One of the keys to sell your house fast is to acknowledge your potential buyers’ financing options that may range from conventional loans, cash, home loans, to rent to own arrangement and owner financing.
In general, the preapproval that comes with conventional loans are quite rigid that you may infer that buyer-borrowers have good credit score. Nonetheless, over the past several years their credit and down payment requirements have become more lenient.
These loan programs are not restrictive on property condition, which makes them ideal for condominium buyers, provided that they can verify their financial stability.
The properties should also exhibit livability and are free of structural problems before these are approved. Buildings and houses that entail major repair, meanwhile, may not be permitted.
These government-backed loans, which are almost similar to VA and USDA loans, come with low down payment and more lenient credit requirements compared with other housing loans.
Over the past several years, this financing option has been attracting buyer-borrowers with its low-interest rate, although it comes with one major caveat: The inspection and property approval requirements can be very strict. Furthermore, condominium projects are typically ineligible unless these have been approved, which many of them are not.
If your property is in good shape and you’re in an area whose people have lower credit scores, FHA offers are good. But if it needs major repair or the project is ineligible by FHA standards, your buyers will need to look for other financing options.
This is when you, the property seller, finance the purchase directly with the person or entity buying it. Consequently, you eliminate the costs of a bank intermediary such as the exorbitant lender’s fee.
You and the buyer execute a promissory note stating the interest rate, payment schedule, and consequences of default. When done correctly, this financing option can give you ongoing streams of income.
Typically this is a fast transaction, especially that the repair issues can be renegotiated.
But as with any financing options, as a property seller, you must accept certain ramifications: You don’t get all your cash out immediately, and you may feel additional strain if you still owe money on the property yourself.
Nonetheless, it works for sellers who plan to reinvest their capital.
This is almost similar to owner financing, although the potential buyer starts as a renter and is given the option to buy the property later on.
Again, this rent to own scheme can be a favorable arrangement if you want top dollar and steady income, as opposed to a lump sum of cash.
If you choose this route, make sure that you can fulfill your agreement to sell your property later on.
For buyers with low credit scores, the rent to own arrangement can be a very attractive option provided that they will be in a stronger financial position within a few years.
Bear in mind that rent to own is almost similar to a test drive. Before the buyers commit to buying your property, they learn about the issues with the house and neighborhood. This aspect is something you have to consider before you jump into the offer.
If you really want to sell your house fast, this is arguably the most attractive arrangement. After all, you get all your money immediately and you have eliminated the uncertainties that come with mortgage lender requirements.
Also, a good number of cash home buyers are investors who typically have no qualm purchasing a property “as is.” As a seller, this may allow you to avoid costly repairs and the headache that comes with it.
However, there is one thing to keep in mind: Most cash home buyers expect a large discount. Hence, this may not always be the best option particularly if you want the highest selling price and time is not really an issue for you.
And while there is always an exception to the rule, cash buyers who are investors are unlikely to pay market value for a home. After all, they are aware of the risk of purchasing a property “as is” and of the attractiveness of their cash offer.
You must weigh the pros and cons of each financing offer from buyers. Also, you should take into account the price and net proceeds, payment and other terms, closing date, and above all, your financial needs and priorities. Furthermore, the current market trends will have some effect on the type of offers you get from buyers.
At American Properties, we buy houses at a fair price. After all, as conscientious investors, we just aim for a modest profit on any deal to help homeowners. This means we have also eliminated the upfront costs, commissions, and other similar fees.