From REI Academy
If you haven't already heard about this you had better hold
onto your hat. There are 2 companies out there that are
currently offering your buyers a grant to use as purchase money
when they buy your house. Nehemiah and Neighborhood Gold. And
what your buyers need to qualify for this program is a pulse.
Literally! The interesting part is that you, the seller, pay the
company back for the grant plus a fee. The fee is approximately
1% of the purchase price of the house. So in effect what you
have here is a totally legal, lender accepted, way to provide
the down payment money your buyer needs from the proceeds of the
sale. It's totally up and up because the lender is fully aware
of what is going on and is consenting to it. Bank fraud comes
when you and or the buyer intentionally hide something from the
lender. We aren't hiding anything here.
How much can you contribute? It depends on the particular
lender and loan program the buyer is using but for the most part
it's more than you will ever want to contribute in cash.
What lenders are participating? TONS! Including FHA! You can
see lists of participating lenders at each of the companies web
sites.
How does it work? Here's a 1, 2, 3. You have a house to sell.
You include in your advertising that the buyer can do a true
zero down, not a red cent out of their pocket deal, and then get
ready for your phone to melt! Your "A" buyer emerges and can
qualify for a 97% loan on your $100,000 house but doesn't have a
dime in cash. They have great credit and good income but not a
dime. Sound familiar? To close the deal it will take about
$102,000 because of closing costs. You contact one of the grant
providers and arrange a $5,000 grant. The provider wires the
$5,000 to the closing agent, the bank funds $97,000 and you have
the $102,000 needed to close. The title company is instructed to
hold back (form your proceeds) the $5,000 grant plus an
additional $1,000 fee (1%) which they send back to the grant
provider. So how it ends up is like this. Total cash on the
table $102,000 minus closing costs of about $3,000, minus the
$5,000 grant, minus the $1,000 fee leaves you about $93,000 cash
for your house. Now your saying that that looks expensive and it
does at first glance. But consider this. If the buyers had the
cash needed you would have netted about $97,000 after paying
yours and most or all of your buyers closing costs and you know
that you'll have to. Then you take into account the 2 or 3
payments you didn't have to make to your lender because the
house sold so quickly, and all the tire kicking buyers and
headaches and stress you didn't have to deal with and I say you
are ahead! Way ahead!! Oh and let us not forget that selling on
these terms would certainly afford us a premium price for the
property right? :^) I say these programs make us money in the
end.
