How to Sell Creative Financing or Equity Creation to a Seller of Real Estate
Investors try to do creative funding in real estate investing so they put as little money as possible into a deal.
They do this by trying to make a seller understand various financing procedures such as owner financing or a "subject to" assumption of the owner's mortgage payments.
If the seller doesn't understand the offer, it could result in a lost sale to another investor who is a cash buyer.
An investor should never try to explain creative financing strategies to a seller on the telephone; it is too easy for the seller to say they want to think about it.
Losing creatively financed deals can be overcome by some pre-planning and putting these financing strategies in writing.
The best type of written material is often a short descriptive brochure but a single page letter can work if it fulfills the objective of making the reader understand the specific creative financing technique.
This written information can also be left with the seller in case the seller's spouse or partner wasn't there for the presentation.
Some of the areas that are most effectively explained in a written format include: 1.
Short Sales - The key to explaining short sales is to make certain the seller understands the benefits of doing the short sale in helping his credit remain as intact as possible and that he will be able to buy a new home is much less time than if he lets his home go to foreclosure.
2.
Pre-foreclosure - If there is equity in the property, the investor can purchase the property and stop a foreclosure sale and its devastating impact on the homeowner's credit score.
If there is no equity, the investor can do a short sale to create equity for himself and again help save as much as possible of the seller's credit score.
3.
Subject To - The biggest benefit to the seller is the speed of the sale of his property.
This can take place literally in days instead of months.
It should be disclosed that the seller is still responsible for the mortgage payments and even though he is transferring ownership, he is still responsible for the mortgage payments until the property is sold and the mortgage paid off.
4.
Owner Financing - The important aspects of this creative financing technique is that the sale will take place very quickly and the equity that the seller would have gotten will be earning him a much better interest rate than in a certificate of deposit in a bank.
5.
Lease Options - The benefits include the seller will still own the property and will be getting interest income on the equity in his property and he will be receiving full market value for his home that he would otherwise not have been able to get in the current market.
If you have trouble writing, you can have someone write these brochures or flyers for you.
If you want to try to write them yourself, look online for articles that discuss the benefits of each option and get key ideas from these sources.
By researching and writing the brochures, you will also improve your presentation to perspective sellers.
They do this by trying to make a seller understand various financing procedures such as owner financing or a "subject to" assumption of the owner's mortgage payments.
If the seller doesn't understand the offer, it could result in a lost sale to another investor who is a cash buyer.
An investor should never try to explain creative financing strategies to a seller on the telephone; it is too easy for the seller to say they want to think about it.
Losing creatively financed deals can be overcome by some pre-planning and putting these financing strategies in writing.
The best type of written material is often a short descriptive brochure but a single page letter can work if it fulfills the objective of making the reader understand the specific creative financing technique.
This written information can also be left with the seller in case the seller's spouse or partner wasn't there for the presentation.
Some of the areas that are most effectively explained in a written format include: 1.
Short Sales - The key to explaining short sales is to make certain the seller understands the benefits of doing the short sale in helping his credit remain as intact as possible and that he will be able to buy a new home is much less time than if he lets his home go to foreclosure.
2.
Pre-foreclosure - If there is equity in the property, the investor can purchase the property and stop a foreclosure sale and its devastating impact on the homeowner's credit score.
If there is no equity, the investor can do a short sale to create equity for himself and again help save as much as possible of the seller's credit score.
3.
Subject To - The biggest benefit to the seller is the speed of the sale of his property.
This can take place literally in days instead of months.
It should be disclosed that the seller is still responsible for the mortgage payments and even though he is transferring ownership, he is still responsible for the mortgage payments until the property is sold and the mortgage paid off.
4.
Owner Financing - The important aspects of this creative financing technique is that the sale will take place very quickly and the equity that the seller would have gotten will be earning him a much better interest rate than in a certificate of deposit in a bank.
5.
Lease Options - The benefits include the seller will still own the property and will be getting interest income on the equity in his property and he will be receiving full market value for his home that he would otherwise not have been able to get in the current market.
If you have trouble writing, you can have someone write these brochures or flyers for you.
If you want to try to write them yourself, look online for articles that discuss the benefits of each option and get key ideas from these sources.
By researching and writing the brochures, you will also improve your presentation to perspective sellers.
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