In the dynamic and ever-changing world of real estate, agents face a slew of challenges. Some of these challenges can’t always be overcome – at least, not the traditional way.
From discerning the needs of buyers to negotiating contracts and everything in between, all that you do as an agent is to get you closer to one goal: closing each contract successfully.
The ability to navigate any challenge thrown your way is what distinguishes average agents from the truly successful. Your ability to overcome and adapt is the #1 determiner of any agent's career success.
That’s why every real estate agent needs to know about this industry game-changer:
Creative financing.
I’ve talked endlessly about how to use creative financing – and if you need to know the basics of where to start, I’m giving out a FREE eBook next week called “HOW TOP PERFORMING REAL ESTATE AGENTS MAKE MORE MONEY THAN YOU DO”.
It's ABSOLUTELY crucial, however, to understand why mastering creative financing can set you apart in the industry. If you can’t stand out, you won’t be able to help your clients OR make money. In just 2020-21, 156,000 people joined the ranks of already operating real agents.
It’s even been said that only “as few as 10 percent” of these new agents will last long enough to make a full-time living selling homes.
Ouch.
So, if you want the realtor's license you paid all that money for to actually make you some money in the future, then you need to prioritize mastering the skill set that is creative financing.
Why? Let’s unpack it together…
1. You’ll make more money
For most real estate agents, commissions are their primary source of income.
So then, the equation is simple: the more deals you close, the more money you make.
Traditional financing methods can sometimes result in lost deals due to issues outside of your control as an agent, such as a buyer's credit history or the inability to meet strict lending requirements.
Creative financing, on the other hand, can offer solutions that bypass these issues, ensuring you close more deals and consequently increase your income.
2. Faster Closing Times
The conventional path to closing a real estate deal can be a long drawn-out affair, particularly when relying on traditional financing options.
Not only does underwriting, employment verification, debt ratios, account collection and everything else involved in traditional underwriting make buyers nervous - it also takes forever. This waiting game isn’t just nerve-wracking for the parties looking to close, it also keeps agents from moving on to the next opportunity.
Creative financing can expedite this process.
Whether it's structuring seller-financing options or tapping into private money sources, these strategies can often lead to faster approvals and quicker closing times.
A faster turnover rate allows agents to work on multiple listings and serve more clients in a shorter time frame.
3. More Contracts Closed
How many times have you as an agent seen a contract fall apart at the last minute due to financing issues? Probably more than you’d like to admit huh?
The frustrations that come with these scenarios are all too familiar in the industry. Creative financing reduces the chances of these setbacks. By offering flexible solutions tailored to the unique financial circumstances of the buyer AND the seller, creative financing almost guarantees a higher success rate in closing contracts.
4. Solutions for Homes with No Equity
A HUGE hurdle in the real estate market is homes with little to no equity.
Traditional lenders are often hesitant to finance these properties, which can lead to stagnant listings, disappointed sellers and lost or expired contracts . Creative financing can provide a lifeline in these situations.
Whether through lease options, subject-to deals, or other creative structures, agents can craft solutions that make these homes attractive to buyers, allowing them to close deals they might have previously thought impossible.
And using these solutions, your sellers won’t have to come out of pocket just to get out of a property they don’t have equity in.
5. Happy, Returning Customers
Success in real estate isn't just about closing a deal; it's about building relationships and trust.
When agents use creative financing to help clients achieve their dreams against all odds, they're not just closing a sale – they're creating a loyal customer for life.
A study recently found that 88% of all homeowners said they would use their real estate agent again if they bought or sold a home… but only 12% became returning customers!
How many returning customers do you think you’d have if you were the only agent out there that could solve their problem? You’d be among the 12%.
Customers who recognize you as the problem solver and as among the very few who can help them are more likely to return for future real estate needs and refer their friends and family, further expanding an agent's clientele.
By being adaptable in the real estate world, agents set themselves apart from the competition. This expertise not only positions you as an innovative problem solver but also a leader in the industry.
Clients will be drawn to agents who showcase an array of skills and solutions, ensuring you're their first call when they're looking to buy or sell. THis puts you ahead of the competition and may even result in your peers turning to you to close the deals that they can’t.
While the intricacies of creative financing can seem confusing to real estate agents at first…
The overarching benefits are clear. And they’re easy to learn with the right resources.
For real estate agents, adapting and learning these strategies is no longer just an added advantage – it's becoming a necessity.
In an industry where the landscape is continually changing, being versatile and proactive can mean the difference between a career that’s standing still and one that's thriving.
By embracing creative financing, agents can ensure they're not just weathering the challenges of the real estate world but thriving amidst them. And, in the end, isn't that the goal? To be the best advocate for our clients and pave the way for a brighter, prosperous future in the industry.