Alternative Financing

Creative Financing EducationPuzzled about Seller Finance?

CE Class CE Class brought to you bybrought to you by

www.WantMoreLeads.com

Your PresentersYour PresentersRob AubreyRob AubreyAssociate BrokerAssociate Broker 801-999-8209 801-999-8209Credit RepairCredit Repair Rob@Aubrey.net Rob@Aubrey.netOwner/Coach WantMoreLeads.comOwner/Coach WantMoreLeads.com

Jax PetteyJax Pettey Real Estate Attorney Real Estate Attorney 801-208-0025 801-208-0025 President of 1President of 1stst National Title Jax@1stNationalTitle.com National Title Jax@1stNationalTitle.com

George AndersenGeorge Andersen Mortgage Banker 801-550-1382Mortgage Banker 801-550-1382 Credit Education george@solaruslending.comCredit Education george@solaruslending.com

THE REAL ESTATE MARKET has shifted drastically and dramatically. Sales volume and the number of transactions have dropped significantly. Inventory has reached an all-time high. Buyers have never been more reluctant. Fear is rampant, anxiety is high, people are getting out of the business left and right. Sound familiar? Sure it does.

The year was 1979 and that’s what was happening all around me.

Gary Keller ~ from the book Shift How Top Real Estate Agents Tackle Tough Times

Discussion TopicsDiscussion TopicsSeller Financing…Seller Financing…

Just a short term “Bridge Loan”?Just a short term “Bridge Loan”?

How does the How does the BANKBANK look at it? look at it?

The Long Term SolutionThe Long Term Solution

How does the How does the LAWLAW look at it? look at it?

The Legal and Board of Realtor SideThe Legal and Board of Realtor Side

Not Cover Today

Cover Today

Real Estate Principles, Contracts, Real Estate Principles, Contracts, Mortgages, Credit, LawMortgages, Credit, Law

The Reality…The Reality…

1.1. 25.5 % of Credit Reports Have a Score of 599 or below 25.5 % of Credit Reports Have a Score of 599 or below *Wall Street *Wall Street Journal 07/13/2010”Journal 07/13/2010”

2.2. Most Bank FHA Overlays a minimum of a 640 Credit ScoreMost Bank FHA Overlays a minimum of a 640 Credit Score3.3. Feeder population of “un-banked”Feeder population of “un-banked”4.4. Not counting Self Employed that have good creditNot counting Self Employed that have good credit5.5. Over supply of housingOver supply of housing6.6. Conventional Pricing can be very punitiveConventional Pricing can be very punitive

Just a blip???Just a blip???

The Options…The Options…

1.1. Get out of the businessGet out of the business2.2. Prospect, lead generate and market soooo much that you Prospect, lead generate and market soooo much that you

have enough leads to sustain youhave enough leads to sustain you3.3. Learn to do business in Learn to do business in Today’s MarketToday’s Market

Alternative FinancingWhat are some of the things you know about seller financing?

What are the Pros?

What are the Cons?

Gather in Groups and discuss pros and cons

Each Table give one pro and one con

Where is the resistance?Where is the resistance?

The home owner The listing agent

Visual Acuity - Test #1

Starting With The End In MindStarting With The End In Mind

In order to have successful transactions and to protect the public.

We must start with the end in mind.

Like any venture a goal and plan is the best way to achieve it.

The Role of the Lender1. Identify the Road Block2. Prescribe the Remedy3. Set time frames4. Get commitments5. Structure the final close

On the hook, and get paid LAST!

Where is Contract for Deed?

What is the 4155?

Is this something new?

Will it stick around?

Magna Carta

What are overlays?

DDyynnaammiiccaallllyy structured seller financing structured seller financing

Uniform Real Estate Contract (Contract for Deed)Uniform Real Estate Contract (Contract for Deed)Can write over an FHA or a VA loanCan write over an FHA or a VA loanBuyer may use combinations of cash and hard costs of Buyer may use combinations of cash and hard costs of

improvements to satisfy down paymentimprovements to satisfy down paymentSeller retains titleSeller retains title HUD Circular Letter 7 - 90 HUD Circular Letter 7 - 90Buyer holds enforceable “Equitable Interest”Buyer holds enforceable “Equitable Interest”

www.realestate.utah.gov

Direct substitutes for a CA$H down payment1. Roofing2. Windows3. Insulation/weather stripping4. HVAC systems5. Solar and wind systems

Fun things you can do with FHA loans

• Negotiated with other sales concessions1. Carpet and decorating allowance2. Plumbing and electrical fixtures

• 3 ways to borrow money for down payment

Fico, the big 3, and big business

bankruptcydischargesettlement.com (2008)

In June of 2004, the Public Interest Research Group revealed that (79% or more) have significant errors in their credit profiles. These errors affected credit scores by 50+ points.

10th Circuit Appeals Court ruled that E-Oscar is not a reasonable validation method (2010)

  Government bail out for credit scores?

Credit Education!!!

You cannot play the seller finance game without this relationship…

How To write the OfferHow To write the Offer

REPC REPC May need to cross out certain sections.May need to cross out certain sections.

Seller Finance AddendumSeller Finance AddendumSelect Appropriate TermsSelect Appropriate Terms

For Contract for Deed For Contract for Deed Select OtherSelect OtherWrite “Contract for Deed/UREC”Write “Contract for Deed/UREC”

More items to chew on…More items to chew on…#1#1 Sales are entered on the MLSSales are entered on the MLS#2 Transaction is eligible for a 1031 Exchange

Paradigm Shift – it’s the decade of the Realtor

Benefits to the Transaction?Benefits to the Transaction?

HUD1 settlement statementHUD1 settlement statementOwner’s policy of title insuranceOwner’s policy of title insuranceClosed with 3Closed with 3rdrd party legal advice party legal advicePayments made to, and “trigger” documents Payments made to, and “trigger” documents

flow through, a 3flow through, a 3rdrd party escrow company party escrow company

…Looks, feels, and acts like an institutional closing

Make a bigger net

Haul in ALL the fish

Sift and Sort Policy

Revised Sales Strategy

What is the Objective?What is the Objective?

1.1. Share the information and educateShare the information and educate2.2. Set up regularly scheduled classes for:Set up regularly scheduled classes for:

a. Our peers and co-workers who will attend this classb. Our Sphere of Influence who will attend a Consumer Oriented class

From Theory to Practice

=

Just do it!You retain on average only 7% of what you hear.

To learn, you must DO.

First thing: write it down

Legal advice must be given in each of these transactions.

You should not give it:Every Seller Finance Transaction Requires

Legal AdviceInstitutional Lenders Have AttorneysNow the Seller is the LenderBuyer Takes Part In Creating the Contract

More or Less• Buyers • Sellers• Transactions to do

Then What’s the Problem

Solution

Seller Finance Options

1. Lease Option

2. Contract for Deed

3. A.I.T.D.

Strong For Mo. Legal You

Seller

2 $500

Both 2-7

$1,500Buyer 7

$500 to $1500

In order to have a successful transaction, you must:

Customize Contracts to Meet the Specific Needs of each party to the contract

Correctly Educate all parties to ensure Creditability and Comfort

Indemnify, Indemnify, IndemnifyClose the Transaction

Buyer Pool

How do you get people into your

Other Agents

Buyers

Pool

Lending Partner Ghost

Signs

KSL and craigslist

Past ClientsRadioWebinars

Business Owners

Seminars

7 referrals

Three Types of People

1. Those that don’t get it and do it, They will be SUCCESFULL2. Those that get it and do it They will be VERY SUCCESFULL3. Those that don’t do itLearn the script, “Would you like fries with that?”

Next Class in….???