Rudy Rodriguez – Page 17 – Making The Dream A Reality

July 12, 2022August 8, 2024

Seller Financing

With credit tight, the housing market glutted, sellers desperate and bargains to be had, more homebuyers and sellers are considering the idea of having all or part of the purchase price of a house financed by the owner. There are pros and cons for buyers and sellers, so here’s the scoop.

Why Seller Financing Now?

“Changes in the market make seller financing very attractive for both buyers and sellers,” says Todd Huettner, a Denver-based mortgage broker. “Many buyers can no longer qualify for an affordable loan, and sellers can be more competitive in a crowded market by offering buyers the option.”

As the economic downturn continues, owner financing will only increase, based on the current market trend. “Without a good credit score, buyers are locked out of a mortgage, and many conventional loans now require a down payment of 20 percent of the purchase price,” adding that when interest rates reached 18 percent in the late 1970s and early 1980s, owner financing was often the only game in town.

Advantages of Seller Financing

For buyers:

It helps alleviate the need for jumbo loans that can hamstring a buyer, says Rudy Rodriguez of California Life Properties in California;
Seller financing can also cover closing costs, which require ready cash that some buyers lack;
It allows a buyer to purchase a house when there are no other financing options.

For sellers:

Owners can move a property more quickly;
A seller can often get a better return on his/her investment than other assets would generate;
A house becomes more attractive to buyers if they don’t have to worry about obtaining financing.

For everyone involved in a home sale, and the market as a whole:

The deal can close more quickly;
A sale means one less vacant house in the neighborhood, which enhances the value of the home and the neighborhood;
It keeps a house out of foreclosure, which is expensive and can take up to a year to complete.

Disadvantages of Seller Financing

For buyers:

The seller may not report to the credit bureaus, meaning that timely payments don’t necessarily improve a buyer’s credit score.

For sellers:

Money is still tied up in real estate;
The seller is paid over the length of the mortgage instead of in one lump sum;
If the buyer defaults, the seller is left holding the bag.

Firsthand Experience

Rudy Rodriguez decided to offer seller financing in July 2003 to a buyer for an investment property in San Antonio, TX. He wanted to diversify his investment portfolio and produce monthly income over a period of time. “Assuming you have a qualified mortgagee, the return is better than interest in a money market or high-yield savings account or a CD,” he said. Rudy and the buyer agreed to a 30-year fixed-rate mortgage (similar to bank terms) and he has generally been pleased with the results.

When Michael Soon Lee of Dublin, Calif., decided to buy a house in the mid-1990s, he could have gone to a bank, but instead he opted for owner financing. He received an interest rate that was 2 percent below the standard rate at the time for a seven-year, interest-only loan, and he didn’t have to pay any bank fees, which would have cost him an additional $7,200 on top of the loan amount. “It was much faster than going to a conventional lender,” Lee said, adding that he probably would not have qualified for a conventional loan since he owned too many investment properties at the time.

Is Seller Financing Right for You?

There’s no question that the seller assumes more of a risk than the buyer when it comes to owner financing. If you want to sell your home and are thinking about offering financing to a potential buyer, but you’re nervous about the prospect, consider your circumstances.

“Some sellers go for owner financing if they have equity in a house but need to sell because they can no longer afford to keep it. Although it may be risky (after all, even creditworthy owners are defaulting these days), it may be better to run the risk of holding a defaulted loan than losing your home and remaining equity to foreclosure. “Don’t make the loan unless it is a property that you want to own,” he cautions.

Whether you’re a buyer or seller, have an experienced real estate attorney review all documents. As is the case with everything, especially with something as sizable as a real estate investment, proceed with eyes wide open and know the ramifications of your decision before you sign on the dotted line.

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July 12, 2022August 8, 2024

Negotiating The Deal

Negotiating Home Sale Price as a Seller

Negotiations are a two-way street when it comes to real estate transactions. In addition to prospective buyers working to get the best deal for their budget and overall goals, home sellers also have a lot of negotiating power. With the help of an experienced real estate agent, sellers can employ a variety of techniques to escalate the final purchase price for their home and secure the most favorable terms. Strategies to consider include, but are not limited to:

Bidding wars

“Highest and best offer” bids

Expiration dates on counter-offers

Rejecting offers outright

Create a Bidding War

The ultimate goal for nearly every home seller is a bidding war between buyers. This scenario drives up your home’s price — often well beyond what it was initially listed for. In today’s market, that goal is not very difficult to achieve, especially if your home is in good condition and listed at a fair market price, says Rudy Rodriguez, a Real Estate Broker Associate with California Life Properties.

“With today’s limited housing inventory, there has been a frenzy among buyers to outbid each other and drive up prices hundreds of thousands of dollars above list price,” says Rudy Rodriguez.

The competition of bidding wars can also inspire prospective buyers to offer more favorable sale terms, such as waiving home inspections and contingencies and offering longer or more flexible closing timelines.

As a seller, you can help trigger bidding wars by pricing your home slightly below market value. This will ideally attract more viewers to your property and result in more offers. Yet another approach is to create a deadline for all offers on your home, which may inspire buyers who have been on the fence to submit their offer.

Invite bidders to make their highest and best offer

Another tactic sellers may choose to employ during negotiations, particularly when there are multiple bidders, is asking prospective buyers to make their “highest and best” offer. This is also sometimes referred to as a “best and final” offer.

As a seller, employing this tactic means you’re not going to negotiate with every potential buyer who makes an offer. Instead, you want them to submit the highest price they’re willing to pay for your home, along with the best sale terms. This approach also typically includes a deadline by which prospective buyers must provide their highest and best offer. Making this request indicates to buyers that you’ve received multiple offers, and it generally results in more competitive bids.

In especially competitive markets, sellers can conceivably pursue multiple rounds of highest and best offer submissions. “This can be done more than once, so that you could continue asking for buyers to increase their offer at each round,” says Rudy Rodriguez.

Include an expiration date on counter offers

When making a counter offer as a seller, you can also include an expiration date by which the prospective buyer must respond. In a competitive situation, this can be helpful in moving negotiations along more quickly. It allows you to either get your home under contract or move on to other offers, with less waiting time.

Reject an offer outright

Though it may sound counterintuitive, as a seller you can also completely reject an offer that does not meet your needs without making any counter offer at all. While this doesn’t seem like much of a negotiation technique, the approach can actually be useful — it may entice the prospective buyer to completely revise the offer they initially submitted and develop an entirely new proposal. In the best case scenario, the new offer will be one that you feel is more competitive financially, or more in line with your goals.

How to know when to accept an offer

While bidding wars and record-breaking sale prices may seem like a dream come true to a seller, knowing when to bring negotiations to a close and finally accept an offer is crucial. Dragging negotiations out too long can cause a potential buyer to lose interest and move on.

Pursuing the highest price at all costs can backfire in other ways as well. “The danger in driving up the price sky high is that, once a seller has accepted an offer, the buyer has the power to cancel their offer and get back their deposit before contingencies are released. This can happen when a buyer feels they’ve offered more money than the property is worth,” says Rudy Rodriguez.

When trying to determine whether or not an offer is the right one to accept, be sure to review all of the terms carefully. “All offers are not good offers,” explains California–based Real Estate Broker Associate, Rudy Rodriguez -California Life Properties. “When they’re full of contingencies, such as ‘If I sell my house,’ ‘If I move’ or ‘If I obtain this new job’ — those may be red flags. Standard contingencies such as inspections are commonplace, but when the list gets to be way too long, it’s typically not in the best interest of the seller.”

In the end, the best course is to consult with your agent. An experienced listing agent knows when it’s time to stop negotiating, when you’ve reached the full potential of the sale and when you’ve secured an offer that’s worthy of accepting. After all, your goal is to finalize the deal, not to drag it out forever in the constant hope of something better.

Bottom Line

Negotiating the price of a home sale is just as important for sellers as it is for buyers. Working with an experienced real estate agent or broker, there are a variety of techniques that can help you obtain the best price possible for your home, as well as the most favorable sale terms. But be sure you know when it’s time to bring the negotiations to a close, or you risk losing the interest of prospective buyers.

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July 6, 2022August 8, 2024

Price Low to Sell High

Here’s some advice for anxious sellers in today’s housing market: Slash the price of your home before you put it on the market.

National real estate expert and television commentator Barbara Corcoran recommends that sellers price their homes 15 percent below comparable homes on the market.

“There’s nothing sexier than an underpriced house.” The most enticing houses on the market are the cheapest and newest listings.”

If your home is languishing on the market, try Corcoran’s tips for getting your home sold.

Tip #1: Stay ahead of the curve.

Corcoran knows that her advice isn’t popular with sellers. “It’s like the doctor giving you bad news that you have to hear,” she said.

But drastic measures are the only way sellers can stay ahead as the pricing curve for houses speeds downward, she says.

In a bad market (and Corcoran says this is the worst real estate market she’s seen in the 30 years she’s been in the business), sellers who overprice or even market-price their homes often end up making small price reductions again and again as similar homes that are priced lower come on the market.

“Nothing smacks of desperation more than incremental price drops,” she said.

Chiseling away at the price signals to buyers and Realtors that a house is “stale” or that something is wrong with it.

Tip #2: Don’t wait for conditions to improve.

Corcoran advises sellers against “sitting it out” in hopes that the housing market will improve. “You’re joining thousands of other homeowners who have also decided to wait,” she said.

She predicts the market will continue its slide downward, and those who wait will have to make even more drastic cuts to sell their houses.

Realtors from various parts of the country agree with Corcoran’s advice that sellers should underprice their houses before putting them on the market. However, several said a 15 percent cut seemed harsh.

Susie Hatch, a Realtor in West Hartford, Conn., said pricing a house 5 percent below comparable houses is more realistic in the Hartford area market, which hasn’t been as troubled as the housing markets in Las Vegas and California.

Tip #3: Find a great broker.

Corcoran and other experts say it’s important in a down market for a seller to hire a top Realtor because the top 10 percent of Realtors make 90 percent of the sales.

To find a good Realtor, Corcoran suggests visiting a local real estate office and asking the owner or manager to recommend the best agent for the job. “They will put you in the hands of someone who will get it sold,” she said.

Tip #4: Whip your home into shape.

Finally, Corcoran says setting a lower price doesn’t mean a seller can skimp on getting their home in tiptop shape before putting it on the market. Clear out clutter and family pictures; they create “visual noise” that distract a buyer from imagining your house as their house.

July 6, 2022August 8, 2024

The Home Warranty

1. Who ya gonna call?

If and when something in your house breaks, leaks or otherwise fails – anything – call your home warranty company FIRST. If you call Roto Rooter to fix an emergency leak, and then later you realize that a bigger plumbing problem was the real cause, your home warranty company might refuse to cover it because they were not able to have their plumber look at the original problem. The home warranty companies all have service reps available by telephone 24 hours a day, so they are well-equipped to handle your emergency home repair calls.

2. Cash is good

If you would prefer cash to having a repair completed, ask your home warranty company. Say, for instance, that you wanted to upgrade from a standard water heater to a tankless, on-demand system. Your home warranty company will replace broken items with similar items, but you might be able to get the equivalent of the replacement cost for your old water heater in cash that you can apply toward the installation of your new system.

3. Renew, renew, renew

Your home warranty is renewable for as long as you own your home (though some providers won’t allow you to re-up if you have had a gap in coverage), usually for about $350 to $500 per renewal year. A single major repair can pay for years’ worth of coverage – if your home warranty provider pays to replace a $7,000 furnace, that policy has paid for itself for as long as 20 years! Of course, big repairs aren’t needed every year, but when they are needed, they always seem to come at Christmas, or when you have just had a new baby, or started a business — times when cash is tight. So, it is a no-brainer to just keep on renewing your home warranty when it comes due – that $400 check will be a lot easier to write than the $5,000 one you’ll have to write if the air conditioner breaks after you let your coverage lapse.

Making The Dream Reality

Everyone has a dream they want to come true in life. Whether it’s having the Ultimate job, living where you’ve always wanted, starting a family or a combination of all these, our aspirations motivate us to pursue these passions and interests. But reaching your dreams starts by setting goals for yourself and having the tenacity and initiative to achieve them.

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