Selling A Home: Choosing Between 5 Different Offers
FHA Loan, Conventional Loan, Cash Purchase, Rent to Own, Seller Financing….Which Offer Type Should I Accept?
There are multiple types of offers that prospective buyers can submit when you want to sell a home. Knowing which one to accept is important. Usually, the difference comes by way of price and how the buyers choose to make the purchase. Following is a summary of the five most common offer types.
1. FHA Home Loans
FHA loans have grown in popularity. These government-backed loans are similar to USDA and VA loans. The loans start with a low down payment and require lower credit requirements. While FHA loans are popular for their lower interest rates, they require an inspection and property approval before anything can proceed. Additionally, there could be more stringent requirements on the property than the loan itself. For instance, the current condition of the property could prevent you from getting approved. A home with foundation issues or roof damage, for example, is not likely to qualify.
2. Conventional Loans
Requirements on these loans, such as credit rating, down payment, and property condition, are less restrictive than. Your property, however, must be livable and free of structural issues so the property owners need to complete a formal questionnaire and verify financial stability. Conventional loans can work well when the property is good shape and is located in a stable neighborhood. But, they will not work when the house is not in good condition, such as mold, fire, or structural issues (e.g., roofing or foundation).
3. Cash Home Buyers
Cash buyers can be very attractive to home sellers. A major reason is that the sale takes less time to close. With this offer, there isn’t uncertainty or a wait and see gamble whether the lender will come through or otherwise. The buyers will typically be expecting a discount and this is a good offer when you need to sell quickly. On the flip-side, the offer could be less attractive if time is not an issue of concern and when your priority is just the highest price. A key benefit of selling to real estate investors is that most will buy with cash and the home can be in any condition.
4. Owner Financing
At times, lenders might be tough to work with in situations where financing is needed. Some buyers don’t want to pay extreme fees or deal with too many processes. In these instances, owner financing, also known as seller-held mortgages, can make sense if the owner owns the home outright or has a small mortgage. Such arrangements could be ideal for the sellers because it creates an ongoing stream of income. Any potential issues can be negotiated making this a somewhat fast transaction. On the downside, the seller does not immediately receive all of their cash upfront and could be a tricky matter when you still owe money on the property. Owner financing is viable if you need to sell quickly for good money. But it is not a viable option when you need all the money on the spot.
5. Rent to Own
There are multiple ways of structuring a rent-to-own deal. It typically starts as a lease with an option of buying later on. This structure is attractive if you want a stream of income and some upfront cash but not good when unsure of fulfilling the agreement to sell later on.
Conclusion
As described above, there are a variety of offers that could come your way and the market provides different options.
At Reimagine Realty Solutions, we are real estate investors and focus on buying houses in any condition and in the manner that makes the most sense for our customers in Texas. We are passionate about what we do and are focused on the satisfaction of all our clients. Call us anytime at (512) 575-2222 and visit us online on www.ReimagineRealtySolutions.com for a free consultation.