If you want to effectively communicate and negotiate with buyers and sellers in your real estate business, you have to ask yourself something harsh: “Who cares?” This is the first thing I say to myself whenever I am getting ready to speak to anyone in my real estate or public speaking businesses. I’ll be honest: This is such an important question I sometimes word it a bit more strongly than I will here in print! But I’ll leave that to your imagination.
The point here is that wh…
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Are you thinking of investing in real estate? But you don’t have enough cash to accomplish this. In this article is a tip you are able to use as long as the property seller is willing to negotiate along.
To be fair, not all sellers will be willing (or even understand) the concept outlined. Your very best wager is to find a property that the owner has great interest in selling, whether because of moving, divorce, or frustration with tenants.
Actually, if you maybe currently renting and considering using this approach perhaps your landlord would be happy to assist you! There are several variations that may be used depending upon you and your vendor. Do they need the market price or are they just desperate to get out of the monthly payments – perhaps facing foreclosure?
The easiest way is to take over their mortgage obligations – called ‘assuming’ the mortgage. You will have to be approved by the first lender to assume the mortgage. If you can’t get approved for an assumable mortgage you may also try a ‘subject to’ assumption where you merely make repayments while the property remains in the seller’s name.
You take over the first mortgage and make a 2nd mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short time period – two or 3 years. Rather than having the money sit in a bank they can be collecting a high interest over 2 or 3 years with the rest due in full at the end of the term.
When the term draws to a close you should be able to refinance the cost, or perhaps you can sell. Unless you hit an actual bad market the value of the house should have risen by then.
Most mortgage lenders merely need to make a great investment. While your local bank may still be lacking confidence there are lots of financial lenders that would like to make a deal. Financiers prefare real estate. The mortgage is usually around 60-70% of the value of the property, so as long as they know they get their money back in the value of the property if you default, they don’t care what kind of revenue you make. Conclude the deal with a 2nd mortgage created with the seller. In case you default they could still foreclose on the property and sell it, paying down the existing mortgage with the proceeds.
Now you can observe the whole picture. It is good that seller and buyer can work together. In the event they can’t wait for a sale, you can still give them their initial price with a little overall flexibility on their part.