Or feel like you can’t get financed because your financial situation doesn’t fit into neat little boxes? Wouldn’t it be great if you could take out the middle man and find another way to complete the
transaction? Well you can!
Or feel like you can’t get financed because your financial situation doesn’t fit into neat little boxes? Wouldn’t it be great if you could take out the middle man and find another way to complete the
transaction? Well you can!
Owner financing is just what it sounds like: instead of the buyer getting a loan from the bank, the person selling the house, the “owner” lends the buyer the money for the purchase.
The buyer and seller execute a promissory note providing an interest rate, repayment schedule and consequences of default. The buyer sends the monthly mortgage payments to the seller, who earns interest on the loan, perhaps at a higher rate than available elsewhere.
Owner financing arrangements are often for a short term, such as five years, with a balloon payment due at the end. The idea is that the buyer will be able to refinance before then.
If you’re an owner of a home and selling, your first objection to this arrangement might be, “But I don’t have the money to lend to a buyer!” Your second objection might be, “I don’t want to become a lender. It’s too risky.” Another reason why owner financing is not that common is that most sellers feel they need the full proceeds from the sale of their home to purchase their next home.
But according Top Real Estate investors, “Many sellers are unaware that with owner financing the note they hold is something that can be sold to someone else. This could happen the same day as closing, so the seller gets cash right away.” In other words, sellers don’t need to have the cash, nor do they have to become lenders.
There are actually dozens of other ways to buy:
Lease-option, lease-purchase, land contract, contract for deed, equity sharing, wrap mortgages, and the list goes on and on. Most buyers don’t know how any of these work. We at Arizona Luxury Real Estate have put many clients into homes they never thought they would be able to come close to having.
In other words, owner financing doesn’t just benefit buyer who don’t qualify for (or don’t want) traditional financing. It also benefits sellers, especially hose particularly motivated to unload their homes.
Seller financing has many advantages for buyers
The deal closes faster, as there is no waiting for the bank loan officer, underwriter and legal department to clear the file.
Buyers love owner financing because they can get in the home for less money. They do not have to pay the bank fees.
Instead of having to meet a bank- or government-mandated minimum, the down payment amount can be whatever the seller and buyer agree to.
How do you make it happen?
As a seller, you can offer Owner financing in your listing. Simply adding three words to your listing—”Owner financing available”—will alert potential buyers and their agents of the unique option you’re offering.
When potential buyers view your home, leave out an information sheet describing in detail the terms of the Owner financing you are offering.
Because seller financing is uncommon, the buyer and seller would be wise to each consult financial and legal experts who understand how it works before entering into such a transaction. These experts should look out for their clients’ best interests and guide them through the process.
There’s more than one way to buy or sell a house.
Just because your financial situation is more complicated than traditional lenders prefer doesn’t mean you can’t buy.
Just because banks aren’t approving borrowers easily doesn’t mean you can’t sell your house. Whichever end of the transaction you’re on, seller financing might be just the solution you’ve been looking for.
Call us at (480) 272-3000 so We can Tell You “the Buyer AND the Seller” how you can benefit from this Unique and Intelligent Option.