Everyone has heard of seller financing. But not everyone understands it, or understands how it can benefit EVERYONE from property buyers, property sellers, real estate agents, investors, and of course, flippers.

The Seller

If you have ever sold a home, or are trying to sell a home, you know that sometimes finding someone who is both interested and qualified can be a hassle, especially if you desperately need to sell your home quickly. By understanding seller financing, you can decide on what terms to sell your home, and often demand a higher price. Seller financing simply means YOU are the bank. Instead of the buyer of your home having to go to a bank, get approved for a loan, get a check, then pay you, you would simply receive payments every month for your property until it was paid off. With the recent “creative financing” courses all over TV and the internet, these types of transactions are bigger than ever. However, agreeing to these terms of payment is not the bottom line. Investors purchase these notes because they can get a great return on their money, and have an investment that is secured by property. So you may decide to use seller financing to sell your home quickly, then turn around, and sell that I.O.U. or cash flow note, to an investor. The buyer gets the home they wanted, you got paid, and the investor is getting a return he wants for his money. You can see how greatly you can benefit by using this type of financing, and if you’re anything like me, I don’t like banks. I would much rather be in control and know exactly what I am getting because it’s on MY terms, not a bank’s.

The Buyer

For someone buying a home, seller financing allows someone who might not be able to qualify for a traditional mortgage, to purchase the home he/she would like. But understanding seller financing will allow you to negotiate with the seller to come to an agreement. Often people don’t get what they truely feel their home is worth. Seller financing allows you to structure a payment plan that is giving the seller the money they want for their home, while allowing you to pay them directly without credit approval. This technique has been used by investors and home buyers for years as a way to purchase homes and other property they might not be able to get otherwise. Then as a buyer, you can explain to the seller how they have the option of selling that mortgage to an investor and still getting their money. Once they sell it, it’s not their responsibility anymore.

The Flipper

No, I’m not talking about everyone’s favorite bottle-nosed dolphin. I’m talking about mortgage flippers. This is where you can build a huge source of income without ever investing money of your own. The only costs you have here are for advertising to the mortgage holders. This consist of envelopes, stamps, paper, postcards and a few classified ads. If you can find a way of investing for less than this, let me know, I’d love to hear it. Finding mortgage holders is not hard. There are litterally billions of dollars of new notes created yearly. The first place you can start looking, is where you are right now, the internet. These types of contracts are also recorded in county courthouses all over the country. Go to your local county courthouse, ask for the recorder of deeds, and ask if you can examine the public records. When you find one of these seller financed mortgages, you can simply contact them, explain to them they can sell their mortgage, and gather the information on it. With that information, you can present it to investors who purchase these notes. When you have an offer, then you can arrange for a simultaneous closing in an escrow account. If you’re looking to become a serious investor, this is an excellent way to generate cash for other types of investing, because you can litterally start with nothing. That is exactly why I personally started doing this type of investing.

My goal is to help sort out some of the mess when looking into real estate, as either an investor or a home buyer/seller. My website offers an explanation and the resources to further your real estate education. I offer a Note Listing service to purchase mortgages so you can profit from them.
http://www.getyourmoney.stlhosting.com

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How long can prices rise before no one can afford to buy? In a nutshell, that is the basic question that is niggling at the back of our collective subconscious when we talk about the real estate bubble.

Real estate is appreciating at staggering rates - as much as 19% in some counties in Florida according to state officials. Meanwhile, on the financing scene, interest rates are low - and staying there. Low interest rates mean lower monthly mortgage payments - which means that many people are able to borrow MORE and afford larger mortgages and more expensive houses. Couple the astronomical increase in real estate value with the continuing trend of low interest rates, and you have a sizzling hot real estate market that just keeps getting hotter as investors jump on board to get their piece of the real estate pie.

Which leads people who know finances and the market to question how long it can last. A major part of that answer is in the question that opened this article. Prices will continue to rise until they reach the point where most people can no longer afford to buy.

Another part of the answer is in the fact that the real estate bubble is extremely localized - and it’s localized in some of the larger media centers around the country. Massachusetts, New York, Florida, California - those states are seeing unprecedented rises in housing and real estate prices. According to national reports, the median price for a home in the United States rose 14.7% over the last twelve months. That percentage is deceiving though. Take a look at some more local figures to get a clearer look at the reality.

If you live in Nevada, the median price of a home rose 31.2 percent. In California, home appreciation rose up 25.4. In Hawaii, the figure was 24.4 percent, in Washington, D.C., 22.2 percent and in Florida up 21.4 percent. Most of the rest of the country is NOT seeing those sorts of astronomical increases in value, though. If you’re buying in Mississippi, for instance, home prices have appreciated at a more reasonable 4.9%. Even in the Northeast, where a two bedroom home in Boston can easily sell for $400,000, if you take a short drive outside the city to the western half of the state, you’ll still find 3 and 4 bedroom homes selling in the low $100’s - and less.

What’s it all mean? Among other things, it means that the dangers of a real estate ‘crash’ are as localized as the effects of the real estate bubble. It means that the foreseen losses are more likely to be smaller profits rather than actual losses. To quote a Florida economist, “The people who think it’s a big bubble see a big crash. We just see deceleration. You don’t have to worry about house prices going down.”

The bad news may be for those who see real estate as a get-rich-quick proposition. One of the most popular investment ’schemes’ of recent years has been ‘flipping houses’ - the practice of buying a house, then reselling it within a six to twelve months for a profit. When real estate prices are rising at 20 - 30% per year, there’s a great deal of money to be made that way. A down payment of $10,000 can effectively double or triple your money in less than a year. According to conservative estimates, though, real estate prices need to rise by at least 15% a year to even cover your closing costs if you sell in less than a year.

Does that mean that you’ll LOSE money on your purchase if real estate prices stabilize and drop back to their more usual 5 - 8% per year rise? Of course not! It simply means that real estate goes back to being what it has always been - a good, solid, long-term investment. It means that speculators looking to make a quick buck will have to re-adjust their expectations - and either find a different ‘product’ - or hold their properties longer before selling.

Either option is good news for the ‘classic’ real estate investor, or the average home buyer who is looking for an affordable house for himself and his family. Prices will stabilize and even drop a little - but the bottom won’t fall out of the real estate market. The typical real estate owner/investor will still end up with a house and land that’s worth more than what he paid for it. And all the naysayers and panic mongers can stop predicting the resounding crash of the real estate bubble falling to earth.

Is this a good time to buy a house? Andrew is the web owner of Home Buying and Home Selling Tips: How to buy a house and sell house fast!, a website that provides informational guide on home buying, selling house, home mortgage loan, foreclosure home, real estate investment, and more. Find the answer at his website: http://www.buy-and-sell-house-fast.com/

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