Homeowner Investors

Problem - Unsalable Properties and Unqualified Buyers

Many agents have properties where the listing price has been repeatedly lowered. The listing may have expired after an extended period - 4-7 months. A poor situation can be made worse by the lack of a “spread” between what is owed and the last listing price. As most offers are less than the listing price, there may be insufficient equity to retire the mortgage and pay a full commission. This can create a tension between the homeowner and the listing agent.

The agent wants to re-list to capture a commission for the extended period of time and effort and the homeowner finds himself in a financial “box” where additional cash might be required to close and reduce the amount he needs for a new property. The listing has become an “Unsalable Property”

Alternative solutions are short a sale (agent gets a commission; owner gets a credit issue); renting (agent gets a rental commission with the hopes of a sale commission in the future; owner gets rental headaches and negative cash); a lease-option (agent gets a small commission and a greater commission certainty; owner gets same problems as renting without additional benefit because of negative cash).  

Many agents only concentrate on standard terms and attempt to increase desirability using only price reductions. Typically when the reductions become effective, the listing has become “stale”. While hope is admirable, alternative choices like equity-sharing might provide a far better solution and a much larger pool of potential buyers.

One potentially valuable asset might be the underlying loan. It would be used in the event of renting or a lease-option. So too, it could be used in an equity-sharing option as well while providing  greater benefits than renting or a lease option.

Re-listing at a higher price with the favorable terms that are unique to equity sharing benefits both the potential Purchaser and the seller. 

With property values and transactions both declining, foreclosures and short sales have been climbing. Coupled with damaged FICO scores, employment issues and much stricter credit, a large and growing new group of buyers has emerged. We call them “Unqualified Buyers”.

They have most or all of the requisites to be a homeowner – cash, income, stability, etc., but they cannot qualify for a loan at present. Many are divorced professionals (physicians, attorneys, dentists, etc.) or those that cannot prove income – small business owners, even real estate agents! They require time (1-2 years) to mend their situation and become able to qualify.

Solution - "OurHomePath™"

The Program co-lists a re-priced “Unsalable Property” and markets it to an “Unqualified Buyer” (“Parties”). They enter into an “Equity Sharing” relationship.  Given the new marketing approach, the higher price and the benefits including taxation for the Parties, the Program is proving to be a far better solution for everyone, including the listing agent.

The Program Provides:

1. Can be implemented rapidly and generate large traffic increases in weeks not months
2. Produces pre-qualified Tenant Investors with the same goals as the Homeowner;
3. Has tax benefits available to the seller whether homeowner or investor and the Tenant Investor
4. Allows deferral of any potential taxable gain
5. Allows seller to participate in market recovery and advance
6. Eliminates Vacancies/Turnovers, Negative Cash, and Property/ Management

Approvals

Equity Sharing has been described as an appropriate real estate strategy by the California Association of Realtors. The IRS has specific provisions (IRS Code Section 280a) covering equity sharing. It has been used by corporations, cities, families and others as an effective investment tool

This Program Qualifies for IRA Investment and 1031 Tax Exchanges