if it meant that they could be putting money into a house instead of throwing it away. Make sure you do a number crunch to make sure they work. Hope this has helped some. Good Luck and Happy Investing, Loreita.

Re: SELLING First Rehab… How to Best Approach? - Posted by Gerald-DC

Posted by Gerald-DC on April 11, 2002 at 24:20:38:

You could also list the property through a discount broker and pay a couple of hundred of dollars to have it listed.

The benifits: Realtors would call you and you could only show it to their clients who have been prequalified at your price.

The negatives: 3% Realtor commissions and having to deal with Realtors.

I’ve sold two houses using the discount broker to list the property on the MLS for $200.

Re: SELLING First Rehab… How to Best Approach? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on April 09, 2002 at 23:21:10:

Brandon Treat–(IL)----------------

Congratulations on getting to this stage of your first deal.

I think you are best served by calling a lot of mortgage brokers and find a good one.

Another possibility: call some real estate agents with properties listed for sale in the area of the property you want to sell. Pretend that you are one of those buyers and ask the agent how you should go about qualifying to buy the agent’s listing. The agents will probably want to meet with you, but you resist, that takes too much time. Figure out how to get them to give you ideas over the telephone.

Good Investing*************Ron Starr***********

Re: SELLING First Rehab… How to Best Approach? - Posted by Anthony-OH

Posted by Anthony-OH on April 09, 2002 at 22:56:57:

You need a new Broker :wink:

First time home buyers programs…Suck.
There are much better programs out there.

Mortgage Brokers who are paying for leads, pay twice as much per lead for leads that have bad credit!

If you have a broker who’s passing up people with imperfect credit then he is wasting your time and passing up a ton of money for himself.

Imperfect credit is where we make our best money.

Re: SELLING First Rehab… How to Best Approach? - Posted by JoeS

Posted by JoeS on April 09, 2002 at 22:21:39:

I was running into the same thing. What I did to correct the problem for me is this: I signed on as an “associate mortgage broker” with an on-line lender. This way I can have access to over 200 wholesale lenders for my buyers. What it has done for me is open the door of opportunity to the availability of sub-prime financing. Hope this helps.

Re: SELLING First Rehab… How to Best Approach? - Posted by wm-pa

Posted by wm-pa on April 09, 2002 at 20:53:53:

I am also in the same position. Will complete my first rehab in may. I considered trying to sell FSBO also, but after reading some posts on this site, I decided that a L/O makes the best sence for me. I have a much bigger potential T/B base that would be able to qualify for a loan in a year. I would then have cash flow every month, option money up front and a higher sales price in the end at closing. If you have a good mortgage broker have the potential t/b get a credit check done and have your mortgage broker let you know what applicant has the best chance at getting a loan for the agreed upon price of you house. Look for Lease Option posts in the archives and see if this would solve your problem. I have not gotten to the closing part on the house yet but the potential benefits look good. I am not an expert so ask around for more information.

Re: SELLING First Rehab… How to Best Approach? - Posted by Stevo

Posted by Stevo on April 11, 2002 at 10:10:14:

Ron, once you find a “good” mortgage broker, do you run every single caller by them? He’s already had 30 callers, so would that overwhelm the broker (running credit checks cost them, right?)? Or should you do any prequalifying over the phone before sending them to the mortgage broker? Also, do you wait until the buyer is approved before writing up a contract?

Re: SELLING First Rehab… How to Best Approach? - Posted by Nate(DC)

Posted by Nate(DC) on April 09, 2002 at 23:31:15:

This may, or may not, result in good things. Many real estate companies have in-house mortgage companies and a lot of agents at those companies will try to steer you to the in-house company even if it’s not the best (and it’s usually not).


Re: SELLING First Rehab… How to Best Approach? - Posted by Charles (OH)

Posted by Charles (OH) on April 10, 2002 at 08:50:43:


If you could I would also like the website address for the online lender you discussed.

Charles Kirkendall

Re: SELLING First Rehab… How to Best Approach? - Posted by Nate(DC)

Posted by Nate(DC) on April 09, 2002 at 23:33:45:


I have often considered doing something similar. Could you tell me

  1. which company it is
  2. how to contact them
    and most importantly
  3. what your experience has been with loans - have they actually closed?

I’d appreciate it.

Re: SELLING First Rehab… How to Best Approach? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on April 11, 2002 at 20:39:06:


Perhaps I shouldn’t have jumped in with a post about an approach that I don’t do.

If I were in this situation, I would first talk with the broker and find out what information would probably eliminate or qualify people. This would be information one could get without getting a credit report, perhaps. If the prospective buyers already have a credit report, that would be useful.

Depending upon whether I had a lot of applicants at one time or just a few dribbling in, I would act differently. If I had a lot of applicants, I would try to do some of my own screening of them, as I do with rental applicants. Call the people from whom they currently and formerly rented. Maybe check the county recorders records for judgemnts. Check the criminal records, perhaps. Verify employment and income. This might be done with pay stubs.

Then, I would put under contract my top three choices, probably without prioritizing them. Submit the three to the broker and see what can be done with them. If none of them pan out, I would either dip deeper into my pool of applicants or I would continue marketing the property.

I feel this method would work without too much work. It certainly works for me doing rental applicants.

Now, I can pull a credit check from people for about $10-12, so I might ask the top choices to pay for a credit check and pull it before talking to the broker.

It is possible to get credit checks even cheaper, if you join the local credit bureau, I understand. I have not done so myself.

Good InvestingRon Starr*

Re: SELLING First Rehab… How to Best Approach? - Posted by Dee-Texas

Posted by Dee-Texas on April 10, 2002 at 07:23:35:

I would like the address also.