Creative Real Estate Financing
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated about 11 years ago, 09/24/2013
Can I use equity?
I currently have an as is home I need a cash buyer for but would like to move into a new home asap. Can I use the equity on my current home somehow to meet my wanted monthly budget for the new home? The home I am selling is way under comps I just don't believe my realtor is doing an adequate job marketing and I'm running out of time to sit on it before I have to move for my growing family. My current home is paid off and has 20k+ in remodel this year and I'm only asking 50k for it, if I have to sit on it much longer anyway I can use part of it's value to get into my next home? Thanks in advance
Look up bridge loans.
- Joel Owens
- Podcast Guest on Show #47
Thank you for the response. I was just looking into those I just wasn't sure if they worked with cash only houses or not? Would you know the down sides to a bridge loan?
Originally posted by Joel Owens:
Or you can bridge it with a credit card or two. 2-3% balance transfer fee with 0% interest rate for 12-18 months. :)
Thanks everyone for the advise!
The bigger elephant in the room is why your home, according to your description, is priced under market and not selling. Are you sure you really under market?
That is important and really the home sale issue is where you should start before you go borrow money based on the home selling and then come up short or prolong the term of the loan, etc.
If the agent listing your house is doing a poor job, fire them. Hold your agent accountable, ask to see a list of who inquired about the house. Where is he marketing the house beside MLS? Get tough, don't settle for below adequate service from the agent, they get their full fee when the house sells. Make them earn it by doing their job or find an agent who will.
Outside of borrowing money to bridge the gap, you can find homes that you like and see if the current owner is willing to let you move in as a tenant until your home sells or similiar arrangement.
Originally posted by Minh L.:
Originally posted by Eric Belt:
If you can qualify for a loan, walk into a bank or a credit union and ask for a HELOC.
You will not be eligible for a bank type loan. The property is currently listed. I would have to come off market for 30 days and now that you have listed it, they will be watching to see what your doing. Any financing will be unconventional. Conventional financing considers your situation a prepayment waiting to happen, they want to put their money out longer than a couple of months to recoup the administrative costs of setting up the loan.
The bridge loan that Joel suggest would be the opition available, it is really just a private or hard money loan with no prepayment penalty. Of course those carry higher interest rates and fees.
I honestly do think it is a realtor problem the house has been on the market for 28 days and I have yet to hear any feedback, have an open house or an offer. I've lowered the price and argued with my realtor on strategy because she said she made an mls and it's listed online which is all she can do. It is the biggest house on the block with the biggest yard, new hvac, new roof and decking, etc.. but others have sold within days for 65k+ and mine hasn't been seen. I wish I had time to finish flipping it and getting a new realtor because I know I could make a decent return on it but time is my killer in this situation.
Originally posted by Eric Belt:
28 Days? Lowered the price already? WHAT?
There is a fire drill going on here I see. I don't know why you would have lowered the price already, that make zero sense to me. You're suggesting you are $15K under market or selling for a real discount of almost 30%. A minute ago I wanted to fire your realtor, now I want to fire you both. Just saying.
There is something to be said about your agent's response. "All I can do is put it in MLS". Well, that is my biggest pet peeve. How did houses sell before MLS online? Lazy agent with no buyer's list to market to and doesn't seem to want to actually do any other marketing. For me, that is simple, you're fired. The agent has the wrong attitude about their work. They don't want to be an agent, they want to be data entry, I can train a monkey to do that, enter information into MLS.
For you, I am thinking there is more to this story, what does "I wish I had time to finish flipping it" actually mean? Is that why in your first post you said you need a cash buyer, the home is incomplete and you need to finish work, so it will not appraise??
The post read like you were moving family from this house to a bigger house, now it sounds like this is an investment property you tried to fix and flip, ran out of time (from what I am not sure) and now need the money you put in out.
If that is true, house not done, need a cash buyer to appraise, 28 days is not enough marketing time at all. You need to find one investor who thinks they can finish what you didn't and still make a profit, which 30% discount may not be enough.
An unfinished house would also explain why you have had no lookers. The portion of the public that will look at that is not large.
BTW, unfinished homes are issues for lenders too, so borrowering money against this also just became more complicated.
Ok sorry my wording was a little incorrect. I bought the house from my mother in an effort to help her out financially, the house later became my primary residence after some medical issues so I have now lived in the house for a few years. My plan was to update the home and sell it for a profit down the line but life circumstances have changed that to selling the house as is now with a few rooms unfinished. The house is perfectly liveable just some rooms aren't updated like the rest and their is a quoted $1200 plumbing problem keeping me from fha loans. I started below the comps asking prices in an effort to move quickly at 55k. In 28 days the realtor suggested dropping price to 50k so I agreed just so I could wash my hands of the property. I do not own investment properties it's just a dream I have one day after many more years of education.
I don't know how to go about firing my agent who is under contract without breaching it and costing more money. I'm already making a smaller profit at 50k than my realtor, if I pay her to go away plus a new one I just lost money. Trust me as confused as you are I am 10x worse.
- Realtor, General Contractor, and Developer
- Redding, CA & Bend OR
- 4,154
- Votes |
- 7,620
- Posts
@Eric B. I'm sorry, but the problem in this equation is both you and your agent. First off, the house being incomplete is a big problem. Most buyers, unless buying a home as a 'fixer" that they want to rehab want a completed house. If buying to rehab, they want a deep discount, and this is probably where your problem is coming in. Price right, according to what you are actually selling.
Whatever amount you have spent on remodeling makes no difference. The question is, was the money well spent? Did it add value? Another problem might be that you have too many people living in too little living space, making the place look cramped.
If your house doesn't show well, or isn't a steal, there's no point in an open house. I will guarantee you, the price you are asking is to much for the house. Houses priced right sell, it's as simple as that. Your agent should not have taken a listing that wasn't priced right. If your house was in the ballpark, there would be offers, maybe low ball offers, but there would be offers...
- Karen Margrave
Ok thank you all for your help. I do know my money invested doesn't mean anything and in a way hurts because it was used more on hidden items such as leveling, insulation throughout, roof, electrical, hvac, etc with a few rooms updated. I chose 5k under what she wanted to price it as initially and now we are at 10k under her suggestion but maybe I will re-evaluate my side again. There is only 2 of us in the 1200sq ft house and it has been staged leaving only complementary furnishings and the bare minimum we need for day to day but that stays hidden away even though we have yet to have a single person enter the door. I guess my plan is to wait it out longer, evaluate my side and possibly eat her 6% so I can get a realtor who actually markets
How long is your contract with her for? Before taking a financial hit like you are talking about consider a few things.
Has anyone been in the door? If the answer is no you need someone to tell you why. If this relator is part of an agency is there someone more senior then them at the agency you might consider seeking help there? It is their reputation maybe they can advise on how to re-write your listing in a more appealing way or where else to market the property. If another agent agrees that the price is correct and can offer suggestions on why it is not selling consider taking them.
You said you need an as-is cash buyer. Why? If it is over a 1200.00 plumbing fix it might be worth doing that fix maybe you get a couple quotes and you can bring the price of that plumbing fix down and do it-If it is more reasonable then the cost of that bridge loan. If you remove that cash buyer from the equation then you might have a bigger market.
A word about comps. Sometimes the price and speed of sale for your house has to do with specifics not size. A style consistent with the area sells quicker. Otherwise it just take longer to find the right buyer. This could be true for any number of reasons for your house. Think about it. Don't have a fire sale if this is true. Also consider the time of year could be an issue.
I urge you before you do anything to seriously evaluate why the house has not sold. Don't dig a financial hole for yourself using a bridge loan unless it really is only going to be a bridge. Consider other options.
Thank you for your response. I've been on the phone with the real estate company for the past hour or so and looks like I made the mistake of picking my realtor by too simple of numbers. She showed top 3% in quickest sales and price per asking for our area but what I did not take into account was her normal price range. She generally sells houses 10x my current homes range and in my market her strategy of sit back and wait works for that price point but not mine.
Long story short they switched me to a realtor more suited for my needs and at no cost plus discounted to 4% commission. They also believe my house is well below market value so hopefully a sale will come soon so I can move on and my pregnant wife can breathe a sigh of relief haha
I do dream of getting into real estate one day and hopefully this house will be my hardest learning curve but other than the final result (which happens to be the most important) I do believe I followed the rules well of structure first, kitchen 2nd, bathrooms and landscape 3rd all while keeping materials relative to comps. Maybe if I could have finished our house before the pregnancy rush and found the correct realtor for the job the first time I could have came out better. Oh well some lessons learned time to move on, start my family, continue to learn about real estate and maybe live my dream one day. Thank you everybody for your help
Good job and good for you on taking it up with the broker thus getting a new agent. The needed repairs sound negligible and you could appeal to investors seeking rental units and primary buyers seeking new or affordable housing. I don't hear a reason you need a cash buyer repair wise, however the sale price calls for a loan that is less than the conventional minimum of $50k. That limits your buyer pool.
It's difficult to increase price now that you dropped it but an idea you should look at and understand.
At your general repair and price, perhaps this is well positioned to market as an investment property. Look at rents in your area and chat with your new agent to see if positioning the house as such makes sense.
The point is, your in a hurry, get involved and manage the marketing if your property with the agent. Some if actions likely scared investors, such as a large drop in the first month of listing. Investors want a deal not a lemon, quick drops like you have are more like a lemon than a deal. You need to change that view in the market place. Perhaps get a REI open house which is targeted to REI.
It sounds like you can pull this out, don't let the fire drill drive the car, that will be problematic.
- Realtor, General Contractor, and Developer
- Redding, CA & Bend OR
- 4,154
- Votes |
- 7,620
- Posts
Maybe you can post pics of your house, and of the comps, and we can help you figure this out. There's got to be something that is missing. What is the actual location of the lot compared to others? Is it on a busy street, or ? You may be able to withdraw the listing, or insist the agent do more marketing, open houses, etc. It may be such a pain for her that she'll drop listing :)
- Karen Margrave
I don't have pics with me but here is the zillow listing. Obviously everything isn't accurate on here but the house across the street sold for 68k, the mobile home beside me sold for 72k and the house next door that looks identical to mine sold for 78k in this past 2 months. Two cash buyers and one with a fha 203k loan. Again the numbers are off on zillow but I have the most sq footage, yard, improvements and upgrades but not one single potential buyer has stepped through my door. I'm hoping the new agent can change that, I don't see how a terrible mobile home can sell in a week for 22k more than my asking price and I get nothing
@Eric B. pictures would be OK, but a link to a listing for the house needs to go in the Marketplace forum.
"You will not be eligible for a bank type loan. The property is currently listed. I would have to come off market for 30 days and now that you have listed it, they will be watching to see what your doing. Any financing will be unconventional."
Thanks for the correction. You're absolutely correct.