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Should Boomers Consider Encore Careers?

encore-career

David Bowie dies of cancer aged 69

The Eagles’ Glenn Frey dead at 67

For anyone in the middle of the Baby Boom generation (like me) these headlines hit like a ton of bricks.

Not just because we grew up listening to their music and they were rock icons but more importantly because they were our age and they died of natural causes. 

It’s one thing to hear about a star dying of an overdose or plane crash which could happen at any age…

… but when they are our age and dying of natural causes that is when our own mortality finely becomes real.

Until then  we all think that we are still invincible…

… still have more time ahead of us…

….still think there’s plenty of time to change direction…

…and we can one day do what we were always meant to do, right?

Eventually, though, we’ll be faced with the reality of how few precious years we really do have left.

Rest in Peace Harry Brockwell:

Harry

Harry Brockwell, 77, passed away on Dec. 26th with family at his hospital bedside.

Who’s Harry Brockwell and what’s he have to do with the other two? 

Before you start to think that this article is a downer pointing out that we’re all headed to the final stop at the pearly gates let me assure you it’s just the opposite. 

Before I tell you about my friend Harry let’s agree that both Davie Bowie and Glen Frey had incredible lives and got to live their dream.

That’s exactly what they have in common with Harry.

Living Your Dreams Can Come Later in Life:

older-workers-technology

I met Harry over 30 years ago when I was a young salesman entering the “information systems industry.”

(That’s the fancy word we used to use for cash registers)…

Harry had been a veteran “C- level” manager in several companies during the cash register days. When the industry moved to new microprocessor technology and started changing at lightning speed many guys like him were pushed to the side. 

(Sound familiar?)

Harry was a great salesman but his heart was never in to what he was doing.

At about 50 years old he was out of a job and had no prospects for regaining a position in the same field. 

I asked what he planned to do and he said with a very confident smile,

“I’m going to do what I’ve always loved, I’m going to cook…”

Second Careers Usually Happen When You’re Out of Options:

Second-career-choices

Harry told me this he had taken some cooking classes but had no formal culinary education…

That meant he had no prospects of getting a job as a chef. 

He said that he was going to take over the fast food concession at one of the local state beaches (which only have business in the summer) and become a restaurateur. 

After all, he told me, what did he have to lose (other than money ) if it didn’t work? 

“When you think about it,” he continued, “I really have very few other choices… so I have no excuse to not do it.” 

I thought he had lost his mind…

Here’s What Happened to Harry

encore-careers

When life pulls you in different directions you sometimes lose touch with people you meant to remain in contact with. 

Such is the case with Harry and me when I moved from that area and seldom returned to visit.

I hadn’t seen or heard anything about him for 25 years until I received his obituary from a mutual friend. 

When I read it I was at once filled with a feeling of sadness at the fact that a friend had passed…

… but more importantly I was overcome with a sense of celebration for the way he lived.

Through those years I would sometimes think of Harry toiling away at the concession stand barely eking out a living and feeling sorry for him. 

Boy was I wrong!

And now – as the radio host Paul Harvey used to say – I’ll tell you the rest of the story

whats-your-story

Here’s the rest of Harry’s obituary, he lived his dream and because of that had very successful and fulfilling life:

Here’s the rest of Harry’s obituary, he lived his dream and because of that had very successful and fulfilling life:

“Harry worked in a multitude of positions in sales and general management while employed with various companies throughout the U.S. and Canada. His love of cooking led him into the culinary arts and after many years of work and service was inducted into the American Academy of Chef’s Hall of Fame in 2014. Harry was president of the Ventura Chef’s Association twice, and twice chapter Chef of the Year. He was awarded his chapter’s Lifetime Achievement award for his unwavering commitment to the food service industry. In 1997, he was the ACF Western Regional Chef of the Year. He supported culinary-education related programs by performing site visits to ACF accredited postsecondary school programs, and evaluating certification applicants. He also served as an on-site visit inspector for various military food service competitions. He was ACF Western Region Vice President 2005-2009 and was recognized for his monthly newsletter. In 2012 he received The American Academy of Chef’s Larry Conti Chair achievement award; ACF Presidential Medallions in 1993, 1994 and 1998 and was a 2012 recipient of an Antonin Careme Medal from the Careme Society.”

Bravo Harry

You made your life worthwhile.

Thanks for showing its never too late.

Steve Jobs Leads by example:

Commencement speech that speaks to  doing what is important to you…

These are 2 quotes from Steve’s commencement speech that spoke to me:

  • For the past 33 years, I have looked in the mirror every morning and asked myself: ‘if today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘No’ for too many days in a row, I know I need to change something.

 

  • “I didn’t see it then but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure of everything.  It freed me to enter one of the most creative periods of my life.” 

Encore Career is not synonymous with “Mother Theresa Syndrome”

sneiors-doing-volunteering

Don’t be fooled into thinking that finding a new purpose in life needs to include philanthropic activities.

Every book I’ve read on the subject talks only about the corporate suit who quit but then went into managing a non-profit…

…or the bookkeeper who quit to go into become a social worker in the underprivileged areas. 

While that might be a noble thing to do and fulfilling for them, could you imagine Steve Jobs donating his time at the local computer club rather than spending it creating products that changed the world? 

For that matter, I can’t imagine Harry Brockwell spending his time delivering meals on wheels to the elderly, (it just wasn’t his thing).

Finding what you really want to do and then doing it is what matters. 

When you do something well because you enjoy it, others usually benefit as byproduct.

Two more favorite quotes from another genius:

einsteen

 

  • “Insanity: doing the same thing over and over again and expecting a different result.”
  • “We cannot solve our problems with the same thinking we used when we created them.”

The most important action to take is to take action. 

That might sound ridiculous ...but the number one reason for not living your dream is the paralysis caused by the thought of changing our routines, the thought of living outside of our comfort zones for a while and the lack of knowing where to begin. 

We’ve spent our lives doing what we done and so it doesn’t take much thought or effort to just keep doing it.

Change is so traumatic for us we usually only do it when we have no other choice such as being fired like Harry and Steve. 

Whether change is forced on you or you’ve found the courage to jump off the cliff before being pushed taking that first step in the most important. 

Things usually start to fall in to place after that.

Planning can eliminate the fear: 

business failed

In my case I had both the scenarios.

For ten years I had a very successful business that kicked out a lot of cash flow and I could imagine a day when that cash flow was so automatic that I could retire and just collect checks and take them to the bank. 

In the mean time I was so bored out of my mind that I remember thinking, “the best thing that could happen to me is to lose this automatic base because it would force me to take action, and that action would be in a different direction.” 

Well the phrase – be careful what you wish for because it just might come true – is exactly what happened. 

Within a very short time the business crashed and my thoughts of simply driving to the bank every day to deposit checks was replaced with, “oh shit, what do I do now?”

crash and burn

 Like a pilot experiencing engine trouble I went into automatic mode.

  1. Trim the plane to maximize the glide. Translation – cut all unnecessary expense and limit the outgoing cash burn to as little as possible.
  2. Look for the closest safe landing spot. Translation – look for the next thing you’d like to do and point yourself in that direction.
  3. Breakout the emergency equipment and rations to survive on. Translation – liquefy equities and turn them into cash with a plan of how long that cash will last.
  4. Once down on the ground immediately get busy working the survival plan. Translation – Don’t hesitate, move forward with the plan immediately and stay on budget.

My planning made it clear that I would need about two years without an income before the new direction that I had in mind would start turning a profit that I could count on. 

Additionally the project would require an investment so I would need even more capital. 

Fortunately I had plenty of equity in real estate (including my California home) that I could liberate which would provide the means to achieve my goals. 

fund-business-home-equity

 

That’s exactly what I did…

Selling my home in California, moving to Florida, reducing my California living expenses to Florida living expenses and re-deploying my equity into re-directing my life has been the best thing that could have happened to me. 

For me, the answer was selling my house.

If I had been over 62 the answer might have been a reverse mortgage.

Either way the key to unlocking the door to opportunity was the liberation of my equity. 

What’s your plan?

reverse mortgage options

 

fast cash for homes

Reverse Mortgages Sell Your Home

Reverse Mortgage Vs. Selling Home: Which is Better?

Reverse-Mortgage-Vs-Selling-Home

A lot of folks who are at or near retirement need to access their home equity to do so comfortably.

Here’s the first question most people ask:

“Should  I do a reverse mortgage or sell my home?”

In some cases, the answer could be….

Why not do both?

Recently I spoke with Ron in San Jose, California about a reverse mortgage. 

Ron is 65, his wife is close to the same age and both are very ready to retire

Both have good jobs that will pay a pension and Ron estimates that their total combined retirement income will be about $4,000 per month. 

After congratulating him on managing to assure an annual income of $50,000 per year he said…

“but there’s a problem…”

no-money

 

When $50,000 a year is not enough…

Ron and his wife own a home in San Jose with a value of $630,000 and they owe $501,000. 

Their mortgage is $3,000 per month. As Ron put it,

“if I retire with that house payment I’ll be housebound ….there will be no money left to do anything…” 

He said “if I could just eliminate my mortgage payment I’d have enough income to live very well.” 

Equity-needed-reverse-mortgage

20% Equity is a bridge too far:

Ron’s neighbor just did a reverse mortgage and that neighbor was able to eliminate his monthly mortgage payment. Ron thought the same solution might work for him. 

Unfortunately the situations were very different … while it worked for Ron’s neighbor (who had sufficient equity) it didn’t work for Ron. 

Based on Ron’s current mortgage balance his home’s value would have to increase to more than $817,000 for him  to qualify for a reverse mortgage. 

ibis-rm-calc

Let’s take a look at the loan calculator numbers…  

The following is a report of Ron’s actual situation when calculated by the IBIS Reverse Mortgage online Calculator. 

Notice the number ($186,494.90) in red meaning that his equity is short by that amount. 

I realize the rest of the numbers can be a little confusing without an explanation but the important point is to note that in this case, for Ron, a reverse mortgage is simply not an option.

ibis-reverse-mortgage-calculator

 

 

reverse-mortgage-unqualfied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Ibis reverse mortgage calculator is a free online service and I chose it to create this sample because unlike the others you’re not required to enter all of your contact information in order to use it. 

If you would like to find out how much of a reverse mortgage that you would qualify for while being assured that no sales rep is going to pester you after you’ve given your  basic information use this link:

Reverse Mortgage Calculator

http://rmc.ibisreverse.com/

So what’s Ron’s solution?

broke-seniors

Here’s the dilemma:

Ron can’t qualify for a reverse mortgage on his current home, so he’s locked into that $3,000 mortgage payment unless he sells the house. 

But if he sold the house and rented something in the same area his rent would be equal to or greater than his current mortgage payment. 

Yes it’s true that he’d have $100,000 cash in his pocket from the sale proceeds after paying off the loan but with rent of $36,000 per year he’d only have three years before all of his equity was consumed.

Then what?

Ron and his wife are not from the San Jose area originally and really have no ties to that community. 

They are willing to relocate to another area if that means they could live comfortably and have enough money to actually enjoy their retirement. 

Which means… Ron has some options.

The Solution Could be Reverse Mortgage for Purchase

h4p-reverse-mortgage-purchase

In a previous post I talked about using the HECM (aka reverse mortgage) for Purchase (or H4P) to afford a larger or more expensive home…

…but what about using the program to downsize? 

Keep in mind Ron would have about $100,000 cash from the sale of his San Jose house. 

That’s a great down payment on a $200,000 home and the second $100,000 could come from a reverse mortgage for purchase. 

Ron and his wife can live in the home without a mortgage payment and will have the entire $4000 monthly retirement income to pay for expense and have enough left to really enjoy their retirement years. 

That sounds fantastic, right?

Why… aren’t… more… people… doing… this?

Let’s take a look at a study of home buyer’s preference in financing a home purchase:

Only 3% of Seniors Plan to Buy Homes Using Reverse Mortgages

A majority of home buyers over 62 prefer to buy their home using a traditional forward mortgage rather than a reverse mortgage, according to the results from a new survey by the National Association of Home Builders (NAHB). Of 4,326 total responses garnered by NAHB, only 3% of buyers say they would use a reverse mortgage to pay for their new home, whereas 67% would likely use a traditional mortgage, whereas 28% would pay in all cash. Only 2% of buyers said they would use “other” forms of payment.

not-enough-rm-purchase

Really? Why?

The answer is simple. 

There is a perception by both baby boomers and seniors alike that reverse mortgages are inherently bad.  Why is that? 

People naturally feel skeptical about anything that they don’t fully understand and very few people understand a reverse mortgage. 

On the other hand what most people believe they know about a reverse mortgage is usually wrong. 

Wrong-info

For example, the majority of seniors believe that “the bank takes your house when you die” which has never been true. These preconceived ideas are very unfortunate because they keep many people who, (like Ron) could greatly benefit from embracing this vital tool.

Ok… but how is Ron going to replace his San Jose home with something comparable that he can buy without paying a mortgage? 

Well…. he can MOVE...  

Here are 10 locations that work:

The 10 Best Cities to Retire in the US

  1. Prescott, Arizona – Average Home Price: $256,400

If you love the outdoors and a vibrant cultural scene, you should consider retiring in Prescott, Arizona.  Located in the north of Arizona, this old mining town experiences a cooler summer than southern Arizona, helping you steer clear of sweltering summer temperatures.  A booming economy, rich history, and low housing prices make this place a real contender for retirement.

retire-prescott-az

  1. Venice, Florida – Average Home Price: $210,000

Venice is a small retirement community found on the Gulf of Mexico in Florida.  Named after Venice, Italy, this community has many canals and rivers that run through it and has been designed with architectural influence from Italian renaissance.  Calm traffic and low prices mean peaceful retirement and it’s particularly well suited to slightly older retirees.  Parks, beaches, golf, tennis, and proximity to the beach will keep you busy, and proximity to nearby Sarasota will mean you have everything you need.

retire-venice-fla

  1. St. Augustine, Florida – Average Home Price: $208,000

The historic community of St. Augustine, Florida, is a perfect retirement location for history buffs.  The local economy is driven by tourism, so if you’re keen to volunteer and stay an active part of your community, this might be the city for you.  On the north east coast of Florida, this city experiences cooler temperatures than other options in the state.

retire-st-augustine-fl

  1. Beaufort, South Carolina – Average Home Price: $156,700

The quaint, charming southern community of Beaufort, South Carolina, is a prime retirement spot.  This old river town offers plenty of golfing and fishing during the mild winters and hot summers. The military installations in the city solidify the economy and diversify the population – while Beaufort is home to a growing retirement community, there are lots of families here as well.

retire-beaufort-sc

5. Myrtle Beach, South Carolina – Average Home Price: $207,141 

Whatever you are looking for in your retirement locale, from downtown living to a planned community, Myrtle Beach has what you need.  Some of the highlights are the Grand Stand – a huge stretch of pristine sandy beach, trendy shopping and restaurants, low cost of living, great theater, excellent medical care, and enough golf courses to keep things exciting. All these reasons will make you love your retirement life in sunny Myrtle Beach.

retire-myrtle-beach-sc

  1. Abilene, Texas – Average Home Price: $244,295

If you’re looking for an affordable retirement, head to Abilene, Texas.  With cost of living over 10% below national average, this old railroad shipping town has a growing retirement community.  Year round warm weather and excellent recreational and social opportunities for senior citizens of Abilene will keep you entertained and in good company all year round.

retire-abilene-tx

  1. Austin, Texas – Average Home Price: $255,000

This big city offers plenty of activities to keep the retiree busy and engaged.  Home to the University of Texas, this cultural hub boasts a terrific economy, warm weather, plenty of volunteering opportunities, open air art markets, galleries, museums, performing art theatres, low crime, and it’s the live music capital of the world.  With so much going on, this city would be best suited for energetic retirees who aren’t looking for too much peace and quiet!

retire-austin-tx

  1. Boise, Idaho – Average Home Price: $188,700

Boise, Idaho makes a great retirement destination for active adults.  Into biking?  This city was rated one of the best cities to live and ride.  Love the outdoors?  The mountains are at your doorstep, and the river offers whitewater adventures for the daredevil retirees out there.  In downtown Boise, there are many shopping, eating, and cultural opportunities.  Walking paths and low crime rates mean that you will feel confident stepping out into this great retirement city.

retire-boise-id

  1. Palm Springs, California – Average Home Price: $337,500

Located in the Coachella Valley, Palm Springs is one of world’s most famous retirement communities.  The breath taking landscape and rich culture draw people from all around the globe to retire here.  Active retirees can enjoy the golf scene and the nearby Joshua Tree Park, and everyone can enjoy the 350 days of sunshine a year.  Watch out though – summers here are so hot you’ll have to retreat to the air conditioned indoors!

retire-palm-springs-ca

  1.  Salt Lake City, Utah – Average Home Price: $240,800

Nestled into the Wasatch Mountains of Utah and next to the Great Salt Lake, the beautiful Salt Lake City is a picturesque place to retire.  Perfect for the active adult, you can enjoy golf and winter sports galore.  Clean air, booming economy, plenty of volunteering opportunities, and an above average doctor per capita rate make this city a prime retirement spot!  Salt Lake experiences cold winters and hot, dry summers, so skip this city for retirement if you can’t take the cold!

retire-salt-lake-city-ut

Notice that these 10 cities represent every region of the country (other than Northeast) and provide every kind of topography, climate, and life style that you could ask for.

In other words, there is often no reason that you can’t have the kind of retirement that you’ve always dreamed of.

Right?  

reverse mortgage options

 

 

Reverse Mortgages Sell Your Home

Can You Change Careers After 50 or 60? You Bet!

How to change careers after 50 or 60

“Life is what happens to us while we are making other plans.”
— Allen Saunders:

Do you resemble Allen Saunders’ quote? 

Did your dreams for life not match your experience? 

Here’s what I dreamed of doing in my 20’s:

after 55 you should have work you love

The year was 1969.  I was 13 years old when the movie Easy Rider hit the movie theater. 

It was the typical Rebel Without a Cause genre with the added effect of a cross country journey on the open road. 

I was hooked and immediately began plans for a similar journey in 5 years directly following high school graduations. 

What I actually did in my 20’s:

american-dream-job

By 20 my dreams were replaced with a different life path…

Here’s what I actually did:

  • I married my high school sweetheart…
  • had 2 kids…
  • bought a home…
  • …and settled on a career that would provide sufficient income to support what was supposed to be the “American Dream.”

I believed replacing the open road for a back yard, a camp fire for a barbecue, and a Harley Davidson Motorcycle for a John Deer ride on lawn mower was the key to finding happiness. 

The problem I had is that my career in sales while economically rewarding was otherwise not very fulfilling. 

What I didn’t realize at the time:

I was typical of the average Boomer… the majority of us hated our jobs.

Gallup Poll finds 70% hate their job:

Gallup has been diligently measuring employee satisfaction rates all over the world. In their most recent survey for 2014, over 80,000 adults were surveyed, resulting in a staggering statistic: nearly 70% of American’s hate their job.  Employees have shouted from the rooftop that in order to love their jobs they need to find purpose, meaning, feel useful and use the skills they were given in a positive way.

That’s why so many of us dream of the day that we can retire. 

Because we see retirement as the day we can actually stop doing something we hate to do. 

But do we really want to stop working for 30 years to go play golf? 

The answer is overwhelmingly NO

We just want to finally do something we “like to do” instead of something we “have to do…”

In fact… most of us NEED to keep working…. but…

Americans seek meaningful work in the second half of life

A MetLife Foundation/Civic Ventures:

Survey conducted by Peter D. Hart Research Associates, Inc. from February to April 2008, involving 1,063 phone interviews and 2,522 online interviews.

Income and benefits are important now but will become even more important to boomers in the years ahead.

Younger boomers (79%) are more likely to say they plan to work longer because they need the income and benefits than pre-boomers (64%). Given the disappearance of traditional pensions, the escalating costs of health benefits, and the lack of adequate retirement savings, it’s easy to understand why.

Those in encore careers are having a good experience. Their message is that the encore career is, on balance, fulfilling and worth pursuing. More than eight in 10 of those in encore careers (84%) say they either get a “tremendous amount” of satisfaction (38%) or “quite a bit” of satisfaction (46%) from their encore careers. A similar percentage (94%) of those in encore careers say that it is “definitely true” (54%) or “somewhat true” (40%) that they have seen the positive results of their work and know they are making a difference. The vast majority indicate they have the income, benefits, and flexibility they say they need.

See full report:

https://www.metlife.com/assets/cao/foundation/Encore_Survey.pdf

What the heck is an Encore career?

The phrase “encore career” was first made popular by Marc Freedman, the founder and CEO of Encore.org in his book Encore: Finding Work That Matters in the Second Half of Life.[1]

An encore career is work in the second half of life that combines continued income, greater personal meaning, and social impact. These jobs are paid positions often in public interest fields, such as education, the environment, health, the government sector, social services, and other nonprofits. Encore Fellowships, created in 2009 by the nonprofit Encore.org, are designed to transition highly experienced professionals from the corporate sector into encore careers in the social sector.

What if you don’t know what you want to do as an Encore career?

Good question…

I asked exactly that same thing. 

Here is a resource that I found very helpful:

encore-career

https://lifereimagined.aarp.org/

Life reimagined is a tool provided by AARP that helps you discover (or uncover) the career path that would be best suited to helping you find real happiness and fulfillment in your 3rd chapter of life. 

The website also offers video interviews hosted by Jane Pauley that show boomers actually living the dream. 

Here’s one of my favorites:

Top 7 Regrets of People Who Are Dying

Here’re the top regrets of people who are dying and how we can use them to live a more fulfilling life.

  1.  I wish I had lived my own life rather than how society taught me to live.
  2.   I wish I discovered my purpose earlier.
  3.   I wish I had taken more risks.
  4.   I wish I had taken better care of myself.
  5.   I wish I’d allowed myself to love.
  6.  I wish I had touched more lives and inspired more people.
  7.  I wish I had been a better partner or parent.

The question is…

Is it too late to make the changes to eliminate these regrets? 

The answer is NO…

…you probably have 20 to 30 more years left in an Encore career if you start today…

Encore Careers: Civic Ventures Study Finds Transition Is Tough

Laura Rowley laura.rowley@huffingtonpost.com

Financially, more than two in three respondents who are already in encore careers experienced gaps in personal income during the process. One quarter said they earned no money and 43 percent said they earned significantly less than they had at their previous jobs.

Of those who experienced time with little to no income, nearly four in five respondents experienced a gap of six months or more; 36 percent said their income gap lasted more than two years.

At 50, Rogers was laid off after 18 years as a director of software engineering for a corporation. She had been an active volunteer with the Alzheimer’s Association and wanted to move into the non-profit sector, but was rebuffed for lack of experience.

Rogers attended a three-month program focused on helping seasoned professionals transfer to the nonprofit sector, followed by a two-month fellowship. That paved the path to her new job, in which she helps 220 families in one of Connecticut’s largest and lowest-income housing projects with employment, education, childcare and other issues. “The transition wasn’t easy — my husband and I had a substantial reduction in income for 14 months,” Rogers said.

finding-work-after-60

Now for the bad news:

Just as in the example above most of us boomers will face financial challenges with launching an entirely new career.

Whether it’s:

  • the cost of going back to school
  • the cost of living with a reduced income while training, or
  • simply doing something that has low economic benefit in exchange for high psychobiological benefit

The simple fact is, we will probably need to draw on our current assets to support our transition.

In most cases your home equity might be the most valuable resource you have in your arsenal.

(Unless you have a large chunk of cash sitting in the bank or a generous pension from your previous career). 

Liberating your home’s equity could be the catalyst to launching what I call BoomerLife 3.0.

BoomerLife 3.0 is where you finally live the life that you’ve always imagined.     

reverse mortgage options

 

Sell Your Home

How to Sell Your Home Fast to a Cash Buyer

Cash home buyers

Are All Cash Home Buyers The Same?

If you’ve decided that selling your home fast to a cash buyer is the right way to go, you probably have a few questions such as:

  • “How do I decide which is the right one to work with?”
  • “Are they all the same?”
  • “Do they all offer the same purchase price or does that vary from buyer to buyer?”
  • “If it varies, how do I know who’s going to give me the most money?”
  • “Can they really close in just 7 days?”
  • “Are there any “gotchas” to look out for?”

These are just some of the questions that you should be thinking about when you are considering selling your home fast to a cash buyer.

Note:

If you are taking this route rather than listing with a realtor, your home probably needs some work to bring it up to full market value. That means you will be selling to a rehabber.

Here are some answers…

Deciding on the Right Cash Home Buyer

Not all of the people claiming to be a cash home buyer are really able to actually complete the transaction.

The 3 Types of Cash Home Buyers

There are 3 types of cash home buyers

Acquisition Agent

Many buyers have very little cash themselves and are simply an “acquisition agent.” 

An acquisition agent really has no intention to close the transaction, but hopes to “assign” a contract to another buyer who can. While they claim to be purchasing the property, that’s not entirely accurate.

What they are really doing is attempting to place the property under contract and then quickly shop for another wholesale buyer to purchase the contract from them before they actually close the transaction with you. 

It is this second buyer who will actually be buying your home.

The goal of the acquisition agent is to buy your home at such a deep discount that even after adding profit for himself, he can sell to a true rehabber at a low enough price that it makes economic sense to the rehabber.

You can usually identify who these people are by the terms in their purchase contract.

The contract will have a large number of contingencies built in which they call “due diligence”. These contingencies are really designed to give them an “out” if they are unable to find a second buyer before you’re scheduled to close. These are the people who will also offer the least for your home because they need to create a profit for both the actual buyer and themselves.

Acquisition agents will typically offer you the least amount of money for your home since they have to make a profit both for themselves and for the real buyer. 

Note: 

Ask any potential buyer to bring along “proof of funds” with any offer. 

Even if they plan to borrow the purchase money from a lender that they have a business relationship with they should be able to show proof that they have the funds available and can close the deal.

Cash Investors

A cash investor intends to close on the transaction and then hire a contractor to complete any necessary repairs before putting it back on the market.

This buyer is planning to make a profit even after paying the contractor so he will need to buy your home at a deep enough discount to accomplish that goal.

 The amount an investor offers will be pretty close to the amount offered by the acquisition agent we talked about before.  The main difference here is that this guy can actually close the transaction and you don’t really care what happens after that.

General Contractors That Purchase, Repair and Sell Homes

The third type of buyer is one with a general contractor’s license who plans on using his own crew to repair the property before putting it back on the market.

This is typically the person who will offer the most cash for your home because his costs are lower for the rehab work. But that’s not always the case…

 

 

Tips For Selling Your Home Fast

Tips for Selling Your Home Fast

  • Ask any potential buyer to bring along “proof of funds” with any offer. The buyer should be able to show proof that they have funds available to close, even if the buyer plans to borrow money from a lender that they have a business relationship with.
  • Don’t take for granted that the buyer with the contractor’s license can offer the most cash for your home. The acquisition agent has a list of contractors to assign the sales contract to and some of them may actually offer a better price. The same is true for the buyer who will close but hire the contractor as he may have a relationship that gives him costs at about the same level.  The best way to assure the highest price possible when selling your home is to get three bids. Make sure that all three potential buyers know that they are competing against each other so that they give you their best cash offer.
  • Any “real” investor knows how to inspect a property.  They can accurately determine what will be needed to repair the property and how much it will cost . With that in mind, it’s not necessary to make the contract contingent on an inspection. Therefore, I would suggest that you either strike that clause from the contract completely, or require the forfeiture of some part of the earnest money deposit if the clause is exercised.  That will separate the real investors from the pretenders.
  • Make sure you have a good purchase agreement when selling your home. A well-drawn purchase agreement that clearly spells out what each party is responsible for, and when they are expected to do it, should ensure no “gotchas” during the transaction. In most cases, these investors are very reputable business people who would like to buy your home at the lowest possible price without any intention of cheating you.

Here’s the Bottom Line:

The best way to assure the highest price possible is to get three bids. Make sure that all three know that they are competing against each other and to give their highest and best offer.

Selling Your Home Can Be A Process

Selling your home can be a long process

Any fast cash buyer with proof of funds can close the transaction in as little as 7 days but don’t count on it.

Typically the contract will be written with an “inspection clause.”

This clause allows the investor to enter into the sales contract now under the terms and conditions that you’ve agreed to. The inspection clause allows time to bring in experts to confirm the estimations of costs to rehab.

Additionally, it gives you the chance to put together all of the documentation that might be needed from you to facilitate the transaction. Count on something being uncovered during this part of the transaction which might require a modification to the original offer.

For example, if foundation problems are found during the inspection process that were unnoticed before, expect the buyer to want to reduce the price before completing the transaction.

If you have any questions that are not answered to your complete satisfaction, you should absolutely seek council from a local real estate attorney before moving forward with a transaction. I guarantee you that it will be worth the fee in just peace of mind.

For more information on selling your home fast to a cash buyer, call us at (800) 407-5696  or click the picture below:

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Sell Your Home

How To Sell Your Home Fast

selling your home

“Mom’s going into senior care and I need to sell the house fast to pay for it!”

What if staying in the home is no longer an option and you need to sell your home fast for managed care?


Sell Your Own House On The Market

sell your own homeIf your home is in great condition, shows well, and needs no maintenance or repairs, you can command full market value.

Your best option would be to find a realtor in your area who will:

  • Tell you the truth about your home’s value
  • list it, and
  • sell it through the normal real estate channel.

I emphasize finding a realtor who will tell you the truth because many will just tell you what you want to hear to get the listing.

The problem is that an improperly priced listing will linger forever on the market while you deal with markdowns and disappointment.

Nobody needs that frustration…

Any house (and I mean any house) in great condition and priced right should sell within 30 days. If a good house does not sell within a month, something in the equation is wrong.

Since the knowledge of a local realtor can’t be measured remotely, we don’t give any recommendations regarding a specific person or company.

Sell Your Home Fast to A Cash Home Buyer

  sell your home fast

There are some situations where a fast sale to a buyer for cash may be ideal. 

This is particularly true if:

  • Your home has years of deferred maintenance
  • The property needs repairs
  • Appliances are outdated, or
  • Some cash is needed to make the property marketable

Unless you’re prepared to invest the time, money and effort to bring the home up to top dollar standards, your best option is to sell to a cash home buyer or real estate investor.

Investors find houses in distressed condition, and buy them for cash at a discount. They then invest money to renovate the property to sell at a higher value.

It’s important to realize, however, that the property will be purchased at a discount.   


Be Realistic:

If you choose to sell your home fast for cash, it’s important to be realistic in your expectation of value.

Being realistic in the value of your home means understanding that both sides need to get something out of the deal. Of course, you need to get as much money as possible but the investor also needs to make a profit.

Many sellers think that they’re going to discount a home by 10% in comparison to other homes in the area.

selling-a-home-at-a-discount

The convenience of collecting a check and walking away is the reason why you’re asking price needs to be adjusted accordingly.

You save yourself the stress of:

  • Cleaning and preparing the home for sale
  • Choosing a realtor
  • Listing it on the MLS
  • Showing the house, and
  • The anguish of meeting contingencies demanded from potential buyers.

Most importantly, you save yourself from the strenuous and time consuming 120 day process of selling a home.

How much of a discount is selling your home fast worth?

I’m going to show you…..

Anatomy of a Fast Cash Home Deal:

how-fast-home-sale-for-cash-works

Let’s assume that comparable homes in perfect condition…

(Which means new kitchens with granite counters, bathrooms with modern fixtures, flooring with the latest in hardwood, modern heating and air-conditioning units, new double pane windows, fresh paint inside and out, etc.)

…are selling for $350,000.

Now let’s assume that your home needs $50,000 in renovations to match the other homes on the market.

Your “As-Is” value is $300,000 which is the market value minus the renovation, but this would not be the purchase value for cash home buyers.

Remember, the cash home buyer or investor has to purchase the house and, in most cases, pay all of the closing costs including title, and transfer tax that are usually assigned to you the seller.

Additionally he will invest the money to:

  • renovate the property
  • pay the costs of holding it during that process
  • place it back on the market
  • pay a realtor fee when it sells
  • pay all the normal seller closing costs with the hope of making a profit in the end.

How much is all of that worth? Typically, you can expect a cash home buyer to pay 25% less than the going market value and here is what the offer will look like:

  • Maximum selling price after renovation: $350,000
  • Less discount of 25%: <$87,500>
  • Less cost of renovation: <$50,000>
  • Cash in your hand at closing: $212,000

Many people will see these numbers and automatically think that it is unacceptable. 

Let me show you a side-by-side comparison of what you can expect if you do it all yourself.

Would you be surprised to see that the difference between selling your home on your own vs. selling fast to a cash home buyer or an investor with no obligations is only about $20,000?

how-to-sell-home-fast

Now the question to ask yourself is, would you take $20,000 less for hassle free transaction?

As you can see the difference in net proceeds between doing everything yourself ($231,935) or simply selling to an investor and walking away ($212,000) in this example is about $20,000.

If the answer is yes, click the picture below or call us at 800-407-5696.

We’ll provide you with more information on how to sell your home fast and put you in touch with cash home buyers and investors in your area.

fast cash for homes