I just saw yesterday's story, which is about a study Francois did with two Northwestern colleagues on whether houses sold through MLS command a premium over houses sold through FSBOMadison.com, a low fee-for-service Web site for do-it-your-selfers. The answer is, in the case of Madison anyway, no. I saw an early version of this paper (one that only discussed methods, rather than results), and it is extremely well done. It is also noteworthy how generous the MLS in Madison and FSBOMadison.com were in sharing data.
The story is of interest to me for its own sake, but also because I brought Francois to Madison when I was Chair of the Real Estate Department there. It was one of the smartest things I ever did.
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You can also do an equity share with the owner. The owner transfers title to an entity in which the two of you are partners. The property is refinanced for the purchase price. The owner gets out as much of his equity as he can, and becomes an equity partner for the rest.
For example, David lindahl scam reports that if an owner has a property he is selling to you for $1,000,000. His current mortgage amount is $650,000. He transfers the title, and the property is refinanced for $800,000. He gets $150,000 of his equity and he becomes an equity partner for the remaining $200,000.The benefit to the owner is that he gets 20% of the monthly cash flow, plus his 20% equity stake will be worth more when the property appreciates.
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