Jim Valentine: Creative options to make it work

We’ve long described market situations like we are now in as a “confused sea.” Those with nautical experience will know that there are times when the ocean just doesn’t know which way to go due to conflicting winds, currents, swells, and other contributing factors that together make the water more or less quiver rather than flow. This real estate market is one of those markets. It is time for some to look to options.

Not all sellers need their cash out of a sale. If all they are going to do is stuff it in the bank at a low interest rate, they may have interest in being the lender for you, doing what is called “Owner Carry.” They get secured by a First Deed of Trust, you put down a good down payment, and make the payment to them. They get a good rate of return, steady cash flow that is well secured, get a good price for this scenario usually generates a higher price for them, and they achieve their goal of selling that asset.

From a buyer perspective this situation can be good for you to save many in cost areas, i.e. – appraisal, credit report, loan origination fee, points, loan approval process, etc. and you get the house you want to live in. You might have an early payoff period, i.e. – 3-5 years rather than 30, but it gets you in and you can refinance or sell it if you get to the end of the agreed-on carry period. If you are doing this as an interim while you try to sell another home this gives you time to sell that home to pay this one off, but you are living in the home and starting your new life.

Sometimes a buyer has something a seller would take for a down payment. Maybe it’s a collectible car, a vacant lot, etc. You can work that equity into your home in the right transaction. We’ve worked real estate transactions involving cars, trucks, cows, pedigreed dogs, boats, stock, etc. Value is value. Don’t doubt what might be able to happen, present the concept and see what the other party thinks. You might just be surprised at what you can do in a market like this. Cash drives hot markets. Motivation drives confused markets.

If you don’t have enough down, but you have other real estate you can try making an offer with multiple Deeds of Trust securing the “Owner Carry.” For instance, you are buying a $500,000 home, but only have $25,000 to put down and can’t qualify or don’t want to qualify for a new loan right now. You can secure the remaining $475,000 with a Deed of Trust on the home you are buying and one on a lot that you own, or a second on the home you are currently in, or… the owner may just want the land instead of being secured by a DT, but either way, you are moving forward with your purchase.

A lease/option is another way to go, but the dynamics are very different for both parties. We have and will discuss such an option at another time. Just mentioning it as it always comes up in these conversations, but most people have little knowledge of the intricacies of that transaction. Done right it can benefit both parties.

Interest rate increases have impacted people more by what they don’t have now, a 3 percent loan option, than the 7 percent rate that is available. 7 percent was very common not that long ago. The impact of that rate will be felt over the next few months as prices adjust a bit for it, but it doesn’t seem like things will crash like 2008 so keep active in your real estate quest and open your mind to options available to you. Be proactive and creative and you might just surprise yourself with what you accomplish.

When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, BS.3481, 775-781-3704. dpwtigers@hotmail.com