All Cash Ad

QUESTION: I currently have my home up for sale with a real estate agent. This past weekend I put an offer in on a home in another state. In today’s newspaper there is an ad by “real estate investor,” which says she buys homes for full price if you’re flexible on the terms. (whatever that means???) I don't know if it's o.k. to call her and tell her that I am working with an agent already, and have her go through the agent or not.
I want to sell my house fast, but I must get full price. I would like to move to the other state before my kids school starts in August. I see this as a quick sale if it's all on the up and up.
Does anyone here know about this kind of thing? Opbviously, I don't want to do anything unethical or illegal in selling my home.


THE GATTEN RESPONSE: The "Full Price, All Cash or Terms" ad generally means this:

If you want all cash, then you’ll need to have at least 40% equity and will need to take, a 60% offer (60 cents on the dollar). This allows the investor to get a hard-money, no qualifying loan to pay you all cash.

However (don’t despair and doln’t turn away yet), if you want ‘full-price,’ then you'll need to set up "terms" whereby you will stay on the loan and get full price when the property sells in 3,4 or 5 (or ?) years, with the overages from appreciation and principal reduction going to the investor.

Another option, if you have enough equity in the property to do so, would be to take the 60 cents on the dollar and ‘carry’ the rest (40 percent), thereby getting 'some' cash now and the 'full price' later. Or (it gets better)...

You can refinance first (prior to making your deal with the investor), having the investor cover the loan costs, and pull out as much cash as possible, and 'then' carrying the rest for your investor for the term specified (this gives you another payday down the road, and avoids capital gains tax until the transaction terminates).

Don't be dismayed by this ad. Its similar to the ones I run, and is not designed to trick anyone...it just generates calls that just might be from someone who is in a position to truly benefit by such an offer. It also contains many truly viable options for some folks.

Remember that when(if) you sell through a Realtor your costs are going to run about 8%+ (assuming 6% commission and standard closing costs). Also note that in addition to this cost your will undoubtedly be required to reduce your asking price by 5 or 10 percent. This could cost you 20% or more up front...so some would say: Why NOT carry the 20% and get it all back someday, rather than paying it out now and never seeing it again.

You may, in fact, be well advised to look carefully at the “Full Price plus Terms” offer. Then if it starts to look better to you, I'd obviously suggest our program.. That is...placing your property into a living trust (land trust) and just leasing it to a co-beneficiary (the investor). Since this is not a sale of the real estate per se, you can avoid a price reduction, capital gains tax, closing costs, and a broker's commission. And have a big payday coming in a few years.

Respectfully,

Bill Gatten

To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.