I’m not so sure I want to play hockey against Bryant Tutas. He thinks like Wayne Gretsky.
I cautioned about the coming mortgage freeze and asked what agents might do to prepare for it. I’m a mortgage guy so I think in terms of institutional financing. I completely forgot about seller-financing. Bryant Tutas answered:
I’m ready for it. I just listed my 3rd property this month where the seller is offering financing. Seller financing is going to be very popular over the next few years. I’ve also been marketing to foreign investors with cash to spend. Once they purchase a home we turn right around and offer it for sale with financing. It’s a win all the way around.
Are you kidding me? It’s so time-tested but underutilized it’s brilliant. I forgot all about it!
What do you know about seller-financing?
First, you have to have a seller with some equity but…. ain’t nobody got no equity no mo’. What’s a hustler to do?
Foreigners are looking to pay cash for U.S. homes and are finding great bargains at auction. In San Diego, we see investors buy properties at auction and sell them for 20-35% higher, 60-90 days later. The problem with some of those properties is that they aren’t appraising. Seller financing doesn’t require an appraisal nor does it have those pesky underwriting guidelines. Bryant Tutas mentioned that he is prospecting foreign investors, to buy properties and sell them with financing terms.
This is the ultimate form of private financing. Before you embark on this strategy, you might advise your sellers to require the following when considering offers:
- a tri-merged credit report– you definitely want to check for tax liens, judgments, and large charge-offs. All of those can become liens on title
- It’s a good idea to require some income documentation– if your buyer’s housing expense doesn’t exceed 50%, you’re kosher in California but it’s probably a good idea to make sure that all of his/her debts don’t exceed 50% of gross monthly income
- A down payment is going to assure your buyer has something to lose if the deal goes sour. I might suggest Read more