Natural speed, please. American/Canadian accent, the male speaker only.
I'm so glad that you decided to stop for a few minutes and learn about another tool you can keep by your side to help sellers that are in a really sticky situation.My name is Peter Bogumil and I'm a real estate investor. I did a different kind of real estate investing: mostly wholesaling, and buy and holds.What I really have found calling for is in the single-family side is buying pretty houses and helping sellers, who otherwise, would have a really hard time selling their houses, because of low equity situation.I know that something, you as a realtor, you come into those situations with the sellers. You have someone, who is really motivated to sell their house. Maybe, they need to move, or they can no longer afford their mortgage, job loss, new marital status. For whatever reason, they're needing to sell a house that they don't still have a lot of equity, yet. So, it can be a hard situation, because you as a realtor you know that there will certainly cost involved to sell the house including realtor commission, closing cost, taxes.So, if you have ever come into the situation, when a seller has to bring money to the closing table, then you'll want to stick around for this presentation.
Because I can show you how I can help and make it a win situation for everyone involved and make sure that you will get paid. So, we will go and look at it a little bit closer. I saw a need and figure the way to fill that need and creating a win-win scenario for the seller, you - the realtor and myself as a real estate investor.It also creates a win for the people that I place into those and so that's another avenue for creating a win in this situation.
What we allow, what I enable you to do is the capture what otherwise would be a dead lead for you. People put a house on the market, but it stays there for a really long time because it's priced too high. And it's usually priced too high because the seller is trying to cover the cost of sale of the house and not have to bring any money to closing.It can also help you generate referrals from other brokers you'll be that go-to person when they have someone, who needs to sell with low equity. And they think that it 's not going to make a good traditional sale. Then they will come to you because they know that you have the answers. That will help you to generate some of those referrals.
I come across so many reasons to sell. I maybe they got fired, maybe they got relocated,they go through a divorce, maybe they bought another house and they have 2 mortgage payments. Some sort of change has happened in this person or family life. And that's the one underlying problem is that they don't have enough equity to cover the cost of the sale. Depending on where you are, the cost for traditional sale ranges between 8-10%. That can quite a bit of chunk of the money out of what the seller is hoping to walk away with.So, here is how I can help. My company offers up to 95% of the fair market value for what I call pretty homes. Homes, which are ready for sale with less than 5,000$ in repairs. Here is what I offer. We pay all closing costs. We can pay a listing agent 2% of the purchase price. So, you would normally get 3% so we do ask the seller if they can throw that extra. Since we cover all the closing costs, and we want to make sure that you are getting paid for your time and effort on what otherwise would probably be just another expired listing.
That you wouldn't get paid anything at all on it. So, you're probably wondering how can I do this and afford to do it and make some money.Here's an example. Let's that home was purchased on July 1st, 2017. The purchase price was 200,000$ and I got one of that great 3 % down payment loans, a great interest rate of 3.75% for 30 years. Well, 3 years later, they have to sell the house for some reason. Looking at the amortization tables we find that unpaid balance is 187,000$.Here's a problem that I find all the time. There are many new homes on the market.And the builders are giving incentives to the buyers. When a consumer can buy a new house for the same price as a used house, what are they going to choose?Of course, they are going to choose a new house with the builder, so they can choose all the upgrades, get the free appliance and all the other carrots that they dangled in front of these new home buyers.So let's say that the fair market value is 195000$ usually new homes being built in an area will drive down the price to the sale price of the existing homes.That's very common, let's say that now repairs needed for this home. if this family would come to you for traditional sale, then they would try to sell the house for its fair market value of 195,000$. That's 6% of selling costs an extra 2% of closing costs. They would deduct 15,600$ for the cost of sale from the purchase price. Subtract from that unpaid mortgage balance of 187,000$. And now they're in the hole, they negative balance of 7,600$. So, that's how much money, sellers will have to bring to closing just to sell their house.And that is not what the seller wants to hear. I'm sure that's not what you want to tell the seller. So, here's the alternative, I can offer. So, we have exact same original circumstances and now my offer would be to purchase the property subject to the existing loan, so the existing balance is $187,000. So, I'm just purchasing it for that and I pay all of the closing cost.So there's no closing, which the seller has to pay. I pay the listing agent, yourself 2% so that's 3740$, on the lead, which otherwise would be dead, and be expired. So everybody wins!Even the sellers are taking on the surface less for their house. Because I cover the closing cost and I covered your payment then they don't have to bring any money to closing. And it's a win for them. They stop being responsible for that mortgage payment and move on to the next chapter in their lives.You get paid on the lead, which otherwise would be dead to you. And everyone wins.I'm sure that you have some questions going to your mind.I prepared some answers to very common what-if questions.
Is selling subject to the existing mortgage legal?
I get this question so frequently from realtors.it is not the standard practice that you see in most retail sales. Yes, it's absolutely legal! What you can do you can take a copy of HUD settlement statement
This is a federal form, which promulgated. Look at line 503 is where you write the amount where the sale takes place subject to existing mortgages. So, that's what is denoted on that. Some states have that, where is an option, have their promulgated forms. In some states, we use a standard purchase contract, where we checkbox for seller financing. An then we have an additional addendum, that is prepared by the attorney, that outlines the terms of subject to purchase.
Another common question is: is the loan remaining in the seller name? Yes, it does. It's not a loan assumption. This is buying subject to leaving in place an existing mortgage.So, our company is making payments directly to the mortgage company, we get the login information, and we pay all the taxes and the insurance. And, we also leave that login information to the seller, so they have comfort being able to check any time they want and see if those payments are being made in full on time, every time.Another question, which we are getting asked is how long it takes until the mortgage will be paid off? That depends on a few things. It depends on the loan amount, market conditions and Fair Market Value. What we try to do is to build up enough equity, so refinance can happen on the existing mortgage. Usually, it takes 2-3 years. In some cases, it can be as long as 5 years. it just depends on the price, which we are paying for the home.So, what, if the seller has a significant amount of equity and just needs to sell the house really fast?That's another question because when we are doing loans subject to, we can close within 2 days, after getting a clear title search. That's a very streamlined process, held through attorney office. We run the title search, but otherwise is just closing through an attorney, because there is no escrow involved. So, we can help in this situation, too. We exam the property, crunch the numbers and if there is a significant amount of equity, then we make a promissory note arrangement with the seller to pay their equity monthly over the time, and any remaining unpaid balance, we pay in full upon refinancing. This was a really quick look at how we can help sellers with low equity or seller, who need to sell fast as quick as within a week. For those people, who need those quick solutions, we can offer that. ANd what we invite you to do is, my name is Peter Bogumil, and here is my number, you can call that number, arrange a time to talk, if you have a property in mind, or even you some questions, which you want to have answered. we are here to help sellers and realtors. Also, we would like to develop an ongoing relationship with you, so you can be that go-to person, a problem solver. I hope that your time here was valuable spent and you learn another technique to help home sellers. Thank you and I hope to talk to you soon!
