As most of us know, one of the toughest things to overcome for our buyers is the down payment. Especially when that down payment needs to be verified. I have on two occasions now successfully overcome this problem both legally and ethically. This is how I do it:
As I get calls from prospective buyers, I find out how much money they have to put down. When I have someone who seems to be creditworthy but does not have down payment money, I tell them about my “Earn your down payment program.”
I ask my prospective buyers if they are handy. If they say “yes,” I ask if they would want to do work to their own home on the weekends, and I will pay them for their work. I tell them that I will put the money into an account for their down payment.
Actually I write a check out to them stating that it is for repairs. I go with them to my bank as they cash the check and buy a cashier’s check to give back to me. We make a copy of the check I wrote to them to verify their earnings and a copy of the check they gave back to me for down payment to establish a paper trail.
I accomplish a number of things by doing this. First, I don’t have to fool with contractors to do the work (anyone who has dealt with contractors knows how tough this can be).
Second, they will work for less than contractors. (I set the price up or down to make the numbers work.)
Third, my buyers can’t complain about the quality of the work. (They did it themselves!)
Fourth, they earned the money (as opposed to me secretly gifting it to them).
Fifth, I get to write it off as repairs. (When we put money into someone’s account to make it appear as though they have a down payment, it is not a write off.)
Sixth, I made a sale that wouldn’t have happened. (They are hard to come by.)
And seventh, they tell their friends what I did for them. (I have three more couples waiting to do the same thing as a result of the first two. All three were referred by the same couple.)
I anticipate doing this much more often. It has worked well on two occasions so far and should continue to work out well in the future.