Seller Financed Real Estate Deals in Today’s Market Conditions

With stricter banking regulations because of fluctuating economic conditions and an unsteady real estate marketplace, real estate sellers today are carrying back private funding to make their property more salable. When an individual seller or broker finances a transaction out of pocket they are acting as the lender. This is beneficial to the process because the buyer doesn’t have to go through a rigorous approval process, which can prove to be very tedious because of the heightened banking standards today.

Over the past two years, the central bank has conducted several in-depth surveys of U.S. banks. The most recent survey of 55 U.S. banks’ current lending practices and standards revealed that the percentage of banks reporting tighter standards is near historic highs. One of these, found that about 75% of the banks surveyed indicated they had tightened their lending standards for prime, subprime and commercial mortgages. That was up from about 60% in the previous survey.

The Fed’s July survey covered 52 U.S. banks which hold about 80% of the residential mortgages on the books of all commercial banks. The Fed survey found that only seven of the banks said they were still participating in subprime mortgages, loans made to borrowers with weak credit histories. Of those seven, six said they had tightened lending standards on subprime loans with only one saying it had left standards basically unchanged.

Any experienced private lender recognizes this as an opportunity to salvage an unfavorable situation and turn it into a positive one. By utilizing seller financing, sellers can sometimes end up getting more money for their property and collecting interest on top of that. Seller financing can enable homeowners to receive the best selling price despite bad lending conditions. In addition, a home buyer with poor credit is able to become a home owner. It’s one of those rare situations where everyone at the negotiating table gets what they want!

Many real estate sellers never consider seller financing because they don’t understand the advantages or the process. There are also common misconceptions that it’s much too complicated to attempt to put together a seller financed deal, or that there are no buyers willing to sign a private loan. Not true! Once a seller takes the time to learn about the basic process and the advantages of offering private to sell their property, the benefits become very clear: bigger buyer pool, easy loan approval process, and a much quicker closing. Plus, a little education about seller financed loans will make it apparent that drafting a secured private loan is actually a very straightforward process.

The bottom line is seller financing can enable a real estate seller to get the best of both worlds: selling at the desired price, closing the deal quickly, and even receiving additional income from interest payments that the buyer makes.

Real Estate Property Investment Series – Focus Canada 2007

Canada has something of an evergreen appeal which means that not only does it welcome many new and affluent citizens to its shores annually as part of its active immigration policy, these new Canadian citizens provide fresh inward flow of demand and affordability to the Canadian real estate marketplace.

If you add to this the fact that more Europeans and Americans are seeking to either move to live in Canada for part of the year or holiday there for extended periods of time throughout the year and you have quite a new and active market seeking long term rental accommodation and even resale property units as well.

On top of this active flow of demand you have local demand which is strong particularly away from some of the eastern provinces where property prices have risen a little too high a little too fast of late, and overall there is a great deal of local affordability and demand underpinning a solid and positive property market.

Having said all that, not all in the Canadian real estate garden is rosy as we look forward to 2007…while an investor who does their due diligence carefully and astutely can reap dividends from commercial and residential real estate in Canada in 2007, there are certain economic facts that could negatively impact the real estate marketplace in Canada in 2007… this report covers both angles.

On the one (negative) hand – while Canada’s property market has not been shaken quite so significantly as other established nation’s markets it has suffered a general slowdown of both market and construction activity. This is because the question of ‘affordability’ has suddenly had to enter the marketplace…questions have been raised relating to whether average property prices have hit a ceiling beyond which home buyers cannot afford to enter the market.

On the other (negative) hand – the Organisation for Economic Cooperation and Development has reported that in 2007 Canada’s GDP growth rate will under perform previous expectations of it. GDP growth was around 2.8% in 2006 and this is predicted to drop to 2.7% in 2007 before bouncing back firmly in 2008 – in addition to this, unfortunately consumer price inflation is set to follow a similar pattern and core inflationary levels could rise from 1.9% to 2.1% in 2007. These statistics suggest that the property buying public’s activity could be depressed a little in 2007.

But it’s not all bad news! Far from it in fact…

The Canadian Real Estate Association is working with the government to change the way smaller property investors in Canada are taxed on their capital gains. A small investor is one with fewer than five employees and this type of investor is called a passive investor in Canadian taxation terms. Currently such an investor has to pay capital gains tax and suffer capital cost allowance recovery if they sell an investment property even if the proceeds from the sale are then reinvested in another investment property within one year. If CREA get their way investors will be able to defer capital gains tax and capital cost allowance recovery when they sell investment properties and then reinvest the proceeds of the sales back in to other investment properties within one year.

So – the question presents itself – where should an investor invest in real estate in Canada in 2007 if they are to reap strong returns?

To tap into strong real estate profitability in Canada in 2007 investors basically need to apply commonsense when it comes to doing their due diligence on whether a market has room for expansion and whether it is enjoying, and will continue to enjoy, strong consumer demand for either rental or resale accommodation.

Simple!

A good example for a potential investor to examine is the city of Edmonton in Alberta where demand for properties for sale is outstripping supply and where the local economy is being supported greatly by the current oil sands driven boom. This is the sort of market an investor needs to preempt to derive as much profit potential from their investment decisions as possible.

Investors should also examine which Canadian towns and cities are going to be benefiting from upgrades to infrastructure such as communications and transport links because where an area is improving so desirability will increase and house prices will always follow. Also worth examining in Canada is the expansion of the local and international tourism market where residential letting opportunities could arise as well as commercial investment interests.

Commercial property investment opportunities also exist in the likes of Ottawa as well where vacancy rates are attractively low and construction is underway to supply some 800,000 square feet of prime, grade A office, retail and industrial space to a market hungry for such space. Basically investors who tap into this new supply could find themselves generating attractive yields in a relatively short period of time and opportunities like this exist all across Canada…in fact it is a nation ripe with investment opportunity!

Luxury Real Estate Marketing Essentials – Become the Break-Away Brand

Whether you grew up with a Krispy Kreme Donut store in your neighborhood or you just tasted a delicious, original hot glazed Krispy Kreme donut for the first time you may be surprised to know that the company has been around for over 70 years! It all started in the late thirties. With steady growth it was sold to Beatrice Foods and later was bought back by a group of franchisees. Then, suddenly in 2000, Krispy Kreme went public, became a modern American icon and an international BREAKAWAY BRAND!

The Krispy Kreme story has important lessons for those luxury real estate marketing professionals who are determined to breakaway from their competition and pursue market leadership in their marketplace. Creating an indelible personal brand and sparking a chain reaction of buzz is challenging, but it can be extremely rewarding if it is executed effectively and sustained.

The word-of-mouth advertising about these premium, high quality donuts was like a shot heard around the world. Move over Winchell’s donuts, which opened their first donut shop on October 8, 1948. Winchell’s is the West Coast’s largest donut chain with over 170 units, in 12 states, plus locations in Guam, Saipan, and Saudi Arabia. Move over Dunkin’ Donuts, the world’s largest coffee and baked goods chain, with more than 7,000 Dunkin’ Donuts shops worldwide.

What Made Krispy Kreme Donuts the Breakaway Brand?

Fast forward to Melbourne Australia, 2006 for the grand opening of the first Krispy Kreme Donut shop in town. Hundreds of Aussies camped out overnight in the race to be the first through the door as the fast-food phenomenon arrived Down Under. One man parked his car four days ahead of the opening to be the first in line for the drive through window. He won a year’s supply of these tasty donuts.

Krispy Kreme attracts almost a cult-like following and raving fans. The opening of a Winchell’s or Dunkin’ donut shop usually does not have this kind of a reaction. Most fans agree that the taste of Krispy Kreme donuts is superior to the other brands. But, how much of this is the affect of hype and how much is really the special flavor and texture unique to the Krispy Kreme brand? How much is it a factor of the expectation of a superior experience?

The name Krispy Kreme itself can make your mouth water. The right brand name can play a very important part in creating a Breakaway Brand.

We are not particularly fond of donuts. However, like many consumers, we absolutely had to discover what all the fuss was about when Krispy Kreme donuts finally arrived at our local supermarket. To us, the ultimate donut experience can be found in a small café in Florence, Italy called Giacosa on Via Tournabone. In Italian, donuts are called ciambelle. Fond memories and pleasant associations can play a very big part in creating a Breakaway Brand.

iPod or ZUNE? That is the Question

Every year in the United States companies invest close to $300 billion in marketing products and services. A huge portion of this is spent on introducing new brands in the marketplace. The majority of these new product launches never get off the ground.

As home loan professionals, the size of your advertising budget does not guarantee your success if you fail to form a strong emotional connection with your target market, whether it be consumers or referring real estate agents.

Recently, Microsoft launched a new MP3 player brand called ZUNE to compete head-on with Apple’s iPod. Fortified with deep pockets Microsoft is gunning for Apple who has the Breakaway Brand in this space. iPod was actually a “Jonny come lately” itself as many other brands had tried to become the dominant MP3 player. iPod connected very deeply on an emotional level with its target market with its sleek design an ease of use for which Apple computers are famous. Zune was met with a lukewarm reception.

The iPod continues to gain market share as a mainstream consumer electronic product and as a music service with its ITunes website. Many iPod loyalists would rather fight than switch brands. Microsoft may be making some strides at chipping away at Apple’s market share. But, so far it is does not have enough distinctive features to overtake Apple as the next MP3 Breakaway Brand.

In the lending industry loan brokers have access to virtually the same products. In that sense these products have become commoditized. That is the very reason why a personal brand is of paramount importance. Good service and integrity are the minimum requirements just to be in the running. You must present a superior and unique value proposition to become the Breakaway Personal Brand as a lender in your marketplace.

The Five Keys to Become the Standout in Your Marketplace

Perhaps organizing a community effort to deliver Krispy Kreme donuts to some schools in your neighborhood can help you stand out from the crowd. Or, you may consider a starting with a contest for agents in your area in which you give away a red iPod to “Do the Red Thing” (Apple will donate 10% to help prevent the spread of HIV).

There are endless ways of becoming well known, well thought of and also creating buzz for yourself while breaking away from your competition. The keys to becoming the Breakaway Personal Brand and standout are:
1) Create the expectation of superior service;
2) Develop a compelling personal brand name;
3) Come up with a way to create pleasant associations with your brand that trigger fond memories;
4) Form a strong emotional connection with your target market, and:
5) find ways to be distinctive in your business methods.

This is part of a series of articles entitled, Luxury Real Estate Marketing Essentials. It is dedicated to luxury real estate marketing professionals worldwide.