Creative Financing to Sell a Stagnant Listing

No doubt, the overall market locally has been on a tear for the last year or so, but try and tell that to the contingency of sellers whose property sits idle in the current market.  What can they do beyond the conventional marketing tactics?  One way may be to advertise a high-leverage program similar to the one we recently wrote about in our Pigs are Flying article.  Or maybe try advertising the lowest, plausible monthly cost of the property.  And how do you do that without suggesting that would-be buyers pay cash?  How about: 1. Increasing the amortization period of the loan to 40 years instead of 30 years, 2. Proposing an interest-only payment,  3. Using an adjustable rate mortgage (ARM) program that has a low rate, 4. Increase the down payment from 20% to 30%, and 5. If you’re really bold, suggest the after-tax cash flow assuming a high marginal tax rate (with the proviso that one seek professional tax advice!).

So let’s compare the difference in monthly cost using the features above versus a standard 30-year fixed mortgage:

Pricing Comparison

As you can see, the 5/1 ARM is $2,515 LESS per month than the 30-year fixed, which translates into a cash-flow savings of over $30,000 per year and over $150,000 over the next five years..! If nothing else, displaying such options will likely attract more buyers and get the property sold sooner than later.

The above is just one strategy that any qualified mortgage professional should have available to assist sellers in selling their home. Who would have thought that a mortgage lender could help sellers ;)!

Note: Rates are subject to daily fluctuation and highest borrower qualification.


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