I have a client who has not had alot of credit built up yet an but they want a home that has had hardly any intrest at all been on the market almost 6 months, They would like to see if the owenr ( owners family) owner passed away in a car crash maybe do a land contract or seller financing untill they can build up enough credit to qualify for a good rate loan. In the mls it has conventianal, cash for payment options. How do I present this to the selling agent? Do I just write it up an submit it an see what happens?
or should I put some options in. or what about a lease option? any ideas greatly appreciated.
Mark

See if they will do a 1 year lease/purchase; NOT a lease-option.

I do them frequently and they usually work out well for everyone.

I get a nonrefundable down payment up front, usually 1-3% of the purchase price and a slighly above market rate rent and let a 100 dollars or so of that go toward the purchase price as a nonfundable credit if the deal doesn't close in a year or 18 months or so.

So if someone is buying say, a $150,000 home they would pay me 2% of that or $3,000 as a down payment, rent for a year for $1200 a month with 200 going toward a credit for down payment and closing costs.

After 1 year they would have a total of $5400 as a credit to help them buy and I also work with them to make sure they pay their bills on time and get their credit cleaned up.

1 year of successful lease payments will go a long way towards helping their credit too.

I would ask the listing agent to run the concept by his clients first to see if they would be interested.

Thanks for your help.

Anyone else out their got any ideas, I dont want to be laughed out of the listing office so want to have ducks in a row..

When you say the buyer does not have a lot of credit built up yet, provide some specifics? How many tradelines (credit accounts) does he have? How long is the history on each tradeline?

If you don't know, has the borrower spoken with a lender or broker yet? If not, I'd advise him/her to do so.

Most lenders use a program called Desktop Underwriter (DU) which is FNMAs automated underwriting program. A borrower many times even with one trade line can get approved in DU.

If the borrower has absolutely no credit, and DU won't fly, lenders can use non-traditional credit to develop a credit file for the borrower.

To use non-traditional credit, the lender would need to obtain a letter from 4 different creditors stating that the borrower has been on time with their payments for the past 12 months.

The following are good sources for non-trad. credit:
- cell phone co.
- gas co.
- electric co.
- cable bill co.
- landlord

Please be advised, using the non-traditional credit option is NOT an alternative for when you have a borrower with bad credit. This option is available to a borrower ONLY when he/she does not have enough established credit.

Good luck.

Sammy

I agree with Sammy... if the borrower doesn't have enough credit, go the traditional route. It's time consuming but if they've got some money, a few tradelines, and a pretty good overall credit history it should work fine.