Oh, So You Have An Offer to Buy Your Home, & What?
Ok, I get it. You want to unload that baby.
Maybe you want the income. Or just to unload the headaches, even mortgage responsibility. Perhaps you are wondering where you could get a good return as the banks aren't paying much and the stock market worries you.
Here are some things I want to point out if this ever is your situation:
The first question you should ask yourself is are you willing to be a tough bank, willing to foreclose without hesitation? If you are nice guy or gal by nature, you might not want to be Simon the banker.
The next question to ask yourself, how much of a down payment are they offering. Will it cover the closing costs? Does it make your position safe? What if they trash the house before they leave it? Man have I seen some trashed homes. I am thinking of one in particular where the evil people almost totally destroyed the home. It was awful. Are you willing to risk that happening?
Next: Are you willing to use an attorney to oversee the transaction. As much as I respect real estate agents, even my own experience, I would never play banker without an attorney from the beginning to the end of the transaction. Remember the end might just be at foreclosure.
Next: Make friends with a loan officer, have this buyer - borrower meet with them. Determine why they want you to be the banker and if that is truly an only option. Therefore, have your future borrower make a regular loan application. Sure, they might say they are offering as they are as they can't quite qualify from a real lender but you are now asked to be that lender. You want to know what a mortgage bank would want to know. You want to see the flaws. You want to hear the excuses.
The first bank I worked for was fascinating. My manager, an underwriter was amazing. He could look at a loan application and tell me things about my borrowers that weren't on paper. He had underwritten so many loans that he could tell me things about my people either I didn't know or was amazed he might know. You want to have those sort of eyes on your borrower, you banker you.
Next: Don't fall for a short term promise. If they don't qualify for a real loan now they may not in a year or two. Were they recently bankrupt? Oh, that might take four years to overcome. I recently was asked about this type of example by someone in this exact situation. What changes in one year I asked? They didn't know. Uh Oh, on no.
How stable is their employment? That is crucial. Are you in a position to evaluate this? Have they been in a field that is sporadic? Is there a big gap in employment? A real bank gets the facts on this, they contact the employer or look at tax returns that can be double checked with the IRS.
When it comes to why they want you to be the bank, the answers are often not so good. If you think you want to be the bank, the reasons you are considering such may also be not so good. Maybe you want too much for your home. Maybe it needs to be fixed up. (I knew one that needed a roof and the home wouldn't qualify without a new roof.) My client, a single lady, didn't have the money for a new roof. Well, fortunately she found a way. Now she is in a strong position to avoid being the banker.
By Larry K Cragun, REALTOR®
graphic provided by license with http://presentermedia.com/
MediaOne Real Estate
4770 S 5600 W West Valley City, UT 84118Phone: 801-204-6000 URL of Map
Blog Archive2014-12-31 05:46:07
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