Feb. 16, 2008: Down Payment Assistance is another creative financing option you can deploy to make sure yours is the home that sells
It's a hard world for home sellers right now. It's possible that things are slowly getting better, but a qualified buyer still has at least ten suitable homes to choose from.
Does this mean you might sell now, or you might sell a little later? Probably not.
Does it mean you might sell for your price, or you might have to accept a little less? Probably not.
What it means is that, if your home is not the one that answers most of a potential buyer's needs, it probably won't sell at all in this market.
We've talked before about being the most appealing -- best priced, best prepared, best presented. These are the homes that will sell to the best qualified buyers -- while the near-misses languish month-after-month.
We've talked about using seller-financing to help less-qualified buyers. Carrying back a note for a third mortgage entails a risk of loss, but, again, that marginal difference can be moot if the house wouldn't sell otherwise, or if it sells months later for a much lower price.
There is another creative financing avenue you can pursue, although this one comes with an assured loss to the seller. It's called Down Payment Assistance. Through programs like AmeriDream or Nehemiah, sellers contribute a portion of the sales price to serve as down payment or closing cost assistance to the buyers, who receive those funds at close of escrow as a grant.
This is what I call Psycho Lender Math at its worst, since the lender is permitting the sellers to discount the home by a huge percentage while pretending that that same pile of money is coming to the buyers as a grant from a neutral third party.
The house still has to appraise for the full purchase price, so it really is just a seller discount disguised as a shell game -- but if it means your house sells while all the others languish, you still might be ahead of the game.
These programs require advance legwork, so talk to your Realtor about what you need to do to participate. Note also that both programs are slated to be discontinued and are being kept alive, for now, by court intervention. If you do initiate a transaction involving Down Payment Assistance, it probably makes sense to act fast.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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