No Money Down...

What is a "No-Money-Down sale?

    You have heard of the famous book by Robert G. Allen, "No Money Down". This book taught people how to buy houses without a downpayment.

   There are reasons why people will do this on both sides of the negotiating table. For a motivated seller, learning how to LEGALLY sell your home to a serious qualififed buyer for no money down can be valuable.

    As with every other type of transaction, care must be taken not to make a deal with a charlatan - during desperate times it seems that such types pop up on every street corner.

    However, if care is taken, this can be an excellent way to move your property in a very difficult market. These types of deals are usually the most viable for investors when the carrying costs of a property are significantly lower than the mortgage and maintenance costs. This will usually be in the later days of a real estate crash.

 

Seller Financing

You need to be clever to sell a home with seller financing.

    After the sub-prime debacle, banks will not be keen to see people selling homes for no-money-down. There are ways around this, however, you should consult with a legal expert before trying any creative financing techniques..

   The standard way of doing it is by lending the purchaser some of the money to buy your home - usually, this is the deposit. Some banks frown on this and make you and the buyer sign a document saying that this did not happen. Real estate people have figured out ways of doing this anyway ranging from the illegal - such as stating a higher purchase price than actual and forgetting about the downpayment; to the legal workarounds such as having the purchaser sell you some antique for an amount approximating the downpayment in a kind of 'quid-pro-quo' transaction.

    There are numerous ways of doing this, and numerous pitfalls. Should you decide to try creative financing, consult with a legal professional. There are also numerous books on the subject of creative finance which you should read carefully.

 

Some home selling tricks and tips

DO NOT RELY ON YOUR REALTOR TO DO MUCH MORE THAN LIST YOUR HOME

Exclamation markPeople who sell a lot of homes know more about it than those who sell a home every few years. I was one of those that sold many homes, condos and apartments over the years. I was always remodeling, staging or selling a property. There are a few things you learn over the years - things that work and things that don't.

   There are also things I saw when I was out buying houses that really got under my skin - things that qualify for top position on a "DO NOT" list. Let's start with the DON'Ts, since they are the most fun.

DO NOT:

  • List with a friend of a friend, find a top agency and a top realtor. Let them know you are motivated.
  • Ignore staging
  • Let the realtor take the picture of your home. They are not photographers and almost always gum it up - shooting from the car window when there is snow on the ground, and using that tired old picture in July... Give them a nice picture of your home. Take it yourself and fix the colors using any one of a number of photo editing packages. Leave out telephone wires if possible.
  • Smoke in the house. 80% of people do not smoke, if you smoke in your house, it STINKS to them. Win that 80%. Smoke outside when you are in selling mode. Change your carpets and clean the drapes because the smoke stink is impossible to get out otherwise. Sorry, but that's the cold hard truth.
  • Let the dogs and cats own the home. Most people love dogs and cats, but they do not like their homes to smell like them nor exhibit any signs of their existence, such as stains on the carpets, cat spray marks (and aromas), fur and hair on furntiture/carpets, scratched woodwork/furniture.
  • Leave a litterbox (especially a full one) in sight
  • Park a car on the grass (or leave evidence of such)
  • Have a dilapidated swingset in the backyard

 

Some things you should do...

ENOUGH OF THE "DON'Ts", HERE ARE SOME DO's

Question markPreparing your home for sale is a lot like preparing for a hot date. You need to create some excitement. Just like curlers and sweat pants are more comfortable, a home not prepared for selling just will not excite a buyer enough to get him/her to open his/her wallet. You have to spice it up.

 

OKAY, SO WHAT ARE SOME THINGS I CAN DO?

PAINT - You were hoping we wouldn't say that, but yes. Paint is amazing. It's kind of like makeup. Would you go to a job interview without makeup? Why would you try to sell your biggest investment without painting it? Are you mad? PAINT IT! Use earth tones and neutral, clean colors. Bright and loud colors can turn off buyers.

Landscaping - Just because you never go outside doesn't mean your buyers are not interested in the yard! Make it look nice. If you are not sure how, just go heavy on the flowers. Nobody ever walked away from buying a home because there were too many flowers. Get rid of doghouses and clutter. Have your son park his dilapidated car down the street for a while. He can use the exercise - you've got a house to sell! NEVER LET ANYONE PARK ON THE GRASS!

If it's broken, fix it - There is simply no excuse for a cracked window that you never got around to fixing. It's really easy to fix and it looks terrible for prospective buyers if they see it - and you can be sure that they will. Anything else that is broken should also be repaired.

Furnish it - if you have had to move out and leave your house empty, think about renting some classy furnishings including paintings/prints and artwork.

BEWARE!!!

    There are plenty of shysters out there. They are just waiting to take advantage of desperate-to-sell homeowners who only want to get a fair price for their home.

    One of the scams they like lately has been to offer to purchase a home from a seller fo "No Money Down" or by using some other form of creative financing. They often offer to "assume" the mortgage from you - but without actually removing your name from the mortgage documents. They may even pay you a little bit of money up front to trick you into thinking that they are sincere.

    What they end up doing is to take over ownership but they leave you on the hook with the bank for the mortgage. Then they quickly rent out the property and collect as much rent as possible and never pay a single cent to the bank. Guess who's credit goes right down the drain? Guess who is on the hook with the bank for the full value of the mortgage?

   Do your homework - if the deal they are offering you seems too good to be true, it probably is. Sadly, people are falling for scams like this daily and more will fall for them as the housing recession gets more desperate.

 

Take Over Payments

Another way that some homeowners sell in a tough market is to find someone willing to take over their payments with no money.

   Again, the scam artists are all over this too, offering to take over your payments for you. Of course they never make any payments and immediately rent your property out and pocket the rentals until the bank finally forecloses on the home - destroying your credit and leaving you on the hook for the full value of the mortgage.

   That is not to say, that such deals are not made successfully. People do sometimes take over the payments on a property. Most successfully, this is among family members. It is good to know who is taking over the property and making sure that they are sincere buyers.