Rockland Real Estate Perspective

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Financing Options in a Crazy Market

September was a tough month for the real estate market in Rockland County, NY. The #1 question people keep asking me: "Is this the bottom of the market?"

I can't answer that question, but I do know this: Life doesn't stop for a slow economy. People always need to buy and sell houses for all kids of reasons; new baby, relocation, retirement.

We have lived through tough times in the housing market in the not too distant past; the oil crisis of the 1970s, the Savings and Loan debacle in the 1980s, and 18 percent interest rates in the early 1990s. Thankfully, our economy has roared back after each struggle.

Today, in Rockland County, NY, our biggest obstacle is the tight credit market. Some buyers have been shut out of the housing market because of a challenge to their credit or inclome, like a low FICO score due to a short credit history or a self-emplyed person whose business is cash based.

During the tough times or the past, creative financing solutions surfaced to help people buy and sell homes. In this decade, not many deals in Rockland County needed creative financing, as credit was easy to come by. During the next few months, creative financing soutions will resurface.

Everyone entering into a creatively financed deal -- buyer, seller and lender -- as a different idea of what's important. The agent's job is to listen to everyone's needs, and to suggest a win-win solution. Solutions could come in the form of concessions from any or all three involved parties, and include options like borrowing against assets to come up with extra cash, seller-financed seconds and lender buy-downs, to name a few.

Any solution needs to be legal, agreed upon by all parties, and properly discolosed in writing. A tax advisor and attorney must be consulted before entering into any creative fainancing agreement.

There are dozens of different ways a deal can be structured. If you are thinking of buying or selling home, I'd be happy to discuss some of the options available, and help you find a qualified mortgage professional and an attorney to make sure all facets of the deal work for you.

It is harder to get financing in this market. Everyone involved in putting together a real estate deal will have to do more to make it happen. That extra work, though, could be the difference between buying a new home, selling a current home, or sitting on the sidelines.

jennifer mallory | associate broker  |  "real integrity in real estate"
keller williams hudson valley realty | 18 laurel rd, new city ny 10956  
845.639.0300 x.119 |  845.323.6247 mobile  |  www.jennifermallory.com

Comment balloon 7 commentsJennifer Mallory • October 09 2008 08:45AM

Comments

Great posts and some ideas that I'm sure are being used through out the nation.  Lease purchase agreements are becoming very common in this area, but I hesitate to perdict how many of those will never close!

Posted by Jennifer Hartwick (Crane and Crane Real Estate) over 9 years ago

Jennifer: Agreed. If the market continues to drop, a lease purchase may not go through because the buyer might become ineligible for a mortgage! Tricky...

Posted by Jennifer Mallory, Nyack NY Real Estate Broker Associate (Keller Williams Hudson Valley Realty) over 9 years ago

I know for me  I am looking for owner financing for myself and some of my clients too right now!

Posted by Anna Matsunaga, Seller specialist, Certified Negotiation Expert (Team Momentum Keller Williams Realty Tacoma) over 9 years ago

Instead of a lease/purchase arrangement, how about a "Land Installment Contract"....

The purchaser has a more vested interest in the property and this document is recorded in the land records. I did them years ago when interest rates were through the roof. Now might be as good a time as any to ressurect this alternative method of conveying real property. It's critical in doing these, that all parties understand this type of agreement.

Posted by Monica McNamara (MonicaC@Ocean-CitySales.com Ocean City Maryland) over 9 years ago

Monica: That's interesting. Could you tell me a bit more about how it works? Is the only difference that it's recorded with the country clerk? I haven't heard of this technique, and I am eager to find out as many different options as I can. Never know when one of them might help put a deal together!

Posted by Jennifer Mallory, Nyack NY Real Estate Broker Associate (Keller Williams Hudson Valley Realty) over 9 years ago

Jennifer:  An Installment Land Contract is an agreement between a buyer and seller whereby the seller finances the sales price of the property on an installment method and retains legal title until the obligation is paid in full or until some prearranged timetable of payments is met. It is often used in place of a purchase money deed of trust or mortgage.

Having said that, I would always consult with your broker and/or a real estate attorney before putting together such an agreement.

Posted by Monica McNamara (MonicaC@Ocean-CitySales.com Ocean City Maryland) over 9 years ago

Monica:
In this market, I'd consult with an attorney as well as a lender before suggesting any creative financing techniques. It's crucial to have a team of experts these days to help buy or sell a home.

Posted by Jennifer Mallory, Nyack NY Real Estate Broker Associate (Keller Williams Hudson Valley Realty) over 9 years ago

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