In certain situations where clients face significant challenges securing conventional bank financing, real estate agents may refer their clients to alternative financing options, particularly private hard money lenders.

Let’s explore the reasons behind these referrals and how real estate agents play a crucial role in ensuring their clients can access the necessary capital.

Credit Challenges

One common scenario that prompts real estate agents to seek alternative financing solutions is when their clients have poor or limited credit history. Traditional banks typically consider the borrower’s creditworthiness, making it difficult for those with subpar credit scores to secure a loan.

However, being a credit-challenged borrower doesn’t necessarily mean having a poor credit score. In many cases, these individuals face unique circumstances that make traditional bank financing inaccessible and can include:

  • Self-employed individuals,
  • Real estate investors,
  • Individuals with inconsistent income sources,
  • Individuals with high levels of outstanding credit, or
  • Individuals who do not have a credit history at all.

In some instances, when a borrower is willing to invest a substantial portion of the purchase price, such as a 35% downpayment (or more), we believe we can mitigate the perceived risk associated with properties in poor condition and confidently move forward with providing the funds needed.

Another factor that can hinder borrowers from obtaining conventional financing is the property ownership structure. For example, transactions involving trusts, Limited Liability Companies (LLCs), Corporations (Inc), or Limited Partnerships (LPs) often fall outside the scope of traditional lenders, leading borrowers to seek alternative financing.

In such cases, real estate agents turn to hard money lenders such as HCS Equity. We’re more flexible in evaluating a borrower’s eligibility based on the collateral (property’s value) rather than their credit score.

Property Condition

Another common scenario is when investors are seeking a property with the intent to purchase, renovate, and subsequently sell it for profit—a strategy known as “fix and flip.” Traditional lenders are often reluctant to provide financing for properties that require extensive repairs or renovations because they’re perceived as risky. This presents a roadblock for investors who see the property’s potential for profit.

Real estate agents understand that private lenders are more willing to provide loans for fix and flip properties with poor conditions. Hard money lenders base their decision on the purchase price or the potential of the property to generate value once it’s improved rather than its current state.

Speed of Transaction

Real estate transactions can sometimes be time-sensitive, and traditional bank financing may not meet the required timelines. This is particularly important in competitive markets where properties can be sold within days or even hours of listing.

We understand that in certain situations, such as fix and flips, delays can be costly and frustrating. On average, HCS Equity loans typically close within 7 to 10 business days. By streamlining our underwriting and approval process, we ensure that clients can close the deal, and secure their fix and flip property quickly. We can also expedite the bridge loan approval process, ensuring that clients secure their dream property before their existing property sells.

Moreover, we’re well-versed in navigating the intricacies of the probate process and can provide the necessary funds quickly, allowing clients to address estate matters without unnecessary delays.

The Final Words

In some instances, where the situation is granted, real estate agents play an important role in connecting clients facing financing challenges with hard money lenders like HCS Equity. Whether it’s due to credit limitations, property condition issues, the need for a speedy transaction, or other unique scenarios, these agents help clients overcome the difficulties they encounter when seeking conventional bank financing.

By referring clients to hard money lenders for trust loans, bridge loans, or fix and flip loans, real estate agents ensure that they have access to the financing necessary to pursue their goals.

Are you a real estate agent looking to provide your clients with the best financing solutions for their unique needs?

Please contact HCS Equity, private hard money lenders in California to discuss how we can help clients overcome financing challenges depending on their unique situation.


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