Using Owner Financing To Sell Your Properties Faster
The real estate market today is having more and more properties for sale, and fewer and fewer buyers for those properties. Cosequently, the prices of houses keep going down every month.
The end result is that most real estate investors are unable to sell their properties as easily as they used to.
Even if you are not selling investment properties, you find that you get little to no interest when you try to sell your house.
In this article, we look at how seller financing can generate interest from buyers resulting to a quick sale even at a higher price.
What is owner financing?
seller financing happens when the seller assumes the role of the bank and finances part or whole of the property. As the seller, you may own the property free and clear, or you may still have a mortgage on the property.
In any case, it is necessary to seek advice on how to structure and close your owner financing deal. As always, you may need to seek legal advice from your attorney and CPA.
When the seller accepts to owner finance the property, the buyer pays a down payment. The seller then receives monthly payments just like a bank.
Some sellers require the buyer to make payments through an escrow company such as a lending institution in order to protect themselves. The buyer is required to file a quit claim deed with the escrow company that may be filed by the escrow officer if seller defaults on making payments.
The property ownership reverts back to the original owner if the buyer defaults in making the payments. The end result is that the buyer loses all the payments made on the property. This acts as a powerful incentive that protects the seller.
In owner financing, there are no points or closing costs, meaning the buyer could end up saving thousands of dollars. The transaction is more open to negotiation which works as an advantage both for the buyer and seller.
Why seller financing?
The days when just staging your property was enough to sell it are long gone. Why should a buyer choose your property when there are numerous other properties in the neighborhood are selling for a lower price?
A potential buyer is first attracted by the terms of the sale before they come to take a look. Properties offering owner financing attract more attention than other properties.
The banks have tightened the lending criteria and most people cannot afford a mortgage. In addition, a lot of people have ended up with injured credit. This makes owner financing as the only option for such buyers.
As a seller, using owner financing generated lots of interest for you resulting to quick sale or even selling at a higher price.
The best price of the property is of course estimated from recent sales of comparable properties in the area.
However, you must be careful which properties you use as comparable sales. Properties that have been sold with seller financing carry a higher price than others sold in the conventional way. This price may therefore not reflect the true value of similar properties.
With owner financing, you end up selling your house faster, even at a higher price.
Ultimately, with so many properties sitting on the market, real estate investors who adapt to the changing trends are able to weather the storm and continue making profits in real estate. seller financing provides a way for them to sell their properties faster even where others cannot.
Simon Macharia invests in real estate in Dallas Texas. He has seen a lot of creative techniques for buying and selling houses and uses an automated website for real estate investing to run his business. These websites attract leads through effective search engine optimization pre-screen and pre-negotiate with these leads and reduce the daily workload enabling him to do more deals using less time, money and effort.
How are the monthly payments on your owner financing Simon? The reason I ask is because I heard a lot of owner financing does go into default.
Are you finding this is not the case?