A few weeks ago, with the help of Patten Law Firm, StepStone had the opportunity to present a free CE class, Advanced Owner Fi Strategies, to local real estate agents. Dan teaches this class and while it can be a lot of information the take away is certainly the advantages of the owner finance option for sellers.
After one of the classes, an agent came up to me and admitted that she had a lot of questions but didn’t ask during the class because she felt so behind the eight ball in understanding the subject. However, her interest was piqued particularly because she had a listing in which owner financing seemed like a perfect option for her client. We discussed the seller situation and I agreed with her and gave her some advice on her listing. In fact, not only was owner financing a good option for her listing it was a GREAT option that would allow her clients to not only sell the property but also create residual income on that sale for many years to come. I have a feeling that her clients are going to appreciate her out of the box thinking.
I admit it. When I’m around other, more traditional real estate agents, I’m a black sheep. In fact, before we did the class Dan and I wondered if we would get any negative reactions. It sometimes happens that agents from more traditional training will have the point of view that investor strategies are unscrupulous, illegal, especially illegal for them as agents to participate in, or simply, unsavory. Luckily, we had some great participants who were actively engaged in the discussion of Wraps, Sub To’s and Amortization tables although I’m pretty sure some of them were happy to have their 2 hours of free CE credit and never think about owner finance again.
So, it was especially exciting for me when that agent engaged me on how what is often thought of as an investor strategy could help her get a big win for her and her client. But, it’s not only familiarity of creative selling strategies that can help agents service their clients. As real estate professionals, we ought to be aware of all strategies available to sellers and buyers. Over the years, I’ve seen some traditional agents do a disservice because of their inability or unwillingness to consider creative, investor strategies in some situations. Here are some examples of when an investor strategy or creative agent can help a seller:
1. Seller with equity facing imminent foreclosure. Many real estate agents do not know what to do to help a homeowner facing foreclosure and yet this is when a seller most desperately needs help from a professional. I’ve seen agents list a property days away from foreclosure with no clue of how to postpone a foreclosure date. Bad idea! How many traditional transactions can be completed in a matter of days with a foreclosure pending? In this case, the best option for the seller might be to sell to an investor often with creative terms such as Subject To. At the VERY LEAST, an agent needs to be familiar with the strategies for postponing the foreclosure sale to buy the seller more time.
2. Seller with no equity facing foreclosure. This one is even more dire. A Subject To sale to an investor may still be a good option for this seller. Alternatively, a short sale listing may be the seller’s best option. What is not a good option is listing the house for what the seller NEEDS rather than actual market value. Another bad option is to do a short sale listing with an agent who doesn’t understand the short sale process. That is a nightmare scenario for all parties involved!
3. Seller with major repairs needed. Many agents visit sellers with the intention to advise them on what to do with the house to sell for top value. While on it’s face this may seem like a good idea it does not take into account the seller’s need. I’ve visited many sellers who told me they consulted with an agent prior to calling investors who told them the property could not be listed until X,Y, & Z were completed. All houses are sellable as long as the price is right! I’m less concerned with how my listing portfolio looks than finding the right solution for the seller. Again, being familiar with investor strategies will allow an agent to evaluate the value of the property in its existing condition (ARV x 70% minus repairs) and effectively market to investor buyers.
4. Investor Client Wanting to Buy! This sounds like an easy client to take care of but if you are awake and paying attention you will know that in the current market finding a property priced appropriately for an investor can be a challenge. All four of Texas’ major metro’s are experiencing months on months of low inventory and investor guru’s and clubs are churning out new investors every day making the market all the more challenging. You are not going to find a juicy deal on the MLS willing to wait for your client’s loan to be processed. By being familiar with investor purchase strategies, getting plugged into the investor community and understanding how to identify and vet potential deals you will be more likely to locate potential properties for your investor client as well as teach them new methods for leveraging their money and buying more property.
At StepStone Realty, we proudly call ourselves the Black Sheep of the real estate world. Caught between the investors who think getting their license would hamstring their investing and Realtors who think what investors do is unscrupulous and we are the ones armed with all the tools and knowledge to not only help our clients and customers to a higher degree but also with the knowledge on how to build wealth for ourselves while we are at it!
If you want to learn more about being a Black Sheep shoot us an email at firstname.lastname@example.org ask for an invitation to one of our upcoming Agent MasterMind lunches.