Attracting buyers can be tricky when it comes to real estate investing.
Many times, mortgage brokers get people who come to them to find a loan and either cannot get qualified immediately or cannot get qualified for enough of a loan to buy the house that they were trying to buy because of some credit “dings”. Very often, these people who have been rejected would be able to qualify for a mortgage after having been in a rent-to-own home for a few months, establishing a payment history on the house that they are buying.
These people are ideal candidates to be buyers for your owner financed or rent to own homes. Most would be able to qualify for a refinance after a year or so of on-time payments to you. When they are able to refinance, they can get a mortgage to cash you out and buy the house. These are the kind of buyers that you are looking for.
These buyers will realize that they cannot be extremely picky when it comes to finding a house to buy. For the most part, they will realize that they are not going to be able to buy a house conventionally. These buyers will be anxious to move into a rent to own or owner financed home. This will allow them to clean up their credit issues and eventually own a home of their own instead of continuing to rent.
You can find these buyers by contacting local mortgage brokers. Ask the broker if they have anyone who has not been able to get a mortgage, but would be able to if they were in a rent to own or owner financed home for a few months. If so, mention that you happen to have a house that might work for these buyers.
Be Proactive in Attracting Buyers
So why would a mortgage broker refer these buyers to you? You can make this attractive to the mortgage broker in a couple of ways. For one, you can offer them a $500 referral fee for any buyer that they refer to you that actually buys one of your properties. (By the way, you can start off by offering less. Very often, $200 is enough to draw interest.) Offering the broker cash right up front is a good way to get their attention. You can then simply pay the broker this $500 out of the upfront down payment or option deposit that you collect from your buyer.
Another way to make referrals attractive to a mortgage broker is by promising them future business. You can tell the broker that when the buyer is ready to refinance the deal and cash you out that you will bring the buyer back to them for their mortgage. On top of this, you may want to mention that you do a lot of lease options or owner financed deals where the buyers would need to get a mortgage at some point to cash you out.
Mention to the broker that you will need a good mortgage broker to help get them financed. By promising the broker future business, they may be even more inclined to remember your name when they get a buyer who cannot qualify conventionally but would be able to at some point in the near future if they were refinancing a lease option or owner financed house.
Make sure to ask for a fax number so that you can fax the details of the property that you are offering to the broker. Keep this fax number on file. The next time you have a property for sale, you can fax the details to this broker again, as well as a cover sheet reminding them of your referral fee that you would pay to them for a buyer.
Real Estate Agents
Now you may be wondering why we would bring up finding buyers through real estate agents. You are not listing your property, so why would you bother with a real estate agent? Many times, if you are selling your house on a lease option or seller financing, you will not have enough money up front to pay an agent’s commission.
Real estate agents sometimes have many buyers who are looking for a lease option or seller financed home. These may be people with slight credit problems, or simply people who want to “try out” a house before they actually buy it. Since it is rare to find a listed house available for a lease option, these agents will many times not be able to find a house for these buyers.
Work With An Agent
It is possible to work with an agent to find a buyer for your property and still not have to pay the standard commission. What you will need to do is offer the same referral fee that you offer to mortgage brokers and rental agencies. Since the agent would not be making any money from these buyers in the first place since they are usually unable to find lease option or owner financed deals on the MLS, making $500 may sound very attractive to them.
Often, real estate agents will have a potential buyer get “pre-qualified” with a lender before they will start showing them homes for sale. This saves the agent from wasting time with unqualified buyers. Some times, these buyers are unable to get pre-qualified for a loan, so the agent will not work with them. However, if you give the agent a reason to work with these people by referring them to you for a referral fee, they will be able to tell people that even if they do not immediately qualify for a loan, they may be able to get into a house (yours!).