Is Equity Marketing Your Real Estate Cure?
By Tom Fazio
Way back in time before there was money, people used to trade things. Then, when currency was invented, it gave people a way to buy and sell a product without needing highly complex exchange rates. It gave them the ability to purchase some other product or asset in the shape, color, size and quantity that was to their best advantage. Is a sword worth 2 or 3 chickens? I don”t know. I suppose that depends upon how many eggs you need a day or how many dragons you need to slay in a given period of time. If I have money, then maybe I can buy 1 chicken and a short sword and have exactly what I need.
It”s no different with Real Estate. If you have money, you can probably find exactly what you need (not a $6 Million house for $100 Thousand, but within reason- reason being the key word). The thing is that you need to exchange your property for money so that you can buy the next asset. This is where the fun starts. Suppose your property is for sale at a fair price; one that can be supported by a legitimate appraisal and or fair comps, like a list of comparable properties sold with similar features and valuation. The value is there, but due to circumstances you can”t seem to attract a cash buyer. These circumstances could include tightened money lending or requirements for fully documented income.
Now we come to equity marketing. Similar to the old days you can still legally trade your property for something that is appealing to you. If your goal is to sell 4 single family houses and buy an 8 plex, or to sell your home and move into an apartment and buy a cabin in the mountains, you aren”t required to sell your home, get cash and buy the cabin. That”s how most people and realtors think; list the property, then if it doesn”t sell keep lowering the price, or take it off the market and wait.
If I remember correctly your goal was to get an 8-plex or a cabin. So, maybe you find someone with what you want and trade with them. Maybe one party has to add cash. Maybe they can only add their RV. You”d like an RV so why not throw it in? If you don”t want an RV maybe you can trade that for a Truck or a BMW. Just because you don”t get the exact number of chickens for your sword doesn”t mean it isn”t a good transaction. You may just have to massage the deal a little.
This can also work when going from a smaller to a bigger house. Who would want my little house? Perhaps people with a big house and grown kids who have moved out would like something more economical. The equity in your property applied to a trade can prove to a lender that you have made a satisfactory down payment on the new property. You may come up with something that works for your particular case.
What if I just plain need the cash? OK so, sell it. Or maybe someone has less equity in their property than you. You have $50,000 equity and they have $25,000. They give you their property plus $25,000 in cash and they get your property. Obviously, you each have to be able to assume each other”s debt, or pay off the loans. So, that gives you cash and another property, maybe even a place to live with income. So if the typical buy and sell strategy isn”t working for you, try an old fashioned swap to get things done.
About The Author
Thomas Fazio does Equity Marketing, Real Estate consulting and developing, and is a Licensed Realtor in the state of Colorado. He can be contacted at http://www.littletoncohomesforsale.com, http://www.denverhouses-denvercondos., and http://www.0-interestcreditcards.com