❓Todays Questions "How do I make my Home More Attractive to Buyers using Seller Concessions?"

The Truth About "Seller Concessions vs Seller Assisted Sales" Learn how to protect yourself from Seller Financed Down Payment Scams...and Committing Bank Fraud!

Listen as Sean Shallis, "The Consumers Real Estate Coach" discusses the difference between good Seller Concessions and Scams... Don't be a Vulnerable For Sale By Owners.. Learn to how to "Sell it Yourself" without hiring agents, paying Expensive Commissions or being a Vulnerable FSBO...Just Say NO!

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Cool. Everybody's shown Charles,

your friend, your neighbor, your real estate experts, 10 X year old,

same working and coaching. So today's question is actually pretty interesting.

We got an actual offer on a property of the day with a solar concession and,

you know, my, my seller asked a great question. They said, Hey, what is this?

Oh, a concession. And who pays for it? How is that benefiting me?

So I thought it'd be a great exercise today to kind of show you guys how this

actually works.

And one of the ways that people use it actually to increase the value of their

home when selling their home is a for sale by owner.

We're also gonna talk about the pitfalls of it and being a vulnerable for sale

by owner. Now you guys have heard me talk about that before.

What is a vulnerable for sale by owner?

So vulnerable for sale by owner is when you know,

there's plenty of guys out there,

there are women or investors out there that are trying to take advantage of a

situation. And even though it's,

there's a lot of laws that are in place to protect the sellers and protect

individuals.

They're still out there still people that are out there that are predatory,

if you will they're not doing the right thing. So what does that look like?

So the first offer that we got was from an investor and I've offered him,

you sent me a letter and it said, Hey, you know, by the way we want the bot,

the seller to sign this letter. We're going to ask for seller concession. Now,

when I think of a seller concession,

I think of they're going to their seller is going to offer them money to close,

but they're going to also offer to pay for closing costs.

And depending on depending on the, you know, the, the, the financing,

the type of financing that you do is going to give you the opportunity to use

different strategies and different different vain financing options,

especially with government loans. You know,

I'm going to bring something up here. I want to just show you guys this

is let's see if we can get this.

So in this particular case, you know,

you can actually get with any Freddie Mac you can get up to three to 9%.

Typically.

They're not going to go more than 6% or 5% of the asking price or the, the,

the total womb on a VA loan. You go up to 4%.

Why is that a big deal on a VA loan is because on a VA loan,

you have to understand that the VA is actually sponsoring that loan.

And they're actually paying for the most part,

you can buy that house a hundred percent financing.

So when I got out of the military, one of the first properties I bought,

I bought what a VA loan it's actually that direction and the VA loan and allowed

me to buy the house 100% no money out of my pocket,

because what I did was I,

I got a hundred percent financing from the United States government.

Plus the seller gave me 3% for financing.

The 3% additional toward my closing costs. Now,

did the seller actually write a check for that? No, I'm going to show you why.

So let me just go back to this for a second.

So in the offer that we got previously, that offer,

actually that documents said, Hey, we want the seller to do all these repairs.

And if the seller doesn't do them, they can opt to say, Hey,

decided not to do the repairs and let the buyer do the repairs.

The challenge is,

is that you gotta be really careful with that kind of an offer because it could

be construed as bank fraud. Reason being was this particular property.

The buyer never went into the property, never saw it.

The buyer is saying they want to put a new roof. They want a new kitchen.

They want to do new floors, all this stuff.

And what they were really doing was building up the

cost credit that they were asking for, which was a $25,000 credit.

What's interesting though, is this,

this house didn't need a new kitchen that needed a new bathroom.

Didn't need a new roof. You could have changed it out. But in actuality,

what they were doing was they were creating a, you know,

they were creating a list of things that they were going to do with no intention

of doing. And, and they really,

what they were gonna do is have the salt seller sign something.

And then at the closing table, decide that, you know,

we don't want to do the work. So you can take that 25,000 due to work.

And who's to say that that work ever gets done,

but because the seller actually signed a document saying that they intended on

doing it, it could come back to them and haunt them and become bank fraud. Now,

you know, I'm a firm believer in, could you, could you get out of that?

Could you say that you were misled? Could you, yes,

you could do all kinds of things,

but the bottom line is why put yourself in jeopardy, right from the get-go.

So as the sellers can, as the consumers real estate coach,

what we want to do is help you to use that tool if you will,

the seller concession the right way and the way it was really designed to see in

the United States, most people don't realize this,

but in the United States crossing across the United States,

the vast majority of the people only put down three to 5%.

I'm lucky enough that I live in a pretty affluent neighborhood where people are

putting down cash. They're putting down 20, 30,

50% in cash and hundreds of thousands of dollars, but middle America.

And the average on the average average sell in and the United States,

people are putting down three and a half percent or no percent in some markets

where you're in urban communities. You know, you're in,

you're in a super suburban, you know, in the farm country, there is some,

there is some programs for a hundred percent financing.

Still government loans offer a hundred percent financing.

There is a grant program that you can get in most states to help you with down

payments and stuff like that.

So how does it work when a seller is assisting in the

the money for it? Okay. And where does it come from? So in this case, right,

we've got a hundred thousand, $160,000 list price, and we're saying, Hey,

we're going to now,

this is how the seller is going to offer this out and make their house more

valuable, at least perceived more valuable to the market.

And what they're saying is, Hey man, we're going to sell our house for $160,000,

but we're also going to give you back $10,000 on a seller concession.

So if you buy our house, we're going to give you the closing costs.

You're only going to have to come up with the three and a half percent down,

or the 5% down to buy my house, or it's conceived as, oh my God,

this all we're spending my closing costs,

I'm saving three or four or three or 4%.

And the reality is in most cases, the way this is pitched is, you know,

the seller gives you the 10,000 hours, but who pays for the 10,000? Okay.

What really happens is,

is that the price of the home is $160,000.

And in the contract,

it says $10,000 are going to be credited to the buyer to be used

for the buyer's closing costs.

The challenge is though is the buyer's loan includes that $10,000.

So in actuality,

the buyer is actually the buyers actually paying for their own closing costs.

They're just financing it over time. And by the way,

that's a great strategy because with the cost of money right now at two, 3%,

in most cases,

it's cheaper to finance your closing costs because you can make more money on a

return on investment. If I give my money to, let's say, you know,

my financial advisor,

a big shout out is Armando de Rienzo from AXA from enterprise merger,

price financial. If I go to him and say, Hey,

can you generate me more than a three or a two or 3% return on my investment

here, which is the amount of money I'm going to pay on my alone on the mortgage.

And he may say to me, yeah, you can. So finance,

your closing cost don't use cash. Or he may say to me, Hey, you know what,

right now you're better off using cash.

So it really depends on your financial situation, but in,

in many markets,

the hardest thing for the buyer to do is get the money together to buy a house.

And when they figure out that, oh, wait a minute,

I can buy this house with three and I can buy the average house in my

neighborhood,

which is a hundred thousand dollars for three and a half percent down.

I need about $3,500 to buy a home. They get to that number.

And then the realtor says, oh my God, well, wait a minute.

You're going to meet no two or 3% of more,

but it took them three years to save the $3,000.

It's almost a lifetime for them to save another three or $4,000.

But what you can do is in this case,

if we're offering the offering to help the buyer and finance their closing

costs. Now, where is, you know,

where is the only on all liability in this for the seller? So what,

first of all, let's go through, let's just write down in this case.

It's 160 minus 10 thousands.

Normally I'd say, yeah, it's $150,000. That's the net.

It's actually not the case. In the poll that we asked, you know, which is,

who pays for it, the buyer, the seller,

or the bank or other it's really other because really what's happening is the

buyer is paying for it. But also the seller pays too,

because what happens is when they raised the price and they raised it to $160,

at least in the state of New Jersey, there's a transfer

depending on what age you are. And depending on how much the price is,

it could be anywhere between a quarter of a percent, all the way to a full 1%,

if it's more than a million dollar home. So let's just say for argument's sake,

this was, you know, this was the transfer taxes is a half a percent.

So a half a percent on 16, 160,000 is if I'm, if my math is right,

it's going to be about $800. Well, the difference between, you know,

if you sell that house for one 60, you're paying 800. If you sell it for one 50,

it's going to be something one 50.

So there's a thought of $50 swing where the seller is going to pay

for that additional tax. In some cases, the seller will say, Hey, you know,

we'll give you the money for the financing to finance your closing costs,

but you have to pay the difference in my tax and my transfer ties. So again,

what's, let's do a little recap.

What is it the benefit of using a seller concession for actually make your

property more valuable? If I put two cars out there on the street,

and I say that, Hey, this car is exactly the same as this car,

but I'm going to give you three months of payments upfront.

And you're going to actually, we're going to give you those free payments.

All of a sudden you perceive that property. If that car is $500 a month,

you're going to say, man, I'm saving $1,500.

I'm going to go buy that one over there. When you get there,

the guy's going to sit down and explain to you that really,

what we're going to do is take your three payments.

We're going to put them on the back of womb.

And you're just going to have to pay an additional 1500 at some point in the

game, but you're not going to have to pay for the first three months.

And is it a little tricky? Is it marketing? Is it

And if you're trying to sell your house, guess what? You're a marketer,

you're a sales person.

And the goal is to get the people in the door and get the traction. So again,

how do you get that? And how do you look like an attractive buyer?

If you're using a solar consumption, the way to do it is to offer,

to pay the tax differential, the way to do it,

explain to them why you're asking for the seller,

close your sellers salary for finance, the closing costs, maybe it's, you know,

what's on your using all the money in the world that you have,

and you just don't have the additional money,

but you absolutely love their house.

And you can see your family and your kids growing up in that house. You know,

there's something to be said for somebody who's selling a house that they want

to sell it to somebody who is going to treat you the way they did.

Who's going to see that they could see them raising their kids in that property.

So again, you want to find out more about getting your household and not being a

vulnerable for sale by owner,

not getting taken advantage of you're going to actually click the link below.

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