'Plan B': What To Do When Your House Won't Sell
The most successful people are those who are good at Plan B."
Statistics show just 1 in 3 sellers who list their Atlanta home for sale today will successfully sell within a normal 90 day market timeframe.
I'm not foolin'… the facts are 1 in 3.
So what happens if you're one of the 66% who can't sell?
Well ... you go to "Plan B".
Here's a quick list of options for sellers who simply can't stand having their home on the market for another day, henceforth known as "Plan B". I will touch on them here and provide detailed explanation of each option in subsequent posts.
"Plan B" #1: Stay Put
Here's a fact: on an average week I meet with 5 to 6 potential sellers. These are people who want to sell their homes. Of those I meet with ... at least three decide not to sell after talking with me. The first words out of my mouth when meeting with a seller? If you don't have to sell ... don't sell. We're about half way through the worst real estate market decline since the Great Depression and the last 3 years have, literally, obliterated your equity. That's right. Stay. I know, I know ... whoda thunk it, right? A real estate agent telling you not to sell. And no, hell has not frozen over and pigs can't fly.
I recently read a great book called "Apartment Therapy" (there's a killer website too right over here). It's required reading for anyone who is longing for something new but could make do by simply revamping the old.
"Plan B" #2: Seller Financing
Loans are cheap but hard to come by. From higher credit score requirements to more stringent appraisal guidelines, even if you found a buyer for your home in this tough market a series of trecherous, deal-killing hoop jumping ensues for you and your buyer.
Enter "owner financing".
The concept is simple: become a bank and offer rate and term financing that works for your buyer.
Why? Because it allows you to set the guidelines on several fronts that might limit your buyer from being able to afford your home. Credit score, down payment, interest rate, financing term (length of the loan), etc. All of these play a role in whether your buyer will qualify for a loan. If you're in charge then you can offer the appropriate level of flexibility and increase the number of buyers who might qualify to buy your home.
"Plan B" #3: Rent To Own (aka lease option)
The best way to look at a Rent To Own is to consider it simply as a lease (rent) with an option to buy. When you offer your home under a Rent To Own, you are leasing your home to a tenant for a fixed period of time. The tenant also has the right to buy your home during this period of time for the agreed-upon option price. Your home isn’t sold when you sign the lease and option agreements!
In a lease-option or rent to own situation -- your "tenant" has the choice to buy your home or not buy your home. However, you are obligated to sell your home to your tenants during the term at the agreed-upon price. In reality, a Rent To Own obligates you to sell without obligating your tenant to buy.
Now ... that might not sound so great to you as a seller / landlord ... but a well structured lease-option has many advantages to both you and your prospective tenant. I'll cover those advantages in detail in a later post.
"Plan B" #4: Rent
And last, but not least, we come to what many consider the "red-headed step child" of "Plan Bs": renting. Being a Landlord is right up there with a visit to the dentist for most sellers, but if you're struggling to get the value you need from the market it might be the best option. Like lease-options, it's all about how you structure the relationship with your tenant. And I know from firsthand experience that proper due diligence is key to a successful landlord experience. From the specific requirements you have for the tenant to how your lease is written, the devil is the details. We'll cover all of them in a future post.
Wow ... we covered a lot here, didn't we? I'll be working to fill in the gaps of each "Plan B" option in future blog posts. Meantime, if you have questions about the speciifcs or want to know how to structure your "Plan B" -- leave your questions in the comments section below and I'll be sure to answer them.
Good post, Joshua. Too many people put all their eggs in one basket, without taking into account the very real possibility of plans not working out the way they intend them to. And in today's market (flooded with distressed properties), having the ability to compete with them means being creative and realizing that it might be time to come off the market temporarily.
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