07/05/2026
Why Traditional Financing is Not Effective
The average real estate agent does traditional financing. The agent lists a property, hopes another agent finds a buyer and then tries to get a bank to approve their credit and to appraise the property for the sale price. About 95% of all real estate sales are done in this manner. That's why agents become discouraged so soon after receiving their licenses.
Finding a traditional lender is difficult, and your transaction may fall through when the buyer:
• Is self employed.
• Has less than perfect credit.
• Have too many credit cards.
• Have more than three other mortgages.
If you ask the seller to carry back a mortgage, more than likely, they will refuse. The seller wants all of their cash immediately when the transaction closes. Finding a qualified buyer that can deliver all cash at closing is difficult, especially for high-end homes.
What if a seller has priced the property above the fair market value? A buyer falls in love with the view and the dining room chandelier, and then agrees to buy it at a slightly inflated (i.e., a premium) price.
The prospective buyer approaches the bank for financing. Before the bank will consider issuing a mortgage on the property, it will require an appraisal and will loan only a portion of the appraised value of the property. The transaction is doomed, because the bank is in charge and dictates the property can be sold only for the appraised value.
This traditional method of selling property prohibited a buyer and a seller from completing a transaction. It's no wonder that most real estate agents leave the industry. They and their clients are the victims of too many uncontrollable variables.
The Average Buyer
We're sure you have many examples of buyers who look for a property out of their price range. Ultimately, they will have to settle for something less than what they wanted.
They feel as if they have been made to "compromise" their great American dream. These feelings, if not properly addressed by a real estate professional, can sour an entire transaction.
The average buyers of real estate are making the largest purchase of their lives. Yet it is estimated that as much as two-thirds of the American population have less than perfect credit. So where do those buyers get the money to make their purchase?
As you already know, the complexity of obtaining or even applying for a bank loan can be overwhelming. Most buyers do not understand closing costs, down payments, or the concept of "points".
Closing fees mount up, inspections are expensive, the interest rate is higher than they were prepared for, and the entire house hunting procedure can become a nightmare for many buyers.
The Average Seller
Sellers can be unrealistic about their listing price and the final sale price.
• They are unclear about inspections, fix-up costs, and the other tedious aspects of selling their property.
• They think they will get all cash for their property; many don't realize they don't even need all cash.
• They don't understand commissions, closing costs, the real sale price, or the tax consequences of a sale.
• They think all they must do is hire an agent like you, and the property is as good as sold.
Reality, as you know, is harsh in the real estate industry. Sellers receive much less cash and far more hassle than they expected.
The Bottom Line
All the average buyer wants is:
• A big house.
• Affordable monthly payments.
• As little money down as possible.
All the average seller wants is:
• A quick sale.
• A high price.
• As little inconvenience as possible.
