There are a lot of ways people come up with a down payment for a home – saving for years, picking up a side gig, selling old items they no longer use, accepting gift funds from friends or family. But selling your Instagram handle for your down payment? That’s not something you see every day.
That’s exactly what one homebuyer did last year, however, when they purchased a house through Home.com’s parent company, Fairway Independent Mortgage Corporation. The buyer sold their Instagram handle for $60,000 and used the funds toward the down payment on their first home.
For privacy reasons, we can’t disclose the actual IG handle or buyer. But there’s a good chance you’ve heard of them.
Ryan Huskey, a senior vice president and area manager in Portsmouth, N.H., who worked with the homebuyer, says that this was the first time he’d seen such an asset sale used to buy a home. He first discovered the Instagram windfall when reviewing the buyer’s financial documents when they applied for the loan.
“When we got the bank statements, all of a sudden there was a large, $60,000 deposit, and so we were then required to source it,” Huskey says.
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How to buy a home with money made from selling your Instagram handle
While it may not be an option for most homebuyers, here are some tips on how to sell your Instagram handle to buy a house.
Sourcing large deposits is a common part of the mortgage process. Lenders are required to document any deposits that are larger than 50% of a homebuyer’s monthly income to ensure the money is coming from a legitimate source and doesn’t indicate fraud or money laundering.
First-time homebuyers are often unaware of this rule, and they’re taken aback when their lender asks for documentation.
“A lot of people who aren’t familiar with the financing process are like, ‘I’ve got money. What do you care where it came from?’, so it’s important to explain that to them,” Huskey says.
That includes a receipt or bill of sale, as well as records of the money being transferred from the buyer’s bank account to yours.
In this instance, the homebuyer had to provide a sale agreement, bank statements showing that the money was transferred, and records from a web host company showing that ownership of the handle had been transferred. This proved that the homebuyer was the original owner of the handle prior to the sale.
In addition to documenting the sale, lenders also need to verify the value of the asset that was sold. This proves the transaction was legitimate. That’s easy to do with traditional assets, like a car, Huskey says. Lenders can look at the Kelley Blue Book to verify the value of the car based on its make and model, and then match that up with the sale price.
But a digital asset, like an Instagram handle, is a little more subjective in its value.
“Part of the guideline is that you have to demonstrate the value of what it’s worth, and that’s where this is very unique, because how do we essentially appraise that?” Huskey says.
He worked with colleagues to research how social media posts are valued and how much a social media creator or influencer could earn based on their posts and followers. They then compared that information to the social media profile of the person who bought the handle and determined that prior to purchasing the handle, they could earn $12,000 per post – an amount likely to increase if they purchased the handle.
“So we [proposed to] underwriting that this person could make a single post and it’s worth $12,000 because of the influence they carry. I think it makes sense for them to buy a handle for $60,000,” Huskey says.
“We weren’t really able to appraise the handle,” he added. “We basically justified its value by an online resource that basically appraised a post.”
Underwriting accepted that argument, and the homebuyer was able to move forward with their purchase.
How to sell your Instagram handle to buy a home in 4 steps
If you’ve got an in-demand Instagram handle and you’re willing to part with it for the sake of buying a home, here’s how to do it:
- Negotiate a fair price
- Establish a bill of sale
- Document the transfer of property
- Gather supporting documents for the asset’s value
Negotiate a fair price
Do your due diligence on how much your handle is worth. Instagram handle values are subjective, and a lot comes down to how much the buyer is willing to pay. But research the buyer and their potential earning power before you agree to a price so that you feel satisfied with the deal (more on this in the next section).
Establish a bill of sale
You’ll need a record of the sale if you want to use the funds to buy a home, but you may also need documentation for tax purposes. Be sure to have a sale contract that you and the buyer sign that outlines the sale price and the terms.
Document the transfer of property
Save copies of your bank statements showing the transfer of funds between the buyer’s account and yours. Keep records of the actual transfer of ownership, too, such as web host records showing that you were the previous owner and that the buyer now owns the handle.
Gather supporting documents for the asset’s value
Your lender will have to justify the value of the sale, so keep any documentation you have regarding the handle’s value. If the person buying the handle from you is an influencer, try to provide records of how much they earn, or potentially earn, for their posts. Your lender’s underwriting team simply wants to know that the sale is legitimate and that the asset’s value justifies the sale price.
Thinking this all sounds like a lot of hoops to jump through? Here’s a way to get around the red tape. If you know you want to buy a house later this year but you’re not ready yet, sell the handle or other digital asset at least two months in advance of starting your home search.
Money that’s been in your account longer than two months is considered “seasoned funds,” and lenders typically don’t need to source older large deposits. But any large deposits – those greater than 50% of your monthly income – made more recently will need to be sourced.
That depends. Naturally, you’re going to want to sell for as high a price as you can get. After all, you’re giving up a handle you may have had for years, and it obviously carries some value.
How much value depends in large part on the person who wants to buy it. One way to determine whether their offer is fair is to try and find out how much they may be able to earn with the handle. If your buyer is a social media influencer, for instance, check out sites that estimate how much different content creators can earn on certain types of posts.
Getting a ballpark of how much they may bring in currently, and what they may be able to earn after buying your handle, can help you determine what a fair price is.
Another factor, though, will be how valuable the account is generally. There are a few metrics buyers will likely look at, including:
- How many followers you have
- Audience demographics
- Engagement metrics such as comments and likes
But sometimes it comes down to the handle itself. Simple, easily recognizable, single-word handles are likely to attract higher bids than less engaging or less recognizable ones. And if a buyer is confident that the handle will help them earn significantly more money, as an individual creator or business owner, they may be willing to pay top dollar for the name.
Although there are many low-down payment mortgage options out there, putting down a larger down payment can save you money long-term. For instance, if you put down 20% on a conventional loan, you won’t have to pay private mortgage insurance (PMI).
Even if you put down 10%, rather than the requisite 3%, you’d still save on PMI, since the requirement falls off once you reach 20% equity in the home. The larger your down payment, the less time you pay PMI, the more money you save.
You can also opt for the low-down payment route and have more cash on hand for purchasing new furniture, making renovations, or investing in landscaping or other projects around the home.
Just know that homeownership is costly, so you don’t want to short-change yourself on the sale of your handle.
There’s no hard and fast rule for how much you should sell your Instagram handle for. Much of the decision will come down to how much the buyer is willing to pay. But you should consider its value to you as well and what amount would assure you that you’re getting a good deal.
And most importantly, document every aspect of the sale. If you want to use the money toward your down payment and you’re in a hurry to buy, keeping meticulous records will help keep your home purchase on track.