If you’re like most people selling their home you want the buyer to pay cash. The traditional way for buyers to do this is to get a loan secured by a mortgage. But this is not the only way to sell the prospective buyers.

There are three categories of sale:

• conventional,
• unconventional
• and financial distress.

This is the first way to sell, but believe it or not a straight sale may not be your best option.

• Rent – Even with the 2001 tax changes that permit you to avoid paying taxes on capital gains from the sale of your personal residence (you’re permitted up to $250,000 if you’re single and $500,000 if you’re married) this may not be the best way to dispose of your house. In fact you may not want to dispose of it at all. If you have a lot of equity in the property, you may consider refinancing and renting the house that will not only put cash in your pocket, but provide for a continuing source of income. There are many services available today to help check the backgrounds of potential renters. You’ll gain from various tax write offs that are only available to investment property owners.
• Out Right Sale – this is what most people think of when it comes to disposing of a house. Find a buyer, negotiate a price and receive cash. It’s a very good way to move on to your next property. But this conventional method carries with it the costs attendant with a well-established process with all of the ancillary businesses and requirements that develop with any business enterprise over time.

Sometimes you need to think outside the box. Maybe you have a buyer that, after you’ve checked them out, has everything it takes but has some problems with their financial history. They’re ready to buy, they have steady jobs, they just can’t get bank financing. What do you do?

• Seller Financing:
  • Land Sale – one option is a land sale contract; in a land sale the seller retains title, just as a bank would, and the buyer agrees to a down payment and monthly payment that not only covers the PITI (principal, interest, taxes and insurance) but a little extra that goes into the sellers pocket. The buyer gets to take the tax advantage of mortgage interest paid and taxes. The buyer pays for a certain period – two to three years – and at the end of that time will have built up a steady credit history to convince the bank to grant a loan. If the buyer decides not to buy the seller returns the down payment and everybody moves on. The buyer consummates the sale the down payment is credited towards the purchase price and the deal is closed.
  • Lease option – a lease option is similar except that the option payment is not refundable. The buyer is paying for the right to purchase, but hasn’t actually purchased the property. In this case a portion of the buyer’s monthly payment is credited towards the future purchase as opposed to the down payment being credited in a land-sale contract; and the buyer does not get any of the benefits of ownership, such as tax write-offs. However this arrangement permits some one with bad credit the opportunity to demonstrate that he or she has taken steps to handle credit responsibly that increases the likelihood of getting a bank loan.
• Trade – strange as it may seem trading (also called bartering) is still around. Maybe the simplest thing you can do is trade your property with some one who has property that meets your needs. For a contract to be binding at least one of the parties must receive something called consideration – that is, I gave you something of value to get something I want. In this case the consideration is mutual each party offering to the other the property that they want to dispose of in exchange for the property they want.

What if you, the seller, are in a bind financially and you need to dispose of your property; foreclosure has a deadly affect on your future ability to get credit and make important purchases such as homes or cars.

• Pre-foreclosure – this is the stage of foreclosure where the bank will still work with you to catch up and start again. Here is one of the places that real estate investors can help. We are able to bring financial support to the table in the form of knowledge and money. A good investor will determine what your status is and what needs to be done. Generally people get into trouble when they buy a house that is more than they can afford. The investor will work with you and the bank to stop the foreclosure property and will then take over payments. The seller moves out of the house and on with his life and when the investor sells the property the seller not only gets a portion of the proceeds, but, having avoided a credit damaging foreclosure can begin to look for a home that he can afford.
• Foreclosure – Okay, maybe you let it go to far; but that doesn’t mean that the inevitable is – well, inevitable. You can still recover by working with an investor to dispose of your house at a higher than foreclosure price. It won’t be as much as if you didn’t have bank problems or even as much as you would get from pre-foreclosure. But let me tell you, if the bank takes it the end result will be a sale at rock bottom prices AND you may still be responsible for the difference between what is owed on the mortgage and how much the bank got.