AVOIDING THE 6-6-6 TRAP
Whether you’re current or behind on your mortgage, it's important to understand the current market dynamic and the backlog of houses that have been for sale for months, even years. Many people choose to sell with a Realtor or agent, hoping it will yield top dollar. If your house is in tip-top condition and your price is enticing enough, it could sell quickly. But even if it does, delays with title work, inspections, appraisals, paperwork, and so on can really drag out the process. And it all hinges on the buyer's offer, which is often contingent on the sale of THEIR house (which may hinge on their buyer selling their house, and so on). Also, buyer financing can fall through at the last minute; and some pre-qualified buyers have had their loans cancelled due to current credit conditions. It's a jungle out there right now.
Realtor-listed properties rarely close in less than two months, and can drag on for weeks or even months after an offer is accepted, which can dampen any seller's enthusiasm. And what if you accept an offer, your property goes off the market, and you move out, only to have the buyer lose their loan, get cold feet, or back out for some other reason? You still have to make your payments, insurance, taxes, and maintenance. In the current mortgage market, some buyers who are ready to close find their loan is denied based on some change the lender or government imposed based on the flux in today’s mortgage markets.
One property we bought had SEVEN transactions downsteam, all hinging on our ability to pay for ours, which was the first in the line. We closed fine, but imagine if you were #6 or #7, helplessly back to square one after all that waiting just because someone upstream had a mix up or their loan got cancelled at the last minute. It can happen, and does.
It can all lead to what we call the 6-6-6 trap. Six months, six payments, six percent...or more! In today's market, many houses sit on the market for 6 months. That's 6 mortgage payments that have to be made (Is your agent going to make them? You could ask, but...). And of course, there's the agent's 6% commission. If you're selling a $200,000 house with $2000 monthly payments, that means that if it sells 6 months in, you'll have paid $12,000 in payments on the house, in addition to payments you may be making for your new house. You also will have a $12,000 commission taken out at closing for the agent. Plus you'll owe other seller-paid closing costs, and the taxes, insurance, utilities, and maintenance costs, which can add up to ANOTHER 6%. After expenses, your $200,000 sale may only net around $164,000, give or take, plus all the anxiety of waiting...wondering...worrying. A $100,000 house would net you $82,000, using the same numbers. Will a buyer--they're more demanding than ever these days--require you to make costly repairs, or change something just on a whim, because they think they can? Will you end up with enough money at closing to pay off your loan, commissions, fees, and expenses, or will you have to bring your own cash to the closing to pay the difference? Or worse yet, not sell the house at all, risking it becoming a “stigmatized” listing, stale, to the point where no one wants to look or show it anymore? You’ve seen them around, those vacant houses on the market for months, signs fading or falling down, lawn not mowed, weeds, targets for vandals, all the while costing their owners mortgage payments, taxes, insurance, and more? Who needs that?
It's true that a good Realtor can really earn his/her 6%. But they rarely if ever can guarantee the sale of your house, especially in a market flooded with other listings, including all the foreclosures that are pushing down prices. That's where we come in. If your home qualifies, we WILL buy it, sometimes within just a few days, and usually within 21 days. Plus we don't charge any commissions or fees. So in the preceding scenario, if we paid, say, $170,000 for your house, you'd end up ahead by $6000 AND you wouldn't have to wait 6 months or more, only to end up with less than our offer anyway. Wouldn't you rather sell it now, not have to wait for months, endure all the "lookers" tromping through your house, maybe get a low offer or two, and still have to wait six months, or even more? By cutting out the middlemen, the fees and the costs of waiting and waiting, you've just made a normally complicated process a lot simpler. That's our business model, and that's how you can benefit from selling your house to us now, instead of trying to get top dollar, only to end up worse off in the end anyway. And remember, we can close quickly, usually in 21 days or less.
We sincerely hope these tips and ideas are of value to you. If you have a Realtor already, call him/her often for updates, advice, and to make sure your listing isn't lost in the shuffle. And if there is any way we can be of service please contact our office. If would like a FREE consultation email SellFast@RiverLoon.com , or call us at 218-556-2542..