With any soft real estate market the seller needs to be more flexible to move the property. If a seller is motivated to sell and tells the world through say an Multiple Listing Service (MLS) and is offering to pay all the buyers closing costs and prepaids and perhaps hold a second mortgage will generate lots of buyer activity. Assuming a natural market exposure has already taken place with no offers resulting then drastic measures have to be considered by a seller. Perhaps the house is now vacant. The sellers by necessity have moved on and need to sell. A series of price reductions resulted in still no activity. Fortunately, the seller’s had made a good purchase five years ago and have some equity to play with. Buyers and/or their agents looking for real estate opportunities need to look for such a situation as with a vacant home, on lock box, lower or not mortgage with perhaps a series of price reductions in the past say 60 days all screams “motivated seller here”. Many buyers who have jobs and means to make monthly housing expenses have for what ever reasons have lousy credit. Sometimes bad things happen to good people. It could have been a recent forced job change, family illness, auto accident, death in the family causing a one or two month interruption in the family cash flow. Credit FICO scores plummeted in the lower 500 range. Things are turning around now, but the challenged credit history remains. What to do? If a family does not wish to wait two years to turn their credit around there are several possibilities. With these lower scores many B/C Subprime Mortgage Lenders will allow anywhere from 80% to a 95% Loan To Value Mortgage. At the same time these mortgage lenders may allow a 100% Combined Loan To Value (CLTV) mortgage with the seller holding a second mortgage for the difference. Mortgage markets change all the time based on secondary mortgage experiences with foreclosures and slow payment histories. Right now, this scenario is possible in this current slow real estate market. In addition, the lenders will allow the seller to pay in many cases up to 6% of the contract sales price for the buyer’s closing costs and prepaid expenses such as the annual hazard insurance premium and escrows for the taxes and insurance. In some cases, these credit-challenged buyers using this financing technique can buy a property with little out of pocket. In the past, these buyers may have been kicked to the curb and told to come back when they have some money saved and improved their credit. This does not have to happen today, at least by mortgage brokers who know their products. Buyers need to seek and qualify Realtors and Mortgage Brokers who are willing to go to the wall for them to get the deal done.

Previously, in the red-hot peaking real estate market, this flexible seller help was not existent. Now it is possible with rising housing inventories and motivated sellers that have to act. Opportunities now exist for buyers with challenged credit. It could have been done before, but the buyer would have needed at least 5% down or more and pay for all their closing costs and prepaids. In most cases, having just gone through the financial wringer, no cash was available for this. A minimum of a 580 credit score is needed currently for an 80/20 100% CLTV Combo loan. With the market change, other financial options are available for credit challenged buyers like the seller held second mortgage.

Dale Rogers is a thirty-year mortgage veteran and frequent contributor to the Broken Credit Blog. The BCB is a free website created to assist the general public with information about credit repair and responsible mortgage lending. www.BrokenCredit.com www.sellerhelpsbuyer.com