Most Realtors are only aware, not just focused, on closing a traditional escrow whether distressed, short sale, or profitable for the home owner. That means that at best, even in an all cash transaction, Realtors could never get paid faster than in 10 days. The Real Estate market is improving. Existing home inventory is down to about a seven month supply (six months is traditionally normal) this is a big improvement in recent circumstances. So what would it take to get paid right now?
The fastest way to make an impact in the short term is to identify a BIG problem, and create the solution. So let's work together and determine; what is the BIG problem? The Wall Street Journal recently reported that current existing housing inventory was at a seven month supply. As stated above a six month supply is closer to normal under traditional market conditions. So, that would indicate to astute Realtors that things are improving. However, a surplus of existing homes still exists. This works to create downward pressure on local median sales price points. So, the BIG problem is that there are simply too many homes on the market for sale. A contributing factor to the housing surplus is that although interest rates continue to sit at their lowest point in decades, there are fewer qualified buyers purchasing homes. Some fully qualified buyers are sitting on the sidelines instead of jumping in and taking advantage of the facts that there are both cheap money to borrow and that everything is still on sale. They prefer to make sure the market bottomed and has recovered, therefore buyers will overpay for their homes in the near future. Realtors can try, but cannot help or save everyone. Having identified the BIG problem, let's identify a solution. How can Realtors act now to get some of these homes off the market and, more importantly, help all the parties involved achieve their dreams and goals. This, of course, includes Realtors earning a full commission.
The solution to all of it, especially for you, the Realtor, is a lease-purchase option. This is how a Realtor can get paid a full commission right now. Some markets refer to it as rent-to-own, or perhaps even owner-carried financing. The details of a contract will vary based on the state and local board. For instance, in Texas this contract must be written by an Attorney, and in California where it is illegal to be paid a fee (commission) in advance it is done as a closed Real Estate transaction. There are non-traditional challenges to it, but every state has its own work around. There is a huge market for this alternative solution. It benefits all parties; the homeowner who cannot sell, and a cash rich buyer that did not qualify for financing. Many potential home buyers with a good debt-to-income ratio and solid down payment are still being denied traditional financing because of credit blemishes or perhaps a too recent foreclosure.
A Realtor's due diligence is different with this transaction. It is important to ensure the deal will close at the end of the lease period. The buyers will need to go through credit counseling to improve their situation, so that at the end of the lease period they qualify to close. The landlord needs to not treat the occupants as simple tenants, but as business partners. Buyers in this situation must be thoroughly vetted, and screened to guarantee they will be able to qualify. Again, you cannot save everyone. You get paid your full commission in cash when the buyer and home owner come to terms and ratify the contract based on the future sales price.
1. Focused prospecting with local lenders will yield a list of recently unqualified buyers. It's your job to determine which of those are best qualified for this transaction; credit within one year repairable and cash enough to make a non-refundable cash down payment to the owner.
2. Check the local MLS, and Craigslist, for lease-purchase option listings.
3. Place an ad on Craigslist to bring all these parties to you. The entire process costs nothing but some determination, focused engagement and follow up.
With determined daily prospecting and the proper engaged focus on the specific task at hand Realtors can do this immediately. Most importantly, nobody else is doing it. This exists in every market. This works in every market. This can earn Realtors a paycheck right now.