Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I like the idea that it gives people who don't have a ton of disposable cash the ability to maximize their sale price. I can't tell you how many times I've had clients say they don't want to paint a room or two that I've recommended simply because they don't want to layout the money. So this kind of removes that objection.
It's not even that they don't want it, they may not ~have~ it.
I have often done this... and I know many other Real Estate Agents who have repaired roofs, fixed downspouts, pumped septic tanks, serviced heat pumps, purchased refrigerators.
I had to do it as a gift. I never got paid back. It would be cool to have a brokerage who would bankroll bigger projects! It's definitely a needed value-added service, I just think it may end up losing a lot of money!
Also, what’s to stop investors (flippers) from taking advantage of this?
Why shouldn't they? I'm not sure why they wouldn't be wanted. Other than I bet there is a price limit and the budget isn't near high enough with these loans to completely renovate a home...
First of all I am impressed that the OP suggested painting and/or other renovations to a seller. I've sold 7 times and even when I ask for suggestions about improvements have never had any agent agree or suggest any. Maybe my properties were already in good condition?
We're prepping for 2 sales now and doing limited renovation plus painting as needed. My spouse is telling me we don't need to paint the smaller property. In his words "we bought it that way" 2 years ago so it's fine as it is. My opinion is that inexpensive improvements more than pay for themselves (of course I can't prove that).
The dichotomy of a seller getting a loan from the realtor is that it's people hurting financially that need this kind of loan, they are not great credit risks. But having the property as collateral makes the risk go away.
I agree with others who think there are some warning signs for the seller about this. Once someone loans you money the relationship has fundamentally changed.
Why shouldn't they? I'm not sure why they wouldn't be wanted. Other than I bet there is a price limit and the budget isn't near high enough with these loans to completely renovate a home...
If flippers catch on that the brokerage will bankroll some of their repairs, I personally do not think that’s good for the investing community. It absolutely will be pushed to its limits. I foresee it making them more liberal with their spending as a whole since they don’t have to fund as many repairs themselves.
do they still pay you for the home improvements if the home doesn't sell?
This is another issue. Some flippers operate on tight margins already. What if it doesn’t sell at the price they need to pay off their loans? Who has first priority on the loans? Will the brokerage place a lien?
While I personally wouldn't be interested, I can see where it might be attractive to some sellers.
If the info we heard during this year's gubment shutdown is true that most people cannot fund a $400 "emergency", such a loan arrangement might be useful to people who need to paint or replace a furnace or what have you in order to get their property on the market...and be attractive to potential buyers.
I would want to be able to use preferred/proven contractors (chosen by lender would make things easier). Defined time frames. Solid pricing.
Listing agent can also supply cost benefit at time of sale.
One stop shopping..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
