Last week I debunked the first four myths related to selling your home. Here’s four more myths people often believe, but shouldn’t.
Myth #5: I have to carry the financing. Seller financing occurs when you, the seller, take the position of the bank. While in many cases it’s appropriate, depending on the circumstances, if bank financing is available for the subject property and the buyer is qualified, it will likely be available at better terms than you will want to carry. Most home sellers don’t want to tie up funds for 30 years at less than 4 percent interest. And if you require a higher rate than this, it will likely have a negative impact on the sales price. In addition, if you are motivated by tax concerns, you probably qualify for a tax exemption of $250,000-$500,000 of profit if you lived in the house for two of the past five years.
Myth #6: I can’t carry the financing. If your house won’t qualify for bank financing, it will be difficult or expensive for a buyer to come up with the cash to pay you in full, making the amount they can or will pay for the property lower than might otherwise be the case. It depends on the terms of seller financing. Short-term financing to comply with the buyer’s short-term needs may fit in with your plans. After all, if you’re taking sale proceeds and sticking them in the bank at 0.2 percent, getting a low interest rate from a buyer and facilitating the sale of your property might have some tremendous advantages. If you carry the financing, I highly recommend requiring at the very minimum a 20 percent down payment. In the event that the buyer defaults and you have to foreclose, you’ll be sorry if you carried the financing with less than 20 percent down.
Myth #7: I’m selling my property as-is. There are two considerations here. First, as-is doesn’t mean you don’t have to tell the buyer everything you know about the condition of the house. In today’s world, it is an absolute requirement and the courts will hold the seller responsible for disclosing anything and everything the seller knew or should have known. Second, “as-is” actually means what it says: selling the house in its current condition except for government-mandated fixes. You may want to reconsider this take-it-or-leave-it stance. Many times, buyers have limited cash but can afford larger monthly payments. The repairs can be negotiated as part of the entire purchase agreement. You may be able to meet their requirements without negatively impacting yours. Look to your Realtor for advice on these issues.
Myth #8: I’ll be offended if I receive a low-ball offer. Before you reject an offer, be careful. Don’t let your emotions control your business decisions. Any offer is better than no offer at all. Sometimes buyers start low but with guidance and negotiation the buyer and seller may be able to come to an agreement that meets both of their needs.
If you have questions about real estate or property management, please contact me at email@example.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.