First, lets look at how property is valued. I have been investing in Florida real estate since 1992 and I am going to tell the secret to purchasing real estate, knowing how to accurately and easily value property. Frankly its not a secret at all, everyone in the industry uses the same method including, banks, real estate agents and appraisers. There are many valuation methods but I am going to give you the best rule of thumb for nearly every type of real estate transaction. Here it is. Price per square foot of heated and cooled space. It is not much more complex than that. The more nice stuff that comes along with the square footage the higher the price per square foot but if you put a pool with a screened in enclosure and marble tile into your home, but that home is located in a war zone, the pool and marble will not raise your price per square foot. On the flip side, if you have an average house in the best neighborhood, the neighborhood itself will elevate the price that someone will be willing to pay per square foot. So ultimately, the price per square foot is what determines the value of your home in your neighborhood at any given time. This is the number the bank will look at when giving a mortgage, it is also the number the appraiser will use to supply to the bank and it is also the number an honest real estate agent will give you when looking to sell your home and it is the number that investors use to determine what they can and can’t pay for a house. So if your house is in perfect shape it should be able to sell at or very close to the higher end of the pricing per square foot.

But if you have tried selling your home and it hasn’t sold for 6 months or longer, it is extremely likely your price per square foot is too high. I have heard this statement many times, but the house right up the street sold for “$X”. That may be true but that house is 850 square feet larger than your house. It can be tough for some people because they do not really understand how property is valued. Based upon the fact that your house did not sell at what you are asking you need to realize that you are trying to sell above market value.

But if you still want to sell, I might want to buy your house. I buy houses a couple of different ways. I pay all cash and can close quickly or I get terms and can close quickly. I will explain both methods in a moment. Either way I have learned that a quick closing benefits all parties so I have built my business around fast closings and all are done legally and filed in the city and county where the property is located. It is extremely important to note that in every real estate transaction I am involved in, the seller and I both walk away satisfied that the transaction was fair.

Whether I use my money, a bank’s money, or an investor’s money, there needs to be a fair return for the investment or I wont buy the property. Typically when we purchase a property with some or all of our cash we need to pay substantially under the market value (price per square foot) for the house and if it needs any work, that price per square foot goes down because it will take longer until the house is in sellable condition. It is a simple math equation, when we purchase houses we know the return we need to be profitable. If we can’t generate a profit there is no reason to be in business, so if you are looking to sell fast, all cash, we can do so but it will be at a discount. By the way, when you list your home for sale with a realtor you are already agreeing to a discount off of your sales price, usually between 5 to 7 percent depending on your local market. Mind you the discount in many cases is worth it because the fact of the matter is, more houses are sold through realtors than any other method but having your house listed with a realtor is no guarantee that it will sell anywhere close to the price they list it for. Real estate will always sell when its priced at or below its market value. Meaning, whatever someone is willing to pay is what your house is worth today. If it hasn’t sold, I can promise you that you were priced above market value during the time frame that you have been trying to sell it. Everything of value will sell at the fair market value at that moment in time. But at this point, if you want cash and you want it now, you need to consider reducing your price to sell your home. Ultimately the market will only pay you a price per square foot in your area.

But what if you don’t want to sell at a discount? If you don’t want to sell below the market value of the property, than you will have to wait long enough for the property value to appreciate to where it is worth what you are trying to sell it for today. But waiting means you have to bear the costs of ownership while you wait.

You do have another choice however. We can purchase your home at or very close to the retail value per square foot, but we will purchase it on terms through some form of seller financing. Many people get scared when they hear the words seller financing because they aren’t really clear on what it means and how they can benefit from it. First let me assure you, you have already been doing seller financing you are just not getting compensated for it like you could be. You deposit your money into a bank and they loan it out and they receive interest and pay you almost nothing and in most cases they make us pay them for the favor by charging us fees. So they make a profit from using your money and pay you little to nothing for doing it. On the other hand I am willing to pay you a premium for doing the same. Equity in a home can be a great place to earn substantially more than you can in a bank or in the stock market or nearly any other type of investment for that matter. Best of all it is secured by an asset that will always hold value if it is maintained properly and in most cases will appreciate. So if you have a home, and do not need your equity today, you stand to make substantially more money on the sale of your home if you sell it on terms.

So what are terms? Terms are multiple agreed upon items in a single agreement. If I pay you retail for your home today, you will need to wait for a period of time to cash in your equity. Technically I am saying to you, I will pay you an agreed upon amount for your home, which is a price you have been unable to get on the open market, but you will get your cash at a later date. If you own your house free and clear you will be the mortgage holder, meaning you are in the first position on the mortgage, just like a bank does when they give you a mortgage. If you don’t own your house free and clear, meaning you have a mortgage on the property, we structure the sale in what we call a lease purchase. A lease purchase is the same as seller financing but because you have a mortgage, we have to structure the purchase so we don’t trigger a due on sale clause that is in most mortgages. A lease purchase is fully legal and used in tens of thousands of transactions each and every month in the US. This is different from rent to own because a rent to own means your are the landlord and you still pay for any problems that arise with the property. This is different from a lease option because we are guaranteeing a cash out date in the future. Where as a lease option would give an option to purchase or technically an option to walk away. We put an actual on or before purchase date in the contract.

So how long will it take? That time frame might be on or before 36, 48 or even 60 months before you your equity. On or before means I can and do often cash you out of the property much sooner. During the term, you are relieved of any and all responsibility for maintaining and paying for the home. You won’t pay for any maintenance or upkeep. If you own it free and clear we will make monthly principal payments to you, which will delay capital gains taxes. If you have a mortgage you will lock in your equity and we will pay the principal, interest, taxes and insurance and all maintenance and upkeep costs. In either method, we pay for everything and you lock in your equity today and we agree to pay you at or very close to retail. This will allow you to walk away with substantially more money than any other method of selling your home. If you own one or multiple properties free and clear, seller financing can allow you to sell at market value without having to do repairs, or maintenance and receive a nice monthly income with deferred capital gains. One of the main ways I sell property that I own free and clear is to use seller financing because I can get monthly principal and interest payments which pay me a better return above what I can get in the bank and it is secured by a hard asset, real estate.

Of course this approach won’t work if you want or need your equity today. If you want your equity today you will have to lower your price per square foot to whatever the market will bear. If you would like us to make you a cash offer or you would like to see just how much more you would pocket on a terms purchase vs. a cash purchase, contact us today for a no obligation consultation.