Get strategic -- and creative -- in your financing and marketing options to secure the best deal for your buyers and sellers - BY BERNICE ROSS
Whether your clients are first-time buyers or homeowners listing their property in a red-hot market, are you able to articulate how you can help them save money on their real estate transaction?
When you ask agents how they keep more money in their clients’ pocketbooks, some say they’re good negotiators. Others provide coupons to save money on moving, home improvement or perhaps a list of where to get rebates on energy-saving appliances.
What else can you do? Check out the list below and earn your clients’ gratitude and future referrals for years to come.
1. Inform first-time buyers
According to the National Association of Realtors’ (NAR) 2017 Aspiring Home Buyer Profile, 87 percent of non-owners believe a down payment of 10 percent or more is necessary to buy a home while 39 percent believe they need more than 20 percent.
These people are usually ecstatic to learn they can purchase much earlier than they have planned, especially with increased interest rates looming on the horizon.
Although you probably know about FHA low down payment programs, did you know that there are grants (i.e., gifts of money that do not have to be repaid) that veterans, educators and others from the helping professions may be eligible to receive?
2. Consider mortgage tax credit certificates
Have you ever heard of a mortgage tax credit certificate (MCC)? I hadn’t until speaking with Rob Chrane.
This program dates back to 1984 and allows up to a $2,000 credit per year against the borrower’s federal tax liability, over the life of the loan.
On a 30-year loan, that could amount up to $60,000. This is not a deduction — it’s a dollar-per-dollar reduction against the borrower’s federal tax liability.
MCCs are not available in every state, but if they are available where you do business, learning more about this program is a must.
3. Help Boomerang Buyers
“Boomerang buyers” are former homeowners who lost their homes either in foreclosure or a short sale and who have kept their payments current.
Many may not know that they can qualify to buy a home as a first-time buyer (provided they haven’t owned a property in the past three years) with a reduced down payment and down payment assistance.
If you represented any clients in the past who meet these criteria, it would be wise to advise them of this great opportunity to become a homeowner again and to stop paying their landlord’s mortgage rather than their own.
4. Wipeout private mortgage insurance (PMI) earlier
Prices have been undergoing strong appreciation in most markets.
While mortgage insurers are required to eliminate PMI when the borrower’s loan balance drops to 78 percent, borrowers can take advantage of this opportunity much sooner by obtaining an appraisal that shows that they have 20 percent equity in the property.
Moreover, if the owner has done any remodeling, especially adding square footage, there is a high probability that their equity will be sufficient to qualify for PMI elimination.
5. Be strategic with your listing
Time your listing strategically. Data from Redfin showed that the best day to list a home is Friday, while a recent Zillow study pointed to a Saturday in May as being your best bet.
If you’re in a heated seller’s market, avoid presenting any offers until the following Monday at 5 p.m.
This gives your sellers additional exposure that can result in a higher price. Furthermore, it often increases the buyer’s willingness to pay more as they anxiously await Monday afternoon.
By the way, if you only have two offers, say one at $280,000 versus one at $250,000, counter them both at $285,000 or $290,000.
There’s a good chance the buyer with the higher offer will raise their price. (There are two exceptions: First, if you have asked everyone to bring their best offer and second, and second, if you have openly discussed what the offers are with both sets of buyers.)
6. Keep Mom’s house with a Home Equity Conversion Mortgage (HECM)
There’s nothing more heartbreaking than seeing a senior forced out of his or her home because they can no longer afford the payments or after losing a spouse.
HECM loans are available to seniors ages 62 or older who have paid off their mortgage or paid down a considerable amount.
The borrower can place one of these on their current home if they have approximately 52 percent in equity or they can purchase a new home.
The advantage is that there are no payments. Instead, the monthly payments are tacked on to the principal each month (think negative amortization loan) and are not due until the person dies or sells the property. Any remaining equity is returned to the owner or to their estate.
Borrowers do have to qualify; however, the money they save from using a HECM can be used in calculating their ratios.
Bonus: Direct global investors to a tax specialistIf you’re working with international buyers who are from outside the U.S. and do not have green cards, advise them to see an attorney who specializes in tax law for foreign investors in the U.S. prior to writing an offer.
“It’s no secret that foreign investors are being courted by U.S. real estate agents and other investment conduits with eye-popping deals to buy real property in the U.S.,” IRS.gov notes. “Eventually, these real property interests will be sold; therefore, foreign investors (transferors) and buyers (transferees) need to know their U.S. tax obligations when a disposition occurs.” More information can be found here.
It’s considered illegal in most states for a real estate agent to give tax or legal advice. If possible, find an attorney in your market area who is a specialist in this field.
When you put money in your clients’ pocketbooks, chances are they will reciprocate by enthusiastically telling their friends and families about how you helped them — is there any other better way to market your services?
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/AgentTraining and www.RealEstateCoach.com/newagent.
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