Posted by David Butler America’s Note Network on October 02, 1999 at 19:16:01:
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SOS on Selling,Do pro flippers use realtors? - Posted by JD
Posted by JD on October 01, 1999 at 02:00:01:
I have a home that’s giving me sleepless nights.I need help figuring out the problem.I can’t find a buyer that can get more than an 80% loan. Here are the details.Home is totally remodelled,new roof,new carpet,new countertops,everything painted and polished.Bread and butter 3 bed, 1 car, nice nieborhood.
Asking $69,000,appraised for $69,000 (home to right sold last year for $68,500, home to the left is listed for last month at $72,500.They are all most carbon copys of each other)
Started selling campain 5-15-99
So far I have
handed out 1000 door hangers
mailed to 200 closest neibors
mailed all apartments in town
ran a $500 flyer insert in local paper(got 1 call)
ran continal add in town paper
have 2’x 8’ banner on front of home
sign in yard and on corner
everything states “will help finance”
I have taken 32 applications , ran them though 3 different lenders and good brokers and none can borrow over 80% ltv.
I have two questions,
#1 What am I doing wrong ?
#2 Do you pro’s feel that the “A” type buyers can only be obtained through paying a realtor and getting in the MLS.
Thanks in advance. JD
Re: SOS on Selling,Do pro flippers use realtors? - Posted by David Butler America’s Note Network
Posted by David Butler America’s Note Network on October 01, 1999 at 21:08:03:
Hey JD,
What’s the problem, if “Owner Will Help Finance”?!? What owner did you have in mind, in your advertising?
Have your Buyer take their 80% new loan, give you 5%/10%/15%… whatever, and have the “Owner Help Finance!” i.e. owner carryback financing for the difference.
Another option… is there any existing financing on the property? Can you wrap it up, and give the whole thing to a new buyer at 9.5%, earning yourself a nice little spread on the interest rate, or selling the AITD to a note buyer?
- Do you own it free and clear! Great… get one of your buyers in by carrying back a 1st and a 2nd. Set the 1st at 65% LTV 30 year amortization/5yr or 7yr call , should be 10.5% or higher depending on Buyer’s credit, sell the note if you want cash. Set the 2nd for whatever balance you need to get the rest of your equity, and at whatever terms your buyer can afford.
Keep the note for monthly payments, sell the note for cash, use the note as trade bait for another deal (lots of times you can get face value for these things going that route), or use as substituted collateral and/or additional collateral to swing another transaction.
Good Luck and best wishes!
Why not hold some paper? - Posted by Carmen
Posted by Carmen on October 01, 1999 at 14:58:25:
If you have 32 buyers who qualify for 80% LTV loans, I’m sure at least some of them would be able to come up with $3,450 (5%) or $6,900 (10%). If so, can you hold a note for the other 10-15%? There are many programs which will allow this. If you can hold $10,350 (or $6,900), you walk away with $55,200 + 3,450 = $58,650 or $55,200 + 6,900 = $62,100, and a note for $10,350 (or $6,900). You can make this a long-term note (15 years) with a balloon in 5, and either keep the note until you get paid, or sell it (usually for a larger discount, as it is a second). Or offer owner financing and sell the note - some people may qualify for 85-90% LTV in these programs - you’d still have to hold some paper if they didn’t have the entire down payment, but less.
Re: SOS Sleepless - Posted by Shack
Posted by Shack on October 01, 1999 at 04:34:42:
JD. I have had similar problems. I am not a realtor but I do use them on flippers and pay them a top fee for selling. I don’t like to list with any certain one. I run an ad in the paper or call competent ones. Usually one will call. I tell them I will pay 7-10% (depending on my motivation) if they sell my house and I can also pay closing costs. I tell them to bring me the contract and insert the commission. I’ll protect their position. This way they get the whole fee and don’t have to split it. It’s a real motivator for them. This way you can continue to market the property yourself. If you sell it you make the “fee”. Unfortunately the following is hindsight but sounds like our market here in GA. The strong buyers, IE FHA, VA, Conventional want at least 1.5 baths, preferably 1 3/4. The buyers with credit problems will consider a house with only one bath. If I buy a flipper to retail anymore; I figure on adding a bath if there is only one.
Kin S.
Re: SOS on Selling,Do pro flippers use realtors? - Posted by Robert_PA
Posted by Robert_PA on October 02, 1999 at 16:51:26:
Is this a situation where he might consider a lease option on the property?
Maybe he takes the $3000 as a downpayment…and refinances with a more traditional lender to cover the existing mortgage and whatever cash he expected?
Here’s your answer… - Posted by JD
Posted by JD on October 01, 1999 at 23:18:40:
I have a private mortgage on this at 15% with 6pts at $42,000 and aditional lines of $12,000.I intended to carry back 10% originally , but the most any of these callers can come up with is $3000 barely enough to cover closing cost and mortgage brokers cut.
If I create a 80% note and discount to sell I am in the same or slightly worst position financialy.Creating notes at the kind of rates you are talking about in your post would price the monthly payment out of the price range of the people I have talked to and I am sure would cause them to default on my 20% carry back eventually.
Thanks for your suggestions anyway . JD
Re: Why not hold some paper? - Posted by JD
Posted by JD on October 01, 1999 at 23:25:21:
The most anyone has come up with is $3000(barely enough to cover closing through mortgage broker) I will be calling back all applicants this weekend and doing more probing for funds.20% is all of my equity in the property and I would like to get at least half of it out. Thanks so much JD
great idea - Posted by JD
Posted by JD on October 01, 1999 at 23:31:50:
thanks, I have already changed my ads to say realtors welcome at 7%. Also contacted board of realtors and for $20 I will be picking up every realtors name on mailing lables in my county to mail flyer to. Thanks again JD
Re: SOS on Selling,Do pro flippers use realtors? - Posted by David Butler America’s Note Network
Posted by David Butler America’s Note Network on October 02, 1999 at 19:20:32:
Hi Robert… yes, that would be an excellent tool as well, provided he isn’t concerned about immediately flipping the paper for cash - however, lease option paper is bought and sold for discounts too, just like notes, or any other cash flow instrument.