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Jun 01, 2005

Down payment assistance: preserving the market value of the homeAlisa Allredhome prices, housing market, sales, buyer assistance CNN recently released a report from National City Corporation listing cities in the United States selling homes significantly over and under market value (visit www.money.cnn.com for the full list). Homes sold under market value weaken the housing market and negatively impact sellers, buyers and communities. Down payment assistance programs directly address this problem by providing a way for sellers to sell their homes at full market value, even in a buyer's market. The number one obstacle potential homebuyers face is the down payment. "Someday," is the mantra of renters when asked about homeownership; someday, they will have saved enough for a down payment. When sellers extend a seller-participation down payment assistance grant in the sale of their home, the pool of potential buyers suddenly increases as much as 30 percent. The property becomes available to a much wider range of buyers without undermining the property value. Misti Bishop, owner/broker of Custom Real Estate Services in Fort Worth, Texas, presents sellers with the option of a down payment assistance grant right up front at the selling presentation. "My clients know all of their options right from the start," she says. Since incorporating down payment assistance in her business, Misti has sold 98.9 percent of her properties at the asking priceand business has been booming. "Not everyone knows about this [down payment assistance]," Misti continues. "It has given me the edge in the real estate market." When sellers agree to participate in a down payment assistance program, they agree to sell their house for up to the full market value while offering to cover out-of-pocket expenses for the buyer through a grant from a down payment assistance program (DAP). The seller also agrees to replenish these funds by making a donation to the DAP in the amount of the grant plus a seller's contribution fee, usually ranging anywhere from $395-$795. This donation allows the DAP to continue providing housing grants to future homebuyers. Patrick McCarroll, a loan officer at CTX Mortgage, advocates the advantages of down payment assistance to both real estate agents and home loan officers. Patrick tells real estate professionals, "Utilizing down payment grants can increase your business by 20-30 percent a year." He also points out that, typically, after 30 days on the market, the price of a home drops by an average of five percent. Real estate agents whose clients extend down payment assistance sell their home faster without dropping the asking price. Homebuyers benefiting from down payment assistance enter a home in better financial condition. Down payment assistance allows them to start building equity immediately. For stronger buyers and successful sales, down payment assistance makes the home sale transaction a win-win situation for everyone. Alisa Allred is director of community building at Esther Foundation. She may be reached at (877) 493-2539 or e-mail [email protected].
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Jun 01, 2005
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