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How To Sell Your House With Little or No Equity

If you’re in a situation where you need to sell but you have little or no equity, then you’re likely stressed out because you see few (if any) positive outcomes and you’re getting desperate to find some alternative way of selling. Most people in this situation try one of two solutions, but I want to show you a 3rd option, which is the best solution for you. This can also be a great exit strategy if you have a rental property or you just want the cash flow without the headaches, so you don’t need to be stuck between a rock and a hard place for this to be a great option.

  1. For Sale by Owner: this can work well if you know what you’re doing and have the time, but most end up listing with a realtor in the end, don’t know how to price the property correctly, don’t have time to host showings, and the process ends up dragging on and on and you end up losing more money than you would if you had simply sold with a realtor to begin with.
  2. Rent it out: when For Sale by Owner doesn’t work, most will try to rent it out even though you’d rather chew broken glass than become a landlord. If you know what you’re doing, this can be a good solution to you, but you have to deal with all the management headaches and maintenance costs, not to mention finding and screening tenants, vacancy costs, and then eventually finding a buyer after a few years.
  3. Lease Option: this truly can be the best, safest, and most profitable option for you with the least amount of headaches (if any!). Bold claim, but what is a Lease Option? It’s basically like selling your home but having the closing date a couple years down the road. We would lease the property from you and also have the option to purchase it at an agreed upon price. The essential components are: purchase price, monthly lease payment, option payment (down payment), and length of lease.
  • It gives you time to build equity and actually make money from selling instead of losing money or barely breaking even
  • We can offer much closer to your asking price- investors generally need to purchase at a discount for it to make profitable sense, but in this scenario we can offer full price or very close
  • Benefit from someone else paying down your mortgage- if you own it free and clear, then you're getting pure profit each month.
  • Receive all the benefits of having a rental without the management headaches or maintenance costs- we cover any repairs/expenses $500 or less per incident
  • No need to transition from being a landlord to trying to sell it: buyer is already lined up, so you aren’t dealing with vacancies costs either
  • No realtor commissions or fees, and no property management fees
  • Who does this work for? This can be an appealing option for basically anyone as long as the house is in good condition, but if your greatest need is to get cashed out immediately then it’s probably not the best option for you. Consider the following scenarios:
    • Need to sell due to: job loss, job transfer, divorce, already moved and are facing double payments, loss of spouse, medical debt, inherited an unwanted property, inherited property out of state and you aren’t sure what to do with it, can’t afford the mortgage anymore, in pre-foreclosure, etc.
    • Want to sell: looking to downsize or upsize but don’t need to be fully cashed out, have a rental and are looking to sell, you’re a tired landlord looking for relief, want benefits of having a rental but don’t want to deal with maintenance or management, you’re retired and own the property free and clear but want to downsize or relocate closer to grandchildren but could benefit from reliable additional monthly income

 

Objections/FAQ:

  • Q: What if the new tenant/buyer damages the house? A: We carefully screen tenant/buyers to make sure they are capable of purchasing the home, and we make them put skin in the game so that they have a home owner mentality rather than a renter mentality- so they will take much better care of the home.
  • Q: What if this doesn’t work out and my house doesn’t sell? A: Worst case scenario, you end up back in the same situation you were in before doing a lease option, but 99% of the time you will have already benefited from someone else paying down your mortgage and your financial situation may be different at that time anyways, so you will likely have the equity and ability to sell normally. Since we also have a financial interest in the property, we are committed to making sure it sells because that's in our best interest as well as yours.
  • Q: I can’t wait a few years, I need the money now! A: That’s understandable, ideally anyone would like to be cashed out immediately, but if you’re in a situation with little or no equity then reality is that you will lose money selling or barely break even, so there’s basically no money to be had. If that’s the case, then the option of losing money or breaking even now versus making money by closing a couple years down the road is a no brainer. If you’re able to sell with a realtor and that’s all you need, then great, we have some good referrals for you, but this option is best for people who are stuck between a rock and a hard place.

 

Consider Example 1:

  • Situation: bought a house within past couple years, but…you lost your job, job transfer, lost spouse, medical debt, etc.
  • Home worth: $200,000
  • Equity: $10,000
  • Closing costs & realtor commissions if selling via realtor: ~$20,000 (10% purchase price)
  • Total profit if selling now with realtor: Negative $10,000
  • Mortgage, taxes, & insurance: $1400/month
  • If you sell on terms with a lease option: our agreement with you (*numbers are approximations*)
    • Purchase price: $195,000
    • Option payment (like a down payment): $3000
    • Monthly lease: $1400 (take over mortgage, taxes, insurance)
    • Total profit if we purchase after 1 year: $8000-$9000 ($195k, $3000-$4000 equity gained)
    • Total profit if we purchase after 2 years: $11,000-$12,500 ($195K, $6000-$7500 equity gained)
    • Total profit if we purchase after 3 years: $14,500-$16,000 ($195K, $9500-$11,000 equity gained)
    • Total profit if we purchase after 4 years: $18,500-$20,000 ($195K, $13,500-$15,000 equity gained)
    • Total profit if we purchase after 5 years: $22,500-$24,000 ($195K, $17,500-$19,000 equity gained)
    • Plus, you get amazing tax benefits!
  • You may not get all the money up front, but considering this outcome vs losing $10,000 selling now, this is a much better deal. We can structure this different ways too: increase or decrease purchase price, increase lease payment so you get some cash flow each month, etc.

Consider Example 2:

  • Situation: you own a home free and clear with no mortgage, maybe you had it as a rental and are looking to sell, maybe it was your personal residence but you recently moved out of state.
  • Home worth: $200,000
  • Equity: $200,000
  • Closing costs & realtor commissions if selling via realtor: ~$20,000 (10% purchase price)
  • Total profit if selling now with realtor: $180,000
  • Taxes, HOA, etc: $350/month
  • If you sell on terms with a lease option: our agreement with you (*numbers are approximations*)
    • Purchase price: $195,000
    • Option payment (like a down payment): $3000
    • Monthly lease: $1400
    • Total profit if we purchase after 1 year: $211,800 ($195k, + $16,800 cash flow)
    • Total profit if we purchase after 2 years: $228,600 ($195K + $33,600 cash flow)
    • Total profit if we purchase after 3 years: $245,400 ($195K + $50,400 cash flow)
    • Total profit if we purchase after 4 years: $262,200 ($195K + $67,200 cash flow)
    • Total profit if we purchase after 5 years: $279,000 ($195K + $84,000 cash flow)
    • Plus, you get amazing tax benefits!
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Life Happens. We'll work with you and make you an offer on your property. We can offer cash or terms, depending on your situation and what makes most sense for both parties. Call or fill out the form below and we will follow up with you as soon as possible



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About Us

At Cornerstone Home Solutions, Inc, we are a multi-service company who BUYS, REPAIRS, MANAGES, and SELLS HOMES while focusing on providing you with Fast, Friendly, and Flexible service.

Contact Us

Cornerstone Home Solutions, Inc
5251-C Hwy 153, #253
Hixson TN 37343

James Greiner
423-427-4663
[email protected]