realtors

Contract for Deed

[2019 UPDATES] Contract For Deed: The Ultimate Guide

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Contract for Deed Home Financing in 2019

Contract for deed home financing is a great option for those individuals struggling to get a traditional loan from the bank. Now, let’s get into the details.

Conventional financing, in 2019, as we all know, is the preferred home loan vehicle. This refers to a standard mortgage loan from a licensed lending institution, and typically can be a15 or 30 year loan with a down-payment that ranges from 3 percent to 20 percent. The higher your credit score, the better deal you will get.

Even before you find your dream home, you should obtain mortgage pre-approval from your lending institution. While pre-approval does not guarantee that everything will go smoothly, it does provide you with significant negotiating power when dealing with sellers.

Applying For Conventional Financing

Your parents probably had to spend an afternoon at a banker’s office when they applied for their first home loan. Now, you can do this by phone or online, although you will eventually have to sign closing documents in person. Some important things to do and factors to be aware of are:

  • Know your credit score.
  • You can easily see this number at Credit Karma, and the service is free.
  • Determine what factors make you less attractive.
  • High student loan balances, maxed out credit cards, judgments, liens, unpaid taxes and underreported income can hurt you.
  • Analyze your actual credit report and correct errors. The FTC reports that one of every five credit reports contains inaccuracies.
  • Optimize your credit status by paying down card balances to below 30 percent; do not make any large credit purchases while attempting to secure home financing.

Understanding What You Can Afford

Banks have certain debt to income ratios that they do strictly enforce. The Consumer Financial Protection Bureau (CFPB) explains:

“Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income.  This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed.”

To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out.  For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)

Evidence from studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a qualified mortgage.

Housing Affordability

Finding Your Home

You can spend all day trolling Trulia and Redfin, but many times you can be missing out on homes for sale that only Realtors can easily access. Remember, sellers pay real estate commissions—you don’t—so avail yourself of this free service and find a good Realtor.

Finding Your Home With Contract For Deed

Working With A Contract for Deed Realtor

The Realtor/client relationship is a two-way street. If you are a type A personality and want all of your texts answered within two minutes, make sure your Realtor is as hyper as you are. Conversely, don’t expect your Realtor to work miracles with incomplete or false information. For example, don’t inflate your income and/or minimize your debts at your first meeting. In the credit world, there are no secrets, so be upfront with you Realtor.

Turned Down For Traditional Financing?

Mortgage Rejection

Those that give up after being rejected for a home loan end up renting apartments while those savvy enough to understand that there are alternatives to conventional financing will look at the rejection as a bump in the road and move forward. Rent to own is one way to become a homeowner, but a preferred method is MN contract for deed. In a rent to own situation, you pay rent to a property owner that may put aside a portion of your monthly rent as a down payment for a future purchase.

If everything works out, either the seller provides financing or you obtain it at some later date. In a contract for deed sale, you sign a contract that states that you will be given the deed to the property you are occupying after you make all of your required payments. Contract for deed is seller financing, and while interest rates can be a bit higher than conventional financing, credit requirements are typically significantly more lenient.

Finding Contract For Deed Opportunities

There are a limited number of MLS contract for deed listings.  If you’re lucky, you might find the right opportunity in a nice location. At C4D, however, we give you an advantage that others that wish to utilize contract for deed just don’t have. Just bring the home you wish to purchase to us. If we can do the deal, we will purchase the home and sell it to you on a contract for deed basis. We have paved the home ownership road for many that were rejected for conventional financing. Application is easy—just go to our website. C4D has the financial power behind them to make these deals happen.

Contract For Deed Documentation

While C4D offers less stringent credit requirements, we still will need pay stubs and bank statements. We look, however, at your situation today, and we care a lot more about what you can do now than what bad things have happened to you in the past. At C4D even high student loan balances and recent bankruptcies are not necessarily the hindrances they would be at a large bank.

Contract For Deed: How It Works

Although the nightmare of waiting 60 days or more to close on even great credit deals is generally behind us, banks take longer than we do at C4D. We usually can close deals in as fast as two to three weeks.

MN Contract For Deed Costs

We’re upfront about all of this. We do require an origination fee and we do add a small initial property markup. And, the interest rate you pay will be higher than the prevailing conventional mortgage interest rate.

Contract for Deed: What Problems?

We have many satisfied former renters that are now homeowners. We are transparent and forthright. If we can help you, we do everything possible to get your deal done. We are MN contract for deed experts, and happy customers are our paramount concern.

If you deal with an individual that is offering a contract for deed, you have to do serious vetting to ensure that there will be no problems with your deal in the future. With C4D, this is not necessary.

Contract for Deed: True Disclosure

When we purchase your home, we get a loan from our bank. With the blessing and full knowledge of our bank, we then sell the property to you with a MN contract for deed. You make your monthly payments to us and we, in turn, make our payment to the bank. But check this out:

We’ve never missed a payment and don’t ever plan on it.  In addition, we’ve worked with our bank partner to have an assignment of contract included in your documents that basically says if we stop paying our lender, you can pay them directly and your contract remains intact.

You won’t find this protection with most individual contract for deed sales. In fact, many times the seller’s bank isn’t even made aware of the transaction, and this can throw the original mortgage into default because of the due on sale clause that is embedded in almost every mortgage note. Our agreements with our bank do not have due on sale clauses.

Everything is upfront and at closing the contract is recorded at the appropriate County.

Helping You Refinance

Our goal is to get you into a home and ultimately help you refinance with a traditional lender.  We have relationships and systems in place to help make this happen. Typically, we can help people refinance within three years of purchase.

For the Realtor: Turned Down? There Is Still Hope!

So you spent weeks trying to get your buyer and seller agree upon a price. Both were difficult at times, and when you finally got all sides to listen to reason, an old unpaid judgment appeared and derailed the financing. After you’re done binge watching House of Cards to ease your pain, give us a call. We have been able to resurrect many deals that have been turned down by others.

Realtor Contract for Deed

We are a reputable, experienced and recognized company that does MN contract for deed. You bring us the buyer and the property, we buy the property and sell it to your client on a contract for deed. Even if you have an iffy buyer with shaky credit and you have not yet found the perfect property, bring them to us; we will get many of them pre-approved and send them back to you.

Is My Commission Protected?

Realtor Commission

You betcha! 80% of our referrals come from realtors, and they wouldn’t keep coming back if we didn’t guarantee that their commissions would be protected.

The Deed

Contract for deed means exactly that.

  • We buy the property.
  • We hold the deed.
  • We sell the property to the buyer.
  • They occupy the home.
  • They make their monthly payments.
  • At the end of the contract period, we turn over the deed and they are homeowners!
  • They can also refinance early with a traditional lender, and this is something that we will facilitate.
  • In addition, the buyer actually has equitable title, and can sell the property at any time if they wish to move on.

What About Financing?

Yes, we use a bank.

  • Our bank gives us a mortgage.
  • Our bank knows what we are doing.
  • The buyer pays us and we pay the bank.
  • We are never late.
  • We never miss payments.
  • Our mortgage with our bank does NOT include a due on sale clause.
  • In fact, we have an assignment of contract put in place that basically says if we stop paying our lender, the buyer can pay them directly and the contract remains intact!

The Final Paperwork

We will hold your client’s hand from application to closing. We will assist with all documentation and paperwork.

When The Offer Is Accepted

At this point, Taylor and the C4D Crew take over.  We work directly with the lender and title company to schedule closing and work out all the paperwork.  The C4D Crew will also work directly with the C4D buyer on all the paperwork and logistics for the day of closing This will be one of the easier transactions you do this year!

Down-Payment

Contract For Deed MN Down Payment

A down-payment is of course necessary, but the down payment be gifted to the buyer in a C4D transaction. Just make sure your clients speak with their accountant for possible tax implications.

C4D Crew Reputation

We can provide you with client references. Just by looking at our website you can see that we provide tons of valuable and free information about MN contract for deed. Of course, we are in business to make money—so are you—but we are also dedicated to helping those with compromised credit become homeowners.

How Long Does It Take?

From the time you and your client find a home they’d like to buy, and an offer is accepted, we can close as quickly as two to three weeks.

Credit Score Minimum?

We don’t have one. We look at every deal individually. Prior BKs, student loans, judgments divorces and tax liens are all issues we can work around.

Credit Score

Can You Approve Any Deal?

In short, no. We are not going to lie and tell you that we can do anything, but you would be amazed at what we can accomplish.

Call Us About Contract For Deed

MN Contract For Deed

Again, just because the loan officer rejected your client’s loan, your deal is not necessarily dead. Contact us and we’ll quickly get started on a contract for deed program that can make your client’s home ownership dream a reality.

20 Tax Deductions Every Realtor Needs to Know

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Your clients continuously ask you about the tax benefits of buying a home, but are you aware of all of the realtor tax deductions available for your own business?

Realtor Tax Deductions

You need to be aware of the Realtor tax deductions available to you; if not, you are wasting your hard-earned commissions by giving a present to the government. Remember, when we speak of listing Realtor tax deductions, we are talking about money that you can deduct from your income, and if you have substantial 1099 income, you know how important these amounts are.

Mileage

You can deduct the miles you drive in the course of doing business. Be sure to keep a log of these just in case. For 2018, you can deduct 58 cents per mile, so if you drove 10,000 miles for business last year, you could deduct $580.

New Car

Car lease payments are another great Realtor tax deduction. You will need to reimburse your business for any personal use of the business vehicle, however.

Home Office

You can charge your business rent for a home office, utilities, Internet and cable, as long as you can show that your business used the percentage you are deducting.

Real Estate Software

Contact management, open house, and lots of other software applications work great for Realtor tax deductions.

Cell Phones

On your phone all day? Let your business pay for it.

Office Stuff

Papers, pens, ink and even paper clips are all valid Realtor tax deductions.

Phone Answering Service

If you outsource your phones when you are not in, an answering service is deductible along with any other virtual services you use like virtual bookkeepers and assistants.

Office Rent

If you rent an office away from your home, the rent is 100 percent deductible.

Office Equipment

Desks, printers/scanners/fax machines, computers and servers are all legitimate business expenses.

Internet/Phone

Of course Internet service is deductible and so are landline and mobile phone services.

Advertising

Your monthly newsletter and email marketing are business expenses and therefore deductible. Marketing tools like business cards and signs are deductible, and so are the fees you pay to an outsourced social media marketing company.

Entertainment and Travel

A portion of these costs can be deducted, but be sure to check with your CPA about the correct deductible percentages.

Conferences and Conventions

Realtor tax deductions can include registration fees for conferences and conventions.

Ride-sharing

Take an UBER or a Taxi? Be sure to save your receipts.

Client Meals and Entertainment

50 percent of what you spend on these can be deducted from your 1099 income. Saving receipts is very important here.

Gifts for Clients

Spend what you want, but only $25 per gift per client is deductible for 2018.

IRA Contributions

These will work as Realtor tax deductions up top certain amounts, so connect with a professional to find out what the limits are.

Shared Workspace

Just like office rent, this is a deductible expense.

Continuing Education

Have to take a class to learn about current market trends? Be sure to deduct the tuition cost.

Dues and Memberships

Your Realtor association fees and other business group memberships are great Realtor tax deductions.

Organization is the key to getting the most tax value from your business activities, so make sure you keep track of expenses and document everything. Be sure to consult with your tax professional if you have any questions.

Contract for Deed Homes: What Realtors NEED To Know

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There are a number of reasons Minnesota residents looking to buy contract for deed homes have had success. But you might ask: why not just buy your home with a traditional mortgage from the bank? Let’s talk about that.

We’ve all had it happen. 

Loan Rejection

After a difficult and protracted negotiation period, you finally got both your buyer and the seller to agree on price, contingencies, and before-closing repairs. At the end, everyone came to their senses, gave a up a little, and all parties were looking forward to closing.

Then the bank stepped in and killed the deal. Even though your buyer was pre-qualified, they made a mistake, didn’t follow your instructions and decided to finance an expensive vehicle. As the bank did a final credit check, the new car loan appeared and skewed the buyer’s debt to income ratio. The deal was dead, but you could have brought it back to life.

Contract for Deed Homes

Image result for home buying process

Contract for deed is a widely accepted Minnesota financing tool where a seller finances the property purchase on an installment basis, and they buyer receives the deed upon making the final payment. Many think that for this to work they need to find free and clear properties where a seller agrees to be the bank.

Why free and clear?

Because sellers can’t usually sell encumbered properties without breaching the lender’s mortgage contract. Therefore, those interested in contract for deed financing look specifically for contract for deed homes. There is another way, however.

Companies Like the Contract for Deed Crew (Yes, that’s us!)

There are quality companies out there like C4D, and it works like this: You bring a deal to C4D. Like a bank, C4D analyzes the deal to ensure that the seller can make the required monthly payments.

Unlike a bank, however, C4D can look past problems like the vehicle purchase mentioned above. With a good contract for deed homes company, you will be dealing with the company owner—not a bureaucratic bank loan officer. If C4D approves the deal, they will buy the property.

They do this with a bank loan, but the company’s bank does not include a due-upon-sale clause in its mortgage to C4D. Therefore, C4D legally and ethically buys the home, and with the bank’s blessing, C4D sells it on a contract for deed to the buyer.

Contract for Deed Homes

Benefits to the Realtor using Contract for Deed

  • You can explain difficult situations to C4D and they will understand. A debt to income ratio that has recently changed can be worked with if the buyers can legitimately afford the home.
  • Contract for deed revives dead deals. Banks can be arbitrary and unforgiving, but with a contract for deed transaction, the seller has more leeway to analyze what really makes the buyer worthy.
  • While a down payment is needed, the actual percentage is not necessarily set, and there are even ways the contract for deed companies can facilitate payment assistance.
  • Buyers can look at any home—not just contract for deed homes. With a MN contract for deed sale, the seller is unaffected since a company like C4D is the only purchaser they need to deal with.
  • All real estate commissions are protected.
  • Sellers can move their homes more expediently because companies like C4D have lots of buyers waiting for their dream homes.

Also, if you’re looking to understand property value event more, check out this presentation:

Presentation courtesy of LoseTheAgent, a listing platform for homes for sale by owner.

Don’t let loan officers and finicky banks get in your way. Consider using MN contract for deed for any deal where the lender is causing you trouble. It’s worth an email!

Real Estate Terminology Explained

26 Real Estate Terms Defined for New Buyers

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Buying real estate can be complicated, and some of the real estate terminology can be confusing. Be sure to refer to this comprehensive guide when you need some clarification.

Real Estate Terminology

1) Adjustable rate mortgage

As opposed to a fixed rate instrument, your actual interest rate can move up and down at pre-determined intervals according to whatever index it is associated with.

2) Amortization schedule

A chart that shows exactly how much of your monthly payment is applied to principal, and how much is applied to interest.

3) Appraisal

An independent accounting of what a property is worth. Lenders will require to this to make sure the home they are financing is worth the loan amount.

4) Assessed value

What taxing authorities say your home is worth. This can be changed annually.

5) Buyer’s Agent

A real estate professional that represents the prospective buyer and is therefore entitled to part of the sale commission.

6) Closing

The meeting where the deal is finalized. Money is usually transferred that day or the next day.

7) Closing costs

These are the loan processing and various other costs that can equal two to five percent of the home’s purchase price.

8) Contingencies

Contract clauses that can allow either party to exit from a deal. An example is contract section that explains if the buyer cannot get financing within a certain period of time, the deal is off.

9) Equity

The difference between the market value of your home and any loans you have against it.

10) Escrow

An account that certain monies like down payments are placed into pending closing a deal. After the loan is closed, banks often require insurance and tax payments to be escrowed also.

11) Fixed-rate mortgage

A mortgage rate that can’t change no matter what happens to subsequent mortgage rates.

12) Home warranty

Usually purchases from a third party, these instruments help pay for problems after the sale has been consummated.

13) Inspection

Done by an independent person, this process checks the house for problems that may have to be addressed before the sale.

14) Interest

The price you pay for money expressed as a yearly percentage. This is an important piece of real estate terminology that you must understand.

15) Listing Agent

In a transaction, the seller’s agent.

16) Mortgage broker

A third party that finds appropriate lenders for buyers.

17) Offer

The legal document that spells out the buyer’s proposed terms of purchase.

18) Pre-approval

Buyers can go to the lender, present financial information, and get pre-approved for a loan. Pre-approval is not usually binding, however.

19) Principal

The amount of money that needs to be financed after your down-payment has been subtracted. This seems like a simple, easy to understand piece of real estate terminology, but make sure you fully understand this concept before searching for a home.

20) Private mortgage insurance

Insurance that the buyer pays for in monthly payments. It protects the lender against default.

21) Real estate agent

Someone with a real estate license who has passed certain exams and who works with a real estate broker. This should be a very familiar term to many; because whether you’re buying a home in Minnesota or renting an apartment in affordable Eugene, Oregon, it’s likely that you’ve worked with an agent. 

22) Real estate broker

Someone that has met certain requirements and who hires agents to work for him or her.

23) Realtor

A real estate agent that is a member of the National Association of Realtors (NAR). NAR has ethical and business standards that members must follow.

24) Refinancing

Restructuring a home loan to get a more reasonable rate or pull equity money out.

25) Title insurance

A policy that both sellers and buyers must purchase that protects that parties in a transaction against title deficiencies.

26) Contract for Deed

A unique process widely used in Minnesota that, when used correctly, can allow those that have been denied credit a real chance at home ownership.

As you can see, real estate terminology can be tricky, but by becoming familiar with this list, you’ll have a better understanding of what’s going on during your deal.

Signs of a bad realtor

7 Things Real Estate Agents Must Do For Sellers

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You need to be able to spot the signs of a bad Realtor when you see them. It’s a must!

Signs of a bad realtor

You can be paying big money to your listing broker when your home sells. If your property goes for $400,000, brokers could get $24,000. Sure, the listing broker will share commissions with the buyer’s agent, but still, that’s a lot of money. Because your Realtor is going to handsomely profit from his or her work, you can expect your agent to do the following.

Signs of a Bad Realtor #1: Doesn’t Correctly Price the Home

Your agent needs to have total local market knowledge and needs to know the price range where your home will sell. There is nothing worse than riding down the market as buyers wait for you to continually lower the listing amount of your over-priced home. Don’t think that Joe Smith—the guy that sold grandma’s condo in the suburbs—is automatically going to know how much your downtown unit is worth, unless he can prove that he understands your local market.

Signs of a Bad Realtor #2: Doesn’t Do A Great Marketing Job

Your expert should not be showing signs of a bad Realtor. Instead, they should use every available too to sell your home. Facebook, MLS of course, Craigslist, his or her network of brokers, Pinterest and any other Internet based platforms need to be used. Any postings and listings must be accompanied by great photos and excellent descriptions. If you have already moved, and your property is vacant, your agent needs to help you with staging. Signs of a bad realtor would include an agent that seems lazy and not Internet savvy.

Signs of a Bad Realtor #3: Does NOT Properly Communicate

Sellers are naturally hyper, and a good Realtor will inform them of his or her availability and communication preferences. If you aren’t presented with something like this right away, you maybe should look for another agent:

“I am available seven days a week by email, phone and/or text. If you contact me before 4:00 p.m., I promise to return your inquiry within four hours. If you contact me after 4:00 p.m., I will be in touch by noon the next day.”

Signs of a bad Realtor would be an agent that doesn’t return calls for days.

Signs of a Bad Realtor #4: Doesn’t Ensure That the Buyer is Qualified

DIY home sellers often make the rookie mistake of taking an offer without vetting the buyer. This can tie up a property for 30 days or more. Your agent needs to make sure that all offers to be considered are from bank pre-qualified buyers, or those that can show they have cash.

For Sale Sign

Signs of a Bad Realtor #5: Poor Negotiation Skills

Think about it — if you and the buyer are $5000 apart on a $400,000 transaction, that $5000 only means an additional $300 in commission for the brokers. The brokers, at that point, may just want to get the deal done and collect their $24,000 commission, and they would probably sacrifice $300 to be able to move on. You, on the other hand, may need that $5000, and a good broker will represent your interest, not his or hers.

Commission Breakdown

Signs of a bad Realtor would be an agent that puts pressure on you to quickly agree to a lower offer.

Signs of a Bad Realtor #6: Doesn’t Attend the Home Inspection

The home inspection carries a lot of weight, and you need to be represented at the inspection. That way, you’ll know what the inspector sees as problems before he sends his report to the buyer. It is better to be surprised early than at the last minute.

Signs of a Bad Realtor #7: Can’t Finalize Loose Ends for Closing

Hearing the words “clear to close” is a great thing, and your agent should be with you every step of the way to help make this happen. He or she needs to be in constant contact with the buyer’s broker, the title company, the bank, and the inspector.

Closing on your house

You’ve made a wise decision if you have hired a Realtor during the home buying process —just make sure you and your broker agree upon expectations.

For Sale By Owner

5 Reasons To Avoid “For Sale by Owner”

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So, you think you should try out the seemingly simple and affordable for sale by owner home sale technique?

You may be a dedicated DIYer. You know how to change your own oil, do HVAC repairs (if you don’t, you can find guides to the best HVAC contractors online), you are a big seller on eBay, and you know how to handle the Craigslist crowd.

You always buy cars rather than lease them, and you sell them after a few years, usually at a profit. You don’t like middlemen, and you avoid sites that claim 10 plumbers will bid on your project as you know how to find qualified vendors. But now it’s time to sell your house, and you are ready to put up the For Sale by Owner sign. Before you do that, however, consider the following reasons you need a Realtor.

For Sale By Owner

For Sale By Owner: The Time It Takes

When you hire a Realtor, they do the work. What work? Assessing your property’s condition and taking quality photos are two important early tasks.

Quality photos don’t mean hurried iPhone pics either. Ever notice how many shots of for sale properties are dominated by deep blue skies and warm orange glows? Do you know how to do that? How long would it take you to get 40 excellent representations of your home?

Pricing It Correctly

House Pricing

We’ve mentioned in previous posts the story of our client’s uncle who offered the following home sale pricing formula:

“Save every receipt for every repair and improvement you have. Then, add that to the original cost of your home, factor in inflation, and that will determine your asking price.”

That’s a sure method to under or overprice your home. A good Realtor will know your market, and after viewing your home, he or she will quickly know the price range in which your house will sell. Overpricing a home can be slow death as you watch the market ride it down, and while underpricing can produce a quick sale, you can lose thousands.

Perception and Agent Boycott

For sale by owner homes can be negatively perceived by buyers because they may not want to deal directly with an owner. While an agent may reply quickly, an owner may not, and prospective buyers may shy away from any situation where communication may be lacking.

Some brokers do not like homes that are for sale by the owner and don’t want to deal with commission or legal issues with what they may feel is a grossly under-informed seller. Even if you know what you are doing, real estate agents may not care to even find out, as they may take their clients to a more traditional situation.

Tied Up Property

Do you know how to vet a potential buyer? Do you understand option periods?

Are you comfortable with financing contingencies? If you aren’t careful, you could have your property removed from the market and tied up for 30 or 60 days while you wait for financing that never materializes.

Realtors can help minimize this problem.

Commission v. Sales Price

Commission Structure

Finally, look at what you are paying for. Sure, six percent commission on a $200,000 sale is $12,000. But that $12,000 buys you a great listing, instant MLS exposure, networking with other Realtors, legal diligence regarding potential buyers and offers, and a person that is dedicated to getting your property sold.

In addition, you may get $12,000 more than you would have if you follow the Realtor’s suggestions about staging, landscaping and showing your property.

If these five reasons aren’t enough, remember that with a Realtor, potential buyers are screened before they are let into your home.

At C4D, we make home ownership possible by utilizing MN contract for deed. And yes, we’ll work with your Realtor to help your home ownership dream come true. We love traditional financing, but if you can’t get it, contact us.

Minnesota Realtors: More Contract For Deed Deals

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Some Minnesota Realtors view the current economic situation as murky with darker clouds on the horizon. Interest rates are moving higher and some mortgage rates have crossed the psychological five percent barrier. Top luxury home prices in places like Austin, TX have begun to stagnate and actually drop. While unemployment is at record lows, inflation is starting to re-emerge as a threat, the price of oil just recently fell from a six-year record high, and of course there is geo-political chaos. None of these factors are good for the housing market.

Minnesota Realtors Change in Real GDP

The Comeback of No-Doc Type Loans

We are almost 11 years removed from the Great Recession that began in 2008. Some new to the real estate business may have been in their early teens when this occurred and may not remember, but no-interest and no-doc loans were part of the problems that ultimately crashed the economy.

One of our older CD4 clients tells us that they were able to get their original home mortgage with a one-page typewritten business profit and loss statement. The mortgage loan officer said, “Are you making money?” and when he got an affirmative answer, they were approved.

In the early and mid-2000s, people used their homes as ATMs, and loan officers aided by appraisers approved scores of loans. Some were no interest, some were adjustable rate, and many were made without any debt-to-income ratio verification. If someone showed that their business cash flowed significant dollars, profits and income were ignored.

Check Out CNN Lately?

Listen to CNN today and you will hear ads for a mortgage company that claims that profits don’t matter–only cash flow does. When companies can advertise nationally and get customers for low documentation mortgages—even in view of what happened in 2008—it’s time to take notice and get worried.

CNN Real Estate

The Next Time for Minnesota Realtors

The U.S. economy is cyclical, and after the second worst downturn in history, we have now seen the longest recovery. Even though there are those that say “Well, this time is different,” savvy Realtors know that is not true. The next recession–whether it’s almost here or won’t arrive for another year–will cause difficulties for Minnesota Realtors. When the GDP falls, the stock market retreats, and interest rates go up, money tightens and loans can be hard to get. And therefore, you need C4D.

Global Trade Contract For Deed

What We Do

We at C4D use MN contract for deed to help prospective homeowners that were rejected for traditional financing to realize the home ownership dream. We use our strength and knowledge as we buy homes and then resell them to your clients who were rejected for traditional financing or unable to obtain it. Yes, your clients need a job and provable income, but we can work with issues like divorce, tax liens, garnishments, bad credit and large student loan balances. We can help where others have failed.

Listen, we do not want to see an economic downturn, and we genuinely hope that one day all of our clients will be able to get traditional financing. Until that time comes, however, Minnesota Realtors can call us with rejected deals and we’ll see what we can make happen. We’ve helped a lot of people.

How to find a good minnesota realtor

How To Find A Great Minnesota Realtor

 1000 500 Sam Radbil
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How to find a good realtor? If you’ve tried, well, you’ve probably realized it’s not as easy as it sounds, right?

How to find a good realtorFirst, there is a difference between a Realtor and a real estate agent. You can be a real estate agent without becoming a Realtor. If you are licensed in your state, you can help people buy or sell commercial or residential property. The State of Minnesota publishes a detailed booklet that explains the real estate licensing process, and you can find it here:

http://mn.gov/commerce-stat/pdfs/re-license-guide.pdf

But don’t confuse licensed real estate agents with Realtors, because there is a difference. According to inman.com, “A Realtor is a trademarked term that refers to a real estate agent who is an active member of the National Association of Realtors (NAR), the largest trade association in the United States.” NAR has certain requirements and members must first agree to abide by its ethics code.

Finding a Great Realtor in MN

It doesn’t matter where you’re coming from; you might be moving from a small Cincinnati apartment to a Minneapolis single family home, but whether you contract with a real estate agent or a Realtor, it’s important that you know how to vet and find the person that best fits your needs. And bankrate.com says that these seven items are paramount.

Talk with agents’ recent clients.

At the first meeting, ask for a list of clients. If these are all relatives, beware, because your prospective agent may not be very experienced. Look for a track record of satisfied clients that are happy to provide referrals. While you may want to help a new agent break into the business, that may not be in your best interest.

Check for license and disciplinary actions.

Licensed real estate professionals are regulated, and if they have been disciplined, there will be a public record of this. Some ways agents get in trouble are:

  • Forgetting who they represent.
  • Co-mingling client funds.
  • Seeking kickbacks from lenders.
  • Showing incompetence.
  • Forgetting that the interests of the client should come first.

Ask about professional awards.

OK, so million-dollar club status is not that hard to obtain, but awards do show that agents or Realtors have sold some properties.

Here’s a rundown from another experienced professional:

Select an agent with the right credentials.

If agent Paul Johnson sold your wife’s office building, that doesn’t guarantee that he knows anything about residential real estate. Similarly, an upscale Realtor that specializes in the Milwaukee suburbs may have a tough time understanding how to sell an inner-city property.

Realtor Credentials

Find out how experienced an agent is.

How many clients? How many closings? How many accepted offers? How many failures? How many rejected deals? Ask these questions.

Look at the agent’s current listings.

If your prospective agent’s listings are all rural farmland, and you have a downtown condo to sell, you may have the wrong person.

Gauge the agent’s knowledge of the area.

Does your agent know the schools? The shopping areas? The crime rates? What the last 10 sales have been? A negative answer means you should look elsewhere.

Getting It Done

Most of all, you need to find someone that can get the job done. We at C4D are like that, because we specialize in MN contract for deed financing. We love traditional mortgages, but if you can’t get one, tell your Realtor to contact us ASAP. We can help where others have failed!

MPLS real estate

Minneapolis Real Estate Market: Where We Stand

 1000 500 Sam Radbil
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We’d like to get technical this week about the Minneapolis real estate market and summarize the comprehensive and extensive report from the Minneapolis Area Association of Realtors.

While of course what’s happening in the Minneapolis real estate market doesn’t exactly mirror the entire State of Minnesota, it does give us a clear picture of what is going on in our region.

Interest Rates

Minneapolis Real Estate Interest Rates

The Federal Reserve moved again, and raised interest rates for the seventh time since 2015. This second 2018 rate hike raised rates by another 0.25 percent. While this didn’t immediately increase the 30-year mortgage rate, rates will inevitably rise.

New Twin Cities Listings

  • New listings decreased 2.7 percent to around 2000.
  • Pending listings also decreased 4.1 percent to around 1400.
  • Inventory decreased significantly by over 18 percent.

New Listings Minneapolis

What Happened in May?

May was a strong sales month for the Minneapolis real estate market, however, as the median home sales price increased 8.4 percent to $271,000, while days on market decreased 9.6 percent to only 47. The all-important supply figure—in other words how much inventory is available—fell a whopping 12 percent to 2.2 months.

Minneapolis Real Estate Market Trends

Minneapolis Real Estate Trends

So what do these trends mean for the MN Realtor? First, interest rates are on their way up. Mortgage guru Rachel Witkowski recently said:

“Here are several predictions from the largest housing and mortgage groups for the 30-year fixed-rate mortgage:

  • The Mortgage Bankers Association predicts it will rise to 4.6 percent in 2018.
  • The National Association of Realtors expects it be around 4.5 percent at the end of 2018.
  • Realtor.com says the rate will average 4.6 percent and reach 5 percent by year-end.”

When rates near the five percent mark, two things can happen. Buyers can become nervous and there can be increased activity as they worry that their buying power may soon be diminished, but after a sales flurry, home prices can begin to decrease because that ethereal buying power actually will dwindle, and this will result in less demand.

Ride the Minneapolis Real Estate Market Wave

As a savvy Minneapolis Realtor, you can use these trends to your advantage as you can nudge buyers into making offers now before higher rates injure them, while at the same time you can counsel sellers to take offers quickly as their homes could be less valuable in the near future.

When It Does Happen

If you’ve been in business for a while, you know that tough real estate market conditions will reoccur. Whether this happens late this year or early next year, higher interest rates = lower stock prices = a weaker economy, and that all can pressure home prices. If a recession does occur, monetary policy will undoubtedly tighten, foreclosures will increase, and financing in general will become more difficult.

And you also know that your clients are going to start looking at charts like the one below from howmuch.net. They’ll want to know what they can actually afford. So, be prepared to guide them into making smart decisions.

Remember Us

This is when you need to realize that we at C4D can make deals happen when others cannot. As your MN contract for deed experts, we strive to find ways to take your marginal deals and get them approved. We have taken many hard working but credit score challenged individuals from renters to owners. Please contact us and see what we can do after the bank has said no. You may be pleasantly surprised!

2018 Realtor Tips: Handle Rising Interest Rates

 1000 500 Sam Radbil
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Rising interest rates in real estate — sounds awful for both homebuyers and realtors, right? Well, you’re in the right place find out. Below, the C4D Crew will outline what factors influence interest rates and what rising interest rates mean for the real estate industry.

The 2008 housing crash was hard enough to deal with. Besides the record foreclosure numbers, Realtors had to deal with very tight lending conditions along with a new and stringent set of government banking regulations. Gone are the days of wild west type appraisals and easily obtained no income documentation loans. While this period has been replaced with a mortgage market some would call the “new normal,” there is an evolving twist MN Realtors now must deal with.

Rates Are Going Up

Mortgage rate predictions for 2018 and 2019

Agency

2018 Prediction

2019 Prediction
Mortgage Bankers Association 4.9% 5.4%
Freddie Mac 4.6% 5.1%
Fannie Mae 4.5% 4.5%
Realtor.com 5.0% No forecast
National Association of Realtors 4.5% 4.8%
Kiplinger 4.7% No forecast
National Association of Home Builders 4.5% 5.0%

Early in the recovery, nicely qualified buyers could actually get 30-year traditional mortgages at rates around 3.25 percent. Now, rates are nudging up to the psychological five percent barrier. Simple math shows us that a $200,000 mortgage at 3.25 percent costs $870.41 per month. At five percent, however, the payment jumps by $203.23 to $1073.64.

To get that payment close to $870.00 with a five percent interest rate, the mortgage amount needs to drop to $165,000. This is a significant 18 percent drop in purchasing power. In other words, a buyer that could have qualified for a $200,000 mortgage at 3.25 percent, now may only be able to finance $165,000.

What Do Rising Interest Rates Mean?

CNBC reported in February:

Sales of newly built homes are falling, and the culprit is clear. Homebuyers increasingly can’t afford what they want. Higher mortgage rates, combined with the loss of homeowner tax breaks in some of the nation’s most expensive markets, are taking away buying power.

Home Sales

Image source: Redfin

Sales fell in December, when the new tax law was signed, and then again in January, when mortgage rates moved higher. Sales are now at their lowest level since August of last year.

“It seems that the jump in mortgage rates in January had an immediate impact on contract signings,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “You can’t get more interest rate sensitive when it comes to homes and cars with the associated cost to finance.”

What Realtors Can Do

Savvy Realtors need to understand that while upward interest rate trends can be an issue, there are some ways this situation can be managed. Sellers can make things easier by offering to pay closing costs buyers certain remodeling credits, or of course lowering sale prices.

Rising Interest Rates Loan Rejection

Buyers may need to rethink their plans for an ultimate dream home and take an intermediary step instead of a final one. Maybe that $350,000 home will have to wait and a $240,000 will have to work for now.

Make It Happen Now

The upward interest rate trend is no secret, however, and Realtors should push both sides to get deals done before rates rise even more. Lock in today’s rates as soon as possible as each Federal Reserve interest rate hike will do more damage to the housing market.

Consumers Getting Priced Out?

Family Buying A Home

In a rising interest rate environment, more consumers are going to be priced out of traditional mortgage financing, and this is where we at C4D can help. Using MN contract for deed, we make deals happen that banks have refused. We understand bad credit issues, and we want to help ensure that good people that may have had some financial issues are able to become homeowners. Don’t give up on your rejected traditional mortgage deal; instead, bring it to C4D and we will see if we can help.