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Attracting Credit-Challenged Buyers

Muncy Flyer Updated

That is my new flyer attracting “Credit Challenged” buyers to my Modesto Property

As you can see I decided to shift my marketing focus. I took down the “honest sign” and removed the old “honest flyer“.

Here is the newspaper ad I am using. It cost me $350 for 9 days. Ouch! It better work, because I am down to my last few bucks. And I don’t know where my next paycheck is coming from.

muncy-newspaper-ad

And here is the craiglist ad:

Muncy Craigslist Ad

Why The Change in Marketing Strategy?

My first marketing strategy was targeting investors. Being honest about my trouble and showing all my numbers upfront was good. An investors could glance at the numbers and know exactly if they can help or not. However, the end-user buyer doesn’t really care about if I am facing foreclosure. They just want a nice house to live in – that they can afford.

Also being too honest about facing foreclosure may back-fire with end-users. They may feel uncomfortable dealing with me. They may think I’m desperate and just trying to dump the house. They might think there are problems with the house, or something else is wrong.

Why Credit Challenged buyers?

I heard somewhere that out of all the willing buyers in the market:

  • 30% are A and B buyers with good credit – can qualify for a loan
  • 70% are C and D buyers who have credit issues and cannot qualify for a loan
  • Very few sellers offer owner-financing
  • Very few C and D buyers are savvy enough to ask for owner financing

This 70% crowd is usually the first-time buyers. They have had issues with their credit and have been renting for a while. Now they are trying to fix up the credit, save a little money are looking for a way to buy.

Some of them are second-time buyers. Maybe they lost a house to foreclosure or had to sell due to a divorce or some other bad situation. In fact I will be a “credit challenged” buyer myself, now that my credit has been ruined. So I know how a person feels in this situation.

Credit-challenged buyers are motivated buyers.

They are tired of renting and are ready to buy! They want the “American Dream” too. They just need a little bit of help. Someone needs to show them how they can get financing and get into a home.

These buyers are not too picky about the house or the price. They don’t have the luxury of bank financing like A&B buyers. Even when the real estate market is down, these buyers are eager to buy.

So if it’s true that there are many more credit-challenged buyers, I need to focus on them. That would be my highest bang-for-the-marketing-buck.

I will offer owner financing of some sort. Either All Inclusive Trust Deed like on my Utah property, or Lease Option (Rent to Own) or something else creative.

Traditional financing too…

I will be reviewing each person’s credit score with my mortgage broker. If we can find a way to finance the buyer then we’ll skip all this owner-financing and go straight for a bank loan. It’s better for everyone. I will be cashed-out and the buyers will own the property with no strings attached.

If their credit score is not high enough for 100% financing I may offer to carry back a 10% second. It’s much easier to qualify for 90% loan. I don’t mind collecting payments until they can refinance me out. Whatever works.

I suspect that some of these people don’t have a good mortgage broker and don’t even realize that they can get financed by the bank. That’s where I will help them with my experience. I have done plenty of creative financing this year. Might as well put my connections and knowledge to good use. And do it legally and above-board, of course!

So I’m shooting for a win-win here: I get to sell my house quickly. A credit-challenged family gets their dream of home ownership. Everyone is happy!

Yes or Yes?

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