By Gayle Rich-Boxman, Broker with Vernonia Realty
As people are finding it more and more difficult to get conventional financing, sellers and buyers are getting more creative in the options for buying/selling properties, both vacant lots and (even) homes. Lately, I’ve had a large list of sellers offering vacant lots with contract terms that can be quite reasonable. If you have some cash, then you can work out terms that are amenable to both parties. You can do 20% down, and the owner can carry a contract for a number of years at a slightly higher interest rate than the going prime rate of interest (because the owner essentially acts as the bank) and set it out to have a balloon payment in three, five, ten years or more with no prepayment penalty. That’s just one formula that has worked at Fishhawk Lake for a number of my clients in the last few years. I had one client who sold his lot to buyers who needed to sell a rental, but didn’t want to miss out on the opportunity to buy a lakefront lot that they would later build on. They wrote the contract out for a ten year term, but the buyers sold their rental within 6-8 months and paid him off in less than a year. Doing something like this allows the seller to get out from under the responsibility of the HOA fees and the taxes and they have at least a small sum in their pockets, both at closing and monthly thereafter.
Right now, I have a builder who’s open to contract terms on his new home. If you have no credit, but a solid work history and a good down payment, then you can work on establishing credit for a year by showing the payments you make on the home and also work on getting some other form of credit established, show a paper trail with your house payments and possibly look at getting a loan from a private lender, or credit union a year down the road. I wouldn’t try large banks or large lenders (Wells Fargo, for example) because they’ll either refuse you or put you through months of wasted energy and frustration with no positive outcome.
We’re all trying to come up with creative solutions to this economic downturn and if you have a willing buyer and a willing seller, and a good and ethical realtor, then you can make everyone happy!