How To Buy Your First Home With NO MONEY DOWN! The Seller's Rescue Program

There are so many ways to buy a home with no money down. And there are very many variables that effect which technique would be best for your transaction.

So, we'll just pick one out of our hat and try to explain it.

We call this technique the “seller's rescue program." In no money down type programs, one of the most important ingredient you need is a “motivated seller.” And believe us there are many. Sellers do not start out that way but most may turn into motivated sellers over time. Especially if three months has gone by without an offer to purchase their property. That old saying “being at the right place at the right time” is not so hard to do, if you know how?

Being In The Right Place At The Right Time?

This article will increase the probability of being in the right place at the right time tremendously.

First, you need a Realtor that understands this program. Most will not know how to structure it and may not want to even do it because they have to work a little harder for their commission. So, if you have a problem finding the right realtor for this transaction please don’t hesitate to call me. We will be more than happy to recommend a realtor in your area. Also, this way we can brief them on how to structure the transaction. You will not have to get involved with educating them about the details of this purchase. We can give them a working knowledge of what is needed to find a home with NO MONEY DOWN!

We recommend using a realtor because the real estate industry is becoming so paper intensive with many liability issues etc. that having a competent realtor working in your best interest is crucial to a successful closing and most of the time you will be involved in a transaction where the other side has representation and you don't. Not a good position.

Like mortgages, there are many unforeseen obstacles that always pop up before, during and after the sale. If you're not in the real estate business 24/7 you could make a mistake that would cost you substantial losses. Click here for Realtors we trust.

OK, How Do I Find A Motivated Seller?

Remember buying a home is not like buying a car. Many things can go wrong. So be careful if you decide to go on your own. At the very least you need to hire an attorney to help you.

Enough said about realtors.

There are many ways to find a motivated seller but we'll cover the one that applies to the “seller's rescue program."

First, ask your realtor to look up in the MLS (multiple listing services) for home criteria that you are interested in (2/3bed/2bath etc.). Next, this is important, realtors can search the MLS the same as doing keyword searches on the Internet. They can narrow down the search as well.

You are looking for seller's who have just reduced the sales price of their home. Most MLS listings will give this information in different ways when a seller has just REDUCED their sale price. In Sarasota, Florida price reduction are released daily. Have your realtor search for these homes and email them to you.

Learn To Fish Where The Fish Are Swimming?

Now you’re starting to fish where the fish are swimming.

Next, Lets assume that you have already been pre-approved (NOT pre-qualified), for a loan because you need to be turned into a *cash buyer* for this program to work. So get a Conditional Approval before you start looking for the home. Again, RATEseekers.com will be happy to help you do this. And when we say Conditional Approval, we are not talking about giving your numbers over the phone and then receiving a VERBAL approval. We are talking about a “Credit Approval Only.” Go to: APPROVE-ME under “Loan Purpose” select “Credit Approval Only.” This type of approval comes in WRITING from the lender and is good for three months.

Show Me The Money?

A loan approval in writing is also a valuable negotiating tool with sellers. They can see and feel it. They know its the real thing. Did you know that 80% of all failed real estate transactions are because of buyers inability to secure financing. Sellers Know this! So when a realtor presents an offer with a *approval in writing* from a lender prior to negotiating sales price, seller's tend to be more flexible on price and terms, and is more likely to think twice before rejecting or countering your offer. The old adage 'fear of loss, hope of gain' kicks in to the seller's decision making process.

Now you have the cash in pocket, what is next?

Simply preview the properties and pick out the ones you like. Limit it to the three that you like the most and start making offers. Click here for property search.

How it works...

Basically you apply for a grant from a non-profit organization. The link below will contribute 3% toward your down payment via the seller, which is really all you need if you apply for FHA financing. Also, you can possibly have your closing costs and prepaids paid by the seller as well.

It’s not necessary to apply through the Nehemiah site. RATEseekers.com will do all of that for you. Also we explain in plain English how their program works in the next paragraph below.

http://www.getdownpayment.com

FREE MONEY?

Nehemiah program Features:

-Gift funds up to 6% of the final contract sales towards your downpayment and/or closing costs
-Gift funds for both first time and repeat homebuyers
-(Nehemiah charges a nominal processing fee that may be paid by the seller, homebuyer, or lender.)
-Gift funds for both new construction and resale homes
-No repayment of gift money
-No income or asset limits
-No geographical restrictions

If you secure an FHA loan, the seller can also contribute up to 6% towards your closing costs and prepaids. So, technically you could buy the property with no cash out of your pocket.

Now keep in mind that the realtors earn a total of 7% commission in the transaction. That’s a whooping 12%-15% on the sales price from the seller’s proceeds depending on the amount of closing cost charged by the lender. (6% Nehemiah, 7% RE commissions, up to 4%-6% seller contribution for closing costs and prepaids)

Why this works?

Remember, as mentioned above, the first thing you're doing is working with a seller that is motivated.

Remember, we ask you to find a home that has been recently reduced. That’s because you may need to increase the sales price back up to the original asking price so that the seller won’t fall off his chair after your realtor has just asked him to pay 11-15% of the sales price towards your transaction. Therefore, bumping the price back up will bring the negotiations back to acceptable terms. But Beware! Make sure the property will appraise at the increased sales price. Remember the lender will only lend on the appraised value or sales price WHICHEVER IS LOWER?

This means that if you agree on a $100,000 sale price but the property appraises for $98,000 max, you’ll have to come up with the additional $2000.00 to close the transaction or renegotiate a $2000.00 decrease in the sales price with the seller.

Negotiating with the seller

Tell him you will pay his original asking price. A full price offer as long as he pays 11%-15% towards (closing cost, prepaids if needed), Nehemiah and Realtor fees.

Granted, you may purchase the home on the high side of *market value,* but in contrast, there is no cash out of your pocket that could easily amount to $3,000-$10,000 depending on loan amount.

We know, the "American Way" is to haggle and try to get a DEAL. But when your talking about a non-depreciating asset like real estate there is nothing wrong with paying what a property is worth! In the end you will still make money because of the benefits of home ownership. (appreciation, equity build-up and tax savings)

P.S. I don't know about you, but I can think of many other places to invest $3,000-$10,000 yielding a lot more than 2-3% per year. Which is the average percentage a property will appreciate per year. (unless its waterfront)

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