Ok I Need A Couple Clarification About CFD..(m)
Ok If I have a house I'm selling for 268k and my buyer puts down 20k then all they have to refi is 248k right? And, as long as the house appraises for at least 248k the deal a go, right? Have I missed any thing on this end of it?
quinn
yes, you have this correct[ Edited by myfrogger on Date 09/18/2004 ]
Well your math is correct ... but the Buyer and Lender may calculate and see the situation different.
1) Buyer may ask ... why pay $268,000 for a home that appraises at $248,000?
2) The $20,000 down payment was probably calculated based on a percent of the original purchase price amount
3) Lenders will loan based on a percent of the appraisal amount not the original purchase price amount
4) Since the appraisal came in $20,000 off contract price ... this would throw all the percent calculations off $268,000 versus $248,000. Then the buyer to balance all this figures the Buyer would be required to come in with more of a down payment than just the $20,000 as originally planned if the home appraised at $268,000.
Without knowing all the facts on the purchase requirement ... this is what appears that would need to happen.
Cheryl Lopez
Then how should this be done? Actually, the house will appraise for more than 268k. It will appraise for 280k but I want to sell for 268k just to move it faster. If I want to do a CFD what is the best way to do it where when it's time to refi, the buyer doesn't have to come up with more money?
Thanks for the replies, I thought I had this all down.
quinn
Anymore advice on this one?
quinn
Why are you selling?
If you want to offer the place below market then offer it that way but point this out and expect the seller to have their own financing so you get cashed out.
If you think the market is slow then maybe the price is soft. If the market is hot or normal then expect you can charge more (either at or above market) when offering seller financing.
If you do a CFD deal and you price at or slightly below appraised value then the future should see the buyer looking to refinance at or at a future value that is higher. The equity in the property will be noted by the lender. The lender will lend X% of the appraised value if the property has been owned by your buyer for more then a year.
Be prepared to take the place back if the deal goes south. Know the rules for foreclosures with CFDs. In some cases it is an eviction and not a foreclosure. That can be how it starts out and after a certain about of time or once there is more then a specific amount of equity it will become a foreclosure in some states.
My suggestion...
Run two ads in the paper.
One talks about needing a quick sale and that you are willing to discount from true appraised value for a cash buyer (cash buyer is someone who cashes you out even if they need to get financing). Your best price is for someone that has cash in their pocket. Make it higher but still a deal if they need a loan but will not specify contingencies plus leave a large earnest money.
Second ad.
"Nice home" and all that. Seller financing available to the right buyer or something similar. Things that indicate you can be flexible if they can pay your price. Sell the place for the appraised value and use the appraisal as proof that the value is there. Make sure the appraiser was accurate rather then came up with a figure that would make you happy.
John
[addsig]
Ok, I know I'm gonna look like a stump for not totally getting it, but, what happens when it comes time to refi? Can you explain using numbers that way I can see and visualize.
Selling price:280k, refi in 16mo
20k
If the bank lends on % of appraised value, will the buyer have to bring more money when closing at re-fi. Thats my main concern.
I think I'm making this harder than it truly is.
quinn