Dear Home Seller,

Are you looking for increased exposure to help you sell your property? What if you could increase demand by reaching out to an untouched demographic? Approximately 13% of the US population is in a position to profoundly benefit from seller assistance. [1] This desirable segment of our population stands longingly on the sidelines, ready and willing to enter the housing market, but they need help. The sellers who are first to reach out to this demographic will create a "win-win" situation by selling their property at full price and simultaneously making another homebuyer’s dream come true. Sound like a good plan? Let’s discuss the dynamics of Seller Helps Buyer.

Millions upon millions of potential homebuyers are qualified to purchase a home at 80% to 95% Loan-To-Value (LTV). LTV is a simple math equation (loan amount / property value). The difference between 100% and any corresponding LTV equals the required down payment. So, a 95% LTV means the buyer would need a 5% down payment, at 90% LTV, the buyer needs 10%, and so on. Let’s suppose the following scenario.

A buyer is qualified for a 90% LTV on a $300,000 home. The down payment required would then be 10% or $30,000. Herein lies the problem. Many homebuyers get stuck at this point because they haven’t been able to save the total 10% required down payment. The solution is for this buyer to work with a seller willing to help by holding a second mortgage for a portion of the down payment. Now let’s look at a seller who has a home for sale for $300,000 and a mortgage balance of $200,000. The market is slow. There are currently more sellers than buyers and this seller may even be considering lowering his selling price. STOP! The solution is to match this seller with this buyer.

The transaction reaches its successful close in this way. Sell the home for $300,000 and offer to hold a second mortgage for 5% or $15,000. This enables the buyer to obtain a $270,000 first mortgage (90% LTV) from the bank and because $15,000 of the down payment is financed by the seller’s second mortgage, the buyer only needs $15,000 down payment to close. To be clear, you (as the seller) do not apply for a second mortgage -- you are the lender. You are in a position to do this because you have equity in your property. At closing, your proceeds check (the check that you would be walking away with) equals the selling price minus your mortgage balance, second mortgage amount and settlement costs. In our example, it would be $300,000 - $200,000 - $15,000 - settlement costs. Your check would be $85,000 minus settlement costs. In addition, you would have a $15,000 note for which you would be entitled to receive monthly payments each month.

The benefit to a seller on this type of transaction becomes transparent when comparing the full price sale ($300k in our example) to the alternative of lowering the selling price by 5%, 10%, or more. Please forgive my colloquialism, but this is a "no brainer." Is it better to lower the sale’s price and receive less money at closing, or sell the property at full price and receive a proceeds check plus the benefits of a second mortgage? It’s not a tough decision.

The Seller Helps Buyer website has been created as a free service in the hopes that it will benefit buyers and sellers in the real estate market throughout the United States. Sellers who are experienced with this type of transaction are encouraged to add properties to our database. You may register and post properties by clicking here or the registration link at the top right of the home page. Please feel free to tell others about our free site.

[1] Fair Isaac & Co.’s National Distribution of FICO Scores 13% range between 500 - 599