Sell Your House Fast, and Make a Profit
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Welcome to the post 2008 housing market. The interest rates are at an impossibly low rate, qualifying for a new mortgage is impossibly hard, and selling your home the conventional way may no longer provide a large windfall of cash.
Selling your house fast in this housing market might seem like an impossible task. Average days on market in South Texas hovers around 190 days. In my home town of Harlingen TX, a full year on market is not unheard of. with this kind of turnaround time for a home sale, finding yourself in a situation where you need to sell your home quickly could prove to be detrimental.
Your house is not too ugly or run down, so don't worry. I'm a firm believer that there is only one reason a home or any item of worth doesn't sell, and that's price! I've mentioned before that real estate agents don't set the price; I would like to make an amendment. I need to add that tax value should also be taken with a grain of salt. The Market sets the price, Adam Smith's invisible hand at work. Show me a run down, dilapidated, haunted home, and I'll show you the correct sticker price. So how do you sell your home quickly and still walk away with a profit?
In today housing market it's important to let go of the traditional way of thinking. Selling your home does not have to be a slow and painful process, and selling your home fast doesn't mean you have to sell it at a deep discount. If the home can't be sold quickly, sell the mortgage. People need a place to live. If you would be willing to take a little risk, selling the home under what's called a wrap could lead to big profits; or at least allow you to exit the property well off.
I'm not an attorney, nor do I play one on TV, so you're out of luck on the legal department. I suggest you get real familiar with your states laws, this information can be found on the internet. I can only speak for my state, and even then things change! Under Texas law, it's legal to sell your home under a wrap note. A wrap is a form of owner financing. This means that you essentially become the bank and add a new mortgage to the existing one (your mortgage). This can add a lot of value to the home sale since the new buyer will not have to qualify for a bank loan. It's hard for the buyer to negotiate a lower price when they are asking for owner financing.
The benefits of a wrap transaction is that it allows you (the seller), to sell your home quickly. Many times you can sell at a profit, but wait, there's more! It allows you to create monthly cash flow. Since you will be adding interest to the loan, say 11%-12%. You earn interest from the banks money as well. Put simple, you sell your home for $10,000 to $20,000 more than what you could selling the home using traditional methods. You originate a new note, (promissory note) for the extra amount and ask for 10% of the purchase price up front in cash. I'll sum it up: $200-$300 a month in cash flow, $20,000 note that will need to be paid by the buyer if they ever want to sell it, and a nice chunk of change up front! You could then take your new note and sell it to a note buyer, but that's for a different article. If you amortize the amount you will see that if the buyer does not refinance, you've created substantial wealth over the life of the loan. $100,000 at 12% interest for 30 years, is roughly $373,000. If the owner does refinance, your $20,000 note will get paid.