Here are some options to sell your property.
Fast Cash Buyer
The fastest way to sell any property is to sell it to a CASH buyer. This is because the cash buyer does not need to get qualified and approved for a loan, wait for inspections, or wait for loan documents to be drawn up (which can take 45 days or more). Cash buyers can make decisions quickly. Cash buyers can also take care of all closing costs, back payments, liens, or taxes, or whatever it takes to get the deal closed. A non-cash buyer typically requires 30-60 days or more to close on a property – most of that time is spent waiting for the lender to approve everything. Additionally, lenders always require inspections, surveys, an appraisal, and possibly even repairs that cash buyers do not require. A cash buyer can close virtually immediately.
Virtually 100% of cash buyers are investors that are buying the property so that it can eventually be resold. This “flipping” of the property means that the cash buyer has certain overhead expenses that must be covered in the transaction.
For example, the cash buyer will have to pay the following expenses:
- Closing costs on the purchase (~2% of sales price)
- Commissions on the resale (~6% of sales price)
- Closing costs on the resale (~3% of sales price)
- Monthly carrying costs until the property is resold (~4-5% of sales price, total)
- Necessary repairs/remodeling ($5-10K to $100K+)
These costs typically total to ~15% or more of the resale value of the property, which means that cash buyers can only afford to buy the property at 60% to 70% of its full market value in order to make a modest profit of typically 15% (of the resale price).
When you see a sign saying “I Buy Houses For Cash” it means “I’ll pay you up to 70% of the property’s value, and do it fast”. For some people, such as sellers with lots of equity that need or want money quickly, this is a great deal. For others with little or no equity, this is not an option. For those with modest equity, or that want or need to make more money selling the property (and have the time to explore other options), this is probably not the best option. Express Equity Homes will buy your property for cash and offer you several other options. Contact Us if you would like to explore this further.
Fast Cash Sale Example
– Current Appraised Property Value: $100,000
– Existing loan(s) payoff: $45,000
– Repairs needed: $5,000 (good condition)
– Sales price: $65,000 (70% x $100K minus $5K)
– Note: Seller does not have to pay commissions, late fees, most closing costs, etc. Close in <7 days.
Fast Cash Sale Advantages and Disadvantages
The advantage of a cash sale is SPEED and no hassles, closing costs, repairs, and no banks to get in the way and slow the process down. The property sells FAST and in it’s as-is condition.
The disadvantage of a cash sale is a lower sales price. Of course, this is somewhat offset by the fact that the seller is not paying commissions and closing costs, and because it sells fast, the seller is immediately relieved of having to pay the monthly mortgage, which may be very significant.
Short Sale
The best way to sell a property that is more than 20-30% under water, without having to pay off the shortage, is to negotiate a short sale. This is also one of the most common ways to sell a property in which the owner is already many months behind in payments, has little or no equity, and wishes to avoid a foreclosure.
A Short Sale involves an investor or buyer and a Realtor, working with the property owner to negotiate with the property owner’s lender. The goal of the negotiations is to postpone (and prevent) a foreclosure auction and negotiate a discounted payoff on the loan (or loans). Using this method, the property can be purchased at a reduced price (less than what’s owed) and a foreclosure can be avoided.
Short Sale Example
Let’s look at a Standard Sales Scenario…
– Current Property Value: $185,000
– Existing loan(s) payoff: $210,000
– Sales price needed to break even: $231,000 (assumes ~10% closing costs and commissions, etc.)
This property would have to be sold for approximately $231,000 to cover all loans, taxes, closing costs, commissions, etc. Unfortunately, the property is only worth $185,000 in the current market, so the property owner would have to come up with $46,000 to cover the difference.
Now, let’s look at a Short Sale Scenario…
– Property Value: $185,000
– Negotiated loan(s) payoff: $165,000
– Sales price needed to break even: $181,500
In this scenario, after the loan is negotiated, the property can be sold for anywhere from $181,500 to $185,000 with no foreclosure and no additional cost to the property owner.
Short Sale Advantages and Disadvantages
The advantage to a short sale is that it may be the only way to actually sell a property where the loan(s) add up to more than the property is worth, and the property owner cannot make up the difference. And, starting a short sale can both postpone a foreclosure and (if successful) avoid a foreclosure.
The disadvantage to a short sale is that, like everything, it does affect a property owner’s credit. A successful short sale is simply better than a bankruptcy and much, much better than a foreclosure (the “Atomic Bomb” of credit scars). Also, about half of short sales are either denied by the lenders, or are never negotiated to a price that a buyer will accept, meaning that about half still end in foreclosure. Finally, a short sale may result in a deficiency judgment (in the event that the lender sues you for their loss, which is rare), a negative impact on a person’s security clearance (for some government employees), and a 1099 for phantom income that may have tax ramifications (although the Debt Forgiveness act of 2007 temporarily restricts lenders for issuing these to homestead short sale sellers)
Short sales are highly complex negotiations that take significant time, paperwork, and expertise. They are among the most complex transactions in real estate. In addition, it typically takes many many months to negotiate with the seller’s lender.
Express Equity Homes is part of a network that has performed over 1,000 short sales for sellers needing this service. If you would like to discuss a short sale, and all of your other options for avoiding foreclosure, Express Equity Homes can help! Contact Us if you would like to explore this further.
Mortgage Payment Assignment
The best way to sell a property FAST, where the property either has a little equity or is not more than 20-30% under water, is through a Mortgage Payment Assignment sale. A Mortgage Payment Assignment sale (also called an Assignment of Mortgage Payment Sale) is the sale of a property in which the deed (ownership of the property) transfers to an investor or buyer in exchange for their legal agreement to take over the payments on the current mortgage(s). It’s important to note that although virtually no loans are assumable, anyone can assign their payments to another borrower along with ownership.
Assignment of Mortgage Payment Homeowner Guide
Mortgage Payment Assignment Sale Example
– Current Appraised Property Value: $200,000
– Existing loan(s) payoff: $225,000
– Sales price: $225,000
In this example, the property is transferred to the investor or buyer subject-to the existing loan(s) that the new owner is then responsible for making the payments on the loan(s).
The sales price is the balance of the loan(s), which may even be a premium above the current appraised property value. Typically when a property is sold with financing, as in this example, it will sell faster and at a premium price, because the buyer is getting the financing. This is because loans are currently difficult to get, and because in general, buyers are buying based more on the terms of the loan (monthly payment and money needed at closing) than the price of the property.
Mortgage Payment Assignment Sale Advantages and Disadvantages
The advantage to selling a property through a mortgage payment assignment sale is that it will typically sell much FASTER and even at a premium sales price because it comes with financing, even if the property is worth less than the total amount owed.
The disadvantage to selling a property though a mortgage payment assignment sale is that the seller’s name remains on the loan. It is somewhat analogous to having a seller co-sign for a loan on behalf of a buyer. Obviously this is not as desirable as a not having to remain on the loan, however, it is usually a better alternative to a short sale, traditional listing (where the seller will have to bring money to the closing), foreclosure, etc. For many sellers, living in areas where hundreds or thousands of properties are available on the market, the most valuable thing they have to offer the market place, is their loan itself, and the mortgage payment assignment program allows these sellers to sell, and to sell FAST.
Obviously, for most people they would prefer to sell FAST and at a PREMIUM PRICE and without leaving the loan in place. Unfortunately, no such options exist… click the following link to Contact Us.
Owner Financing
The fastest way to sell a property, where the property is owned free and clear, is through an Owner Financing sale. An Owner Financing sale involves the seller creating a loan for the buyer to buy the property with. If the seller owns the property free and clear, the loan can be created with a simple note. If the seller already has a loan on the property, the loan payments can be assigned, using a mortgage payment assignment sale, or a new loan can be created using a wrap-around mortgage sale.
Owner Financing Sale Example
– Current Appraised Property Value: $200,000
– Existing loan(s) payoff: $0 – owned FREE AND CLEAR
– Sales price: $210,000
– New Loan: $10,000 down, $200,000 balance, Interest Rate: To Be Negotiated
In this example, the property is sold at a premium price by creating a loan that is made by the seller and given to the buyer. Because the property is sold with financing, it will generally sell FASTER and at a PREMIUM PRICE.
The exact terms, including the interest rate and monthly payment are negotiated with the buyer. In general, properties sold with financing will demand premium interest rates (2-6%) above what lending institutions offer (to those that can get loans). Most or all of the down payment will go towards fees and closing costs.
Express Equity Homes can manage this entire process for you by contracting to buy your property from you, creating the loan and all necessary paperwork, and then assigning the contract to a buyer that would like to buy a property with owner financing.
Owner Financing Sale Advantages and Disadvantages
The advantage to selling a property through owner financing is that it will typically sell much FASTER and even at a premium sales price because it comes with financing. Also, because the interest rate is at a premium, you DO get a nice return on your money. Additionally, because you have a first lien on the property, it is a secured investment.
The disadvantage to selling a property with owner financing is that you don’t get all of your money at the sale – instead you get it in the form of monthly payments.
If you want to place a time limit on the loan you are making, you CAN put a balloon term in the note, making the loan expire after 3, 4, or 5 years (or any amount of time you desire) at which point the buyer will be required to refinance and you will receive all of your money.
For many sellers this is ideal – fast sale and excellent return on their money. For others, they would prefer to sell FAST and at a PREMIUM PRICE and get ALL OF THE MONEY up front. Unfortunately, no such options exist, so you have to choose between the tradeoffs of selling using the various options listed in on this website. For people that own properties free-and-clear the best options are generally owner financing, fast cash, or traditional listings, with each having different advantages and disadvantages. Click to following link to Contact Us.
Wrap Around Mortgage Sale
The best way to sell a property FAST, where the property has some equity (usually 20% or more), is through a Wrap-Around Mortgage Sale. This is a variation of Mortgage Payment Assignment and Owner Financing in which a new loan is created for the buyer, generally with a higher balance and monthly payment than that of the existing underlying loan.
Wrap-Around Mortgage Sale Example
– Current Appraised Property Value: $220,000
– Existing loan(s) payoff: $205,000
– Sales price: $230,000
– New Loan: $15,000 down, $215,000 balance, Interest Rate: To be negotiated
In this example, the property is sold at a premium price by creating a loan that wraps around the existing underlying loan. Because the property is sold with financing, it will generally sell FASTER and at a PREMIUM PRICE. The exact terms, including the interest rate and monthly payment are negotiated with the buyer.
In general, properties sold with financing will demand premium interest rates (2-6%) above what lending institutions offer (to those that can actually get loans). Most or all of the down payment will go towards fees and closing costs.
Express Equity Homes can manage this entire process for you by contracting to buy your property from you, creating the wrap-around mortgage loan and all necessary paperwork, and then resell the property to a buyer that would like to buy a property with owner financing.
Wrap-Around Mortgage Sale Advantages and Disadvantages
The advantage to selling a property through a wrap-around mortgage sale is that it will typically sell much FASTER and even at a premium sales price because it comes with financing.
The disadvantage to selling a property through a wrap-around mortgage sale is that you either don’t get any of your equity (this is the tradeoff for selling faster) or, if you do get some of the equity, it is in the form of monthly payments, and not in the form of cash at closing (because cash at closing is used to pay closing costs and fees). Additionally, the seller’s name will remain on the underlying loan that is wrapped for the buyer.
Obviously, for most people they would prefer to sell FAST and at a PREMIUM PRICE and get and or ALL OF THE MONEY up front. Unfortunately, no such options exist, so you have to choose between the tradeoffs of selling using the various options listed in on this website.
Common Questions about a Wrap-Around Mortgage Sale
Question: Should I make the payments until the property is sold?
Answer: We would prefer to wrap mortgage payments that are current. If you are behind, a wrap may still be possible, however, the more behind, the more a buyer would have to bring to closing to make the loan current – and the less likely it will be that a buyer can be found to buy the property.
Also, as the loan goes into default, a foreclosure becomes possible.
Generally if you are not able to keep the loan going, WE CAN HELP by doing a short sale on your property. Often we can start a short sale and wrap-around mortgage program together (a COMBO PLAN) and if a buyer can’t be found in time for the wrap-around mortgage program, we can fall back to the short sale to avoid a foreclosure. For more information, click the following link to contact us and Contact Us.
Auction Sale
Another option for selling a property FAST, where the property has at least 30% equity or more, is through an Auction Sale. Typically the way this works is that an investor will get the property under contract for up to 70% of the as-is fair market value, and will then auction and/or market the property aggressively to prospective buyers he may have already identified. Alternatively, a licensed auctioneer can work with the property owner to set a reserve price, typically at up to 70% of the as-is fair market value, and then auction the property, through a public auction, to the highest bidder that bids above the reserve.
The advantage of working with an investor is that the owner is not required to pay for the marketing of the property (which can cost 5-10% of the value of the property) and the owner does not have to pay sales commissions or possibly even the closing costs (which can total 6-15% of the cost of the property). The advantage of working with an auctioneer is that any proceeds after marketing, commissions, and closing costs go back to the seller.
Auction Sale Example
– Current Appraised Property Value: $500,000
– Existing loan(s) payoff: $330,000
– Sales/Reserve price: $350,000 +
In this example one of two scenarios can occur:
1) An investor gets the property under contract for $350,000 and attempts to wholesale the property quickly to a list of pre-qualified buyers within an option period (usually 60 days). If the investor can wholesale the property within the option period, the sale is completed, the investor takes care of all expenses and closing costs, and any premium above the option price of $350,000 goes to the investor. If no buyer is found, no sale occurs, and the seller is not out any costs or expenses.
2) Alternatively, a licensed auctioneer can auction the property for the seller. In this scenario, the auctioneer collect 5-10% of the property value from the seller and spends this money on marketing. After the marketing, the property will be auctioned off to buyers found by the marketing, with bids starting at the reserve price of $350,000. If a buyer is found and bids above the reserve price, the property is sold and the seller receives any proceeds remaining after closing costs and commissions (which can be 10% or more) and of course the costs of the marketing. If no buyer is found, no sale occurs, however the seller is NOT reimbursed the marketing expenses.
Express Equity Homes can manage this entire process for you by contracting to buy your property from you, and marketing it to sell quickly to a list of pre-qualified buyers, within the option period (usually 60 days).Contact us to discussion this further.
Auction Sale Advantages and Disadvantages
The advantage to this strategy is that several people may be drawn to the property due to its low reserve price, causing a competitive bidding situation when the auction day comes. If this happens, the property owner may achieve the goal of getting the property sold quickly at a price somewhere between the reserve price and the fair market value.
The disadvantage to this strategy is that in a slow market, it’s very possible that no one will bid on the property or perhaps only a few people may bid and you may only hit the minimum reserve price at best.
Equity Partnering Sale
The fairest price way to sell a property FAST, where the property has 30% equity or more, even when the seller is behind on payments and facing foreclosure, is through an Equity Partnering arrangement. Equity partnering involves selling a property that has equity (where the property is owned outright or is worth more than what is owed on it) to an “investor partner” that in turn resells the property (possibly as-is or possibly after renovating it) in exchange for agreeing to share the profits with the original owner. There are many variations to this – only limited by the creativity and experience of the investor partner.
This can be a great program for a property owner that needs to renovate their property, but does not have the cash to do so. Note: depending on the property, location, amount of renovation, etc. an investor may or may not be willing to do equity sharing on a property. Renovating properties is high risk, and there must be enough profit to justify the transaction.
This can also be a great program for people that need to sell FAST to avoid a foreclosure, but still want to receive maximum proceeds from the sale.
Other forms of equity partnering involve properties (generally not needing
renovations) in which the investor partner finds a new buyer that is willing to pay the existing mortgage payments going forward, and then refinance the property in the future, at which time the profit is shared with the original seller and the investor partner.
Equity Partnering Sale Example
– Property Value after repairs: $200,000<>
– Renovations Needed: $30,000
– Existing loan(s), taxes, etc.: $110,000
– Purchase price: $110,000
Note:The investor buys the property, completes the renovation, and resells the property on the retail market to an end buyer.
– Investor expenses (renovation): $30,000 (plus any purchase expenses, back payments, taxes, etc.)
– Sales price to end buyer: $200,000
– Costs of sale (commissions and closing costs): $15,000
– Total profit: $200,000 – $15,000 – $30,000 – $110,000 = $45,000
– Share of profit paid back to original owner: $20,000 or more (depends on agreement)
In this example the investor buys the property (generally buying it subject-to the existing financing by taking over the payments on the existing loan), completes the renovation, and resells the property on the retail market to an end buyer. Because the investor is able to purchase the property with financing and at a low price, the risks to the investor are minimized, and thus the sale can occur very quickly and with less due diligence, and the investor and seller can join into an equity partnering agreement where both parties share the common goal of quickly and cost-effectively renovating the property and then reselling it for maximum profit, which is shared. This has many advantages over the more standard process requiring the investor to do extensive calculations on resale value and repair calculations in which rough estimates have to be performed in a short time frame (if there’s a pending foreclosure), and negotiations are more complex.
Equity Partnering Sale Advantages and Disadvantages
The advantage to this strategy is that very little negotiation is needed between the investor and seller, because both share in the profits, and thus both share in the goal of ensuring that maximum profits are generated. This means that an investor can usually buy a property more quickly and with less total analysis.
The disadvantage of this program is that the seller does not receive their equity until the property is actually resold by the investor.
If you would like to explore this option further, click here to Get Started Now.
Property Swapping Sale
The best way to trade properties, without having to buy or sell a property on the open market is through a Property Swapping Sale. Property Swapping involves selling or deeding your property to an investor, who then sells or deeds another property to you. It can be especially useful for people with less than perfect credit, and/or people that need to sell and buy properties with owner financing.
Express Equity Homes is part of a network that buys and sells a high volume of homes and can occasionally facilitate a home swap in exchange for a fee from one or both homeowners. If successful, this can be faster and cheaper than selling using other strategies. Specifically, you can save on Realtor commissions and other expenses.
Property Swap Sale Example
– Property #1 Value: $200,000
– Property #2 Value: $180,000
Seller of property #1 can sell their home to an investor, or sell using a mortgage payment assignment, wrap, or owner financing to another buyer.
Seller of property #1 can then BUY property #2 by taking over the payments.
In this example, the seller is able to SELL FAST and buy another home, possibly in a better location or with a more attractive payment, at the same time.
Property Swaps Advantages and Disadvantages
The advantage of this strategy is that a seller can both SELL FAST and BUY FAST at the same time, even if they have little or no equity and even if they have less than perfect credit.
The disadvantage to this strategy is that it may take time to find the second property, meaning that it may not be possible to do both deals simultaneously, the purchase of the second property will probably require some money from the seller, and, in general, the seller is also usually selling with financing and thus their name remains on the underlying loan as in the mortgage payment assignment sale program or the wrap-around mortgage sale program. Click here to Get Started Now.
Lease Option
The best alternative to selling a property right away may be to lease it with an option to buy. A Lease/Option involves leasing a property to an investor or tenant who agrees to buy the property at a future date and at a pre-determined price. NOTE: This option may not be legal in all states. We would be glad to discuss this with you. Click here to Get Started Now.
Lease-Option Example
– Current Appraised Property Value: $220,000
– Existing loan(s) payoff: $205,000
– Monthly Loan Payment (PITI): $1900
– Lease Payment: $1900
– 3-Year Option Sales price: $225,000
In this example, the property is leased for the loan payment of $1900/month, to an investor, who has an option to buy the property, within 3 years, at the premium price of $225,000.
The investor will then offer the property on a rent-to-own plan to one of many pre-qualified tenants that are looking to buy a home within the next 3 years.
Express Equity Homes can manage this entire process for you by contracting to lease your property from you (with an option to buy), and then reselling the property to a buyer that would like to buy a property on a rent-to-own plan.
Lease-Option Advantages and Disadvantages
The advantage to a lease-option is that the owner can quickly have someone take over the responsibility for making their mortgage payments without having to transfer title or provide financing. The property may also sell for a premium price because the seller can set the price at the home’s estimated future value and not just the present value.
The disadvantages to a lease option are that the owner is not selling, but instead they are a landlord and thus still have some maintenance responsibilities. Additionally, there is no guarantee that the buyer will ever exercise their option to buy or will be able to qualify for a loan when the time comes for them to buy. In fact there is no guarantee that the property will be worth the option price in the future and/or that a lender would provide a loan at that price to a qualified buyer. Finally, because the tenant is a renter and not an owner, they may not maintain the property as well as a buyer would, in which case maintenance expenses could be significant.
Historically, the vast majority of lease-option tenants never become buyers.
Obviously, for most people they would prefer to sell FAST and at a PREMIUM PRICE and get any or ALL OF THE MONEY up front. Unfortunately, no such options exist, so you have to choose between the tradeoffs of selling using the various options listed in on this website. If you want to SELL and not just LEASE, than the mortgage payment assignment program or wrap-around mortgage sale program may be better alternatives.
If you would like to explore this option further, click here to Get Started Now .
