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What is Seller Financing and

How does it work for the buyer and the seller?
What are the differences between the different types of Seller financing?

Seller Financing Options:

 

 

  1. 1. ) Lease Option: (Strong for the seller however there are liabilities.
Default remedies attorney can have buyer out in 6 week  Only good for small down payments 

  1. 2.) All Inclusive Trust Deed: AITD: (strong for buyer who holds title)
  2. Legally new law (Dodd Frank law) has to hold for 30 years with a 5 year fixed interest rate.

    3.) Contract for Deed Protect: Equitable title is recorded. Buyer has Ownership mentality but does not have Deed...Strong for both parties (draft to the strength of the party).

Date of sale is the date that shows “sold”, not the day it’s paid off. Good for Capitol Gains issues

$12-$20,000 down or more. Title Company holds. Commission etc paid from down.

 

  • Title doesn’t transfer to buyer. Seller holds title
  •  Can write over FHA or VA Loan
  • Buyer gets tax advantages on home
  • Notice recorded protecting interest
  • Equitable interest: Buyer has equitable interest but not on title. Once fulfilled the contract then the buyer gets the Deed. Therefore calling it “Contract for Deed”.
  • Payments to Escrow Specialties, designate who pays what fees etc, taxes, insurance and monthly fee’s
  • Personal finances go to lender, not to agent
  • Must have title insurance since the seller acts as the bank
  • Owners police: (Title) Is split by both parties.
  • Good buyer: must have preapproval from lender and exit strategy repairing their credit so they can refi when contract is due
  • Due on Sale Clause:  Mortgage Company would have to foreclose if payments missed, but if payment is made foreclosure stops. (4 months).
  • Commissions paid with down payment
  • Insurance from both seller (landlord policy) and buyer (renter’s policy)
  • If want to purchase another home before 12 months: do a Lease Option (separate document) for 1 year, as trial period for buyer, then a REPC for Contract for Deed. Lender will see this as being rented with income and won’t have to wait an entire year to purchase another home.

 

What kind of Buyer do we look for?

  1. Why doesn’t buyer qualify for a loan?
  2. Can problem be fixed? (all can in time)
  3. Can you refi a property you don’t hold title to? Yes
  4. Is buyer motivated to get finance problem fixed or repaired?

Renting vs. Contract for Deed

 Renting: deposit is less, risky, renter makes payments or not, may trash home, owner responsible for all repairs etc.

 Contract for Deed: buyer acts as home ownership, may lose large down payment if don’t make the payments. Get higher interest rate and price. Can put on MLS as sold and use as comp if they don’t  refi. If property doesn’t appraise at time of refi, can extend agreement.



Seller financing is a wonderful way to facilitate both the buyer and the seller. It is a type of short term “bridge loan” where the seller carries the contract until the buyer is able to refinance and get a loan. For Seller financing to succeed it is best to have an exit strategy put in place at the time a contract is written up. The exit strategy entails the buyer speaking to a lender or a credit repair company, to prescribe a remedy for why they are not able to get a loan, and set a time frame up with actions, to get the permanent financing.

A “contract for deed” does not transfer title into the buyers name; however it does give the buyer “equitable title”. This means that they have rights to the property owner without title. It also eliminates a judicial foreclosure when the “Cancelation of Contract” is signed at closing which was agreed upon before hand by both buyer and seller.

To circumvent a default, a pre-signed “cancel contract document is signed at closing with terms if payments are not made. This way the judicial system does not need to be involved and only an eviction if issue is not remediated.

A down payment IS necessary in seller financing and usually needs to cover expenses, a 3rd party escrow agent for payment, and a few months of mortgage payments, if there was a default.

Just because a buyer is not able to get a loan conventionally, does not mean that they are a bad risk. Sometime circumstances prevent a buyer from getting a loan such as being a self employed, or had a hardship. When designing seller financing options, I always believe that using a lawyer to finalize the paperwork. The cost is different for each contract, but I have found usually is around $400 per side or less depending if a Title company has their own lawyer on the premises. This gives both the buyer and the seller confidence that the papers are done with both parties in mind for a successful transaction.

HUD document 4145.1 states that seller financing can be use for refinancing for: “a land contract, contract for deed, or other similar financing arrangements in which the borrower does not have title to the property.”

What are the steps for Seller Financing for a buyer?

1. First speak to a lender and identify the problem as why you are not able to get a loan.

2. Identify a solution and how long it will take to fix the issues so that you have an exit strategy.

What about a Due on Sale Clause?

The bank states that you may be in default IF the title were to actually change. With a Contract for Deed, the title does not change. In any event, if a default were to rise, all that needs to be done is to cur it, giving the title back to the seller that mirrors the same terms as the written contract.

Credit Restoration:
If you need credit repair click here. Price is $499.00. They can fix it quickly, restablist your credit, and you will be able to get a credit card with no security deposit by paying on line with only a $29.00 activation fee for the credit card. As them about how to use your utilities, rent etc to establish credit!

If you need an annual credit report click here. The reports do not include FICO scores, just details on what information on what is on your report!

 

 

 

 

Seller Financing Options

This is from a company that takes care of the seller financing details for you if your are interested.

Seller Financing is proving to be the most innovative yet practical solution. Although Seller Financing has been around for a long time, these new developments have sparked a real estate specialty dedicated exclusively to Seller Financing. Throughout this website is a lot of information that can help you make the most of selling your property with Seller Financing.

Most property sellers (even seasoned property sellers) are inexperienced when it comes to:

  1. Deciding if Seller Financing is the right strategy for quickly selling their property.
  2. The initial homework that should be done before the sale including the common sense underwriting needed to determine the right buyer.
  3. The proper structuring of the sale to achieve the best, safest results. This can save you tens of thousands of dollars and keep you out of trouble. The best time to worry about a loan is before you make it.
  4. Maintaining your note after you have created it so that it retains its value and is protected to it’s fullest extent.
  5. Protecting yourself from legal issues, including the new Safe Act.
  6. What the note is worth and how to go about selling all of it or partial payments.

Should I Owner-Finance?

Without notice mortgage originators have stopped creating sub-prime loans and this large group of buyers/borrowers is now left with nowhere to secure financing. Today, there is a staggering number of potential real estate buyers who can only look to the property seller for the financing they need. While this seemingly simple step of financing the buyer may seem like a good idea, we recommend you learn some fundamental elements of the business before becoming a mortgage lender.

Owner financing is a sensible way to sell property and extremely common all over the United States. (It has been estimated that approximately 10% to 15% of property sold is now sold with seller financing.) Offering to finance the purchaser of your property can help you sell it quickly, may provide tax benefits and will give you a nice source of monthly income.

 
Seller financing is rapidly emerging as THE solution to the current crisis in conventional lending. It's responding to the sluggish real estate market by presenting a smart alternative to conventionling lending. By offering to finance the sale of their properties, owners are selling up to 70% faster than those that are available for purchase only through conventional loans or cash. They're also selling at prices much closer to market values.

Many times a property owner considers using owner-financing as a quick and easy way to sell their property. In fact, sometimes they ignore the questions of qualifying the buyer and properly underwriting the sale (obtaining an adequate down payment, interest rate, etc.). You can't assume that your investment is protected simply because it is secured by your property. You may be able to get the house back in the event of a foreclosure, but what if your potential buyer destroys the property?

In most real estate markets - those that have fairly aggressive lender underwriting and affordable interest rates - most properties sell with a 3rd party qualifying the borrower and the collateral (the property) and then extending a loan. So the issue is, how can I determine if the property I'm selling falls outside of what most traditional mortgage lenders want. Secondly, when can I safely owner-finance a property to a buyer who cannot get a conventional loan or doesn't want to get a conventional loan.

First let's focus on the property. Traditional third party lenders tend to shy away from single-family homes with any of the following issues: sale price range (usually under $60,000 in value), repair or condition problems, improvement to land ratio (i.e. small house on 25 acres). In addition, other types of property such as land only, and unique commercial property are all difficult to finance through a third party. If a property of any type is quickly and easily financed by a third party, why should I owner-finance it? The answer is maybe you shouldn't. It depends on the amount of time, energy and money you have to devote to maintaining and showing the house. Each market determines the amount of time it takes before a property will sell and each day that your property is not sold is costing you time and money.

Seller Financing is suitable for a variety of properties, including single family homes, multi-family units, commercial properties, mobile homes, farm acreage, ranches, and raw land. Once limited to low-cost properties, seller financing is now offered on million-dollar homes. With all the lending issues involved with jumbo loans (typcially over $417,000) we are seeing more and more high end homes selling with Seller Financing.

The popularity of Seller Financing is staggering. Two years ago, only one in four hundred real estate transactions used Seller Financing. Today, that number has increased to one in every fifty.







Owner Financing Advantages for the Seller
  • The number of potential buyers will increase significantly.
  • The sale price should not have to be reduced below market value.
  • The sale will close more quickly than with bank financing.
  • Any potential income tax liability from the sale may be able to be deferred.
  • Lower over all closing costs and time invested.
  • In most cases, the note you create can be sold and converted into cash at any time.
  • In some cases owner financing is the only way to sell the property especially when we start looking at land ratios, condos, or high priced houses situations.
  • The seller can receive a higher yield on his/her investment by receiving equity with interest.
  • The seller could negotiate a higher interest rate.
  • The seller could negotiate a higher selling price.
  • The property could be sold 'as is' so there will be no need for repairs.
  • The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.
Owner Financing Advantages for the Buyer
  • The buyer will not have to meet rigid bank qualifying standards.
  • The buyer may be able to purchase a property the banks would not qualify him for.
  • The buyer will pay lower closing costs.
  • The buyer may be able to make a smaller down payment than the banks would require.
  • The buyer may have the option of creating flexible payment terms.
  • The buyer won’t have to pay origination points or mortgage insurance.
  • The buyer may not have to establish a prepaid escrow account for taxes and insurance.
  • The buyer can request special conditions for the purchase, such as inclusion of household appliances.
  • Both the buyer and the seller can make substantial savings in closing costs.
  • They can negotiate interest rate, repayment schedule, and other conditions of the loan.
  • The borrower does not have to qualify with a loan underwriter.
The demand for owner financing has increased significantly since 2007 and will continue to climb as more borrowers find they don't qualify for conventional financing. Offering owner financing to potential buyers is a more powerful marketing tool now than ever before.

If you are considering selling a property with Seller Financing give us a call so we can provide you with the right resources to make the most out of selling your property.

 

Should I Owner-Finance?  click here for full article.

Without notice mortgage originators have stopped creating sub-prime loans and this large group of buyers/borrowers is now left with nowhere to secure financing. Today, there is a staggering number of potential real estate buyers who can only look to the property seller for the financing they need. While this seemingly simple step of financing the buyer may seem like a good idea, we recommend you learn some fundamental elements of the business before becoming a mortgage lender.

Owner financing is a sensible way to sell property and extremely common all over the United States. (It has been estimated that approximately 10% to 15% of property sold is now sold with seller financing.) Offering to finance the purchaser of your property can help you sell it quickly, may provide tax benefits and will give you a nice source of monthly income.

Seller financing is rapidly emerging as THE solution to the current crisis in conventional lending. It's responding to the sluggish real estate market by presenting a smart alternative to conventionling lending. By offering to finance the sale of their properties, owners are selling up to 70% faster than those that are available for purchase only through conventional loans or cash. They're also selling at prices much closer to market values.

Many times a property owner considers using owner-financing as a quick and easy way to sell their property. In fact, sometimes they ignore the questions of qualifying the buyer and properly underwriting the sale (obtaining an adequate down payment, interest rate, etc.). You can't assume that your investment is protected simply because it is secured by your property. You may be able to get the house back in the event of a foreclosure, but what if your potential buyer destroys the property?

In most real estate markets - those that have fairly aggressive lender underwriting and affordable interest rates - most properties sell with a 3rd party qualifying the borrower and the collateral (the property) and then extending a loan. So the issue is, how can I determine if the property I'm selling falls outside of what most traditional mortgage lenders want. Secondly, when can I safely owner-finance a property to a buyer who cannot get a conventional loan or doesn't want to get a conventional loan.

First let's focus on the property. Traditional third party lenders tend to shy away from single-family homes with any of the following issues: sale price range (usually under $60,000 in value), repair or condition problems, improvement to land ratio (i.e. small house on 25 acres). In addition, other types of property such as land only, and unique commercial property are all difficult to finance through a third party. If a property of any type is quickly and easily financed by a third party, why should I owner-finance it? The answer is maybe you shouldn't. It depends on the amount of time, energy and money you have to devote to maintaining and showing the house. Each market determines the amount of time it takes before a property will sell and each day that your property is not sold is costing you time and money.

Seller Financing is suitable for a variety of properties, including single family homes, multi-family units, commercial properties, mobile homes, farm acreage, ranches, and raw land. Once limited to low-cost properties, seller financing is now offered on million-dollar homes. With all the lending issues involved with jumbo loans (typcially over $417,000) we are seeing more and more high end homes selling with Seller Financing.

The popularity of Seller Financing is staggering. Two years ago, only one in four hundred real estate transactions used Seller Financing. Today, that number has increased to one in every fifty.







 

Understanding A Notes True Value

Understanding the factors that go into determining a notes value is important because if you properly set up your Seller Financing transaction ahead of time you will not only save yourself alot of headaches, but it can also save you tens of thousands of dollars when you go to sell the note. When looking at a note to determine it's value there are a number of factors to consider. Below are 6 basic catagories of elements that are used to evaluate the quality of a note.

Now, if your lawyer or closing agent does not know or understand these key elements then you should look into getting a Note Professional involved with your transaction. Just because a lawyer or title company can prepare the needed documents to make the transaction legal, does not mean that they are setting the seller financing transaction up in a way that MOST benefits you.

How To Structure A Valuable Note

With the growth in Seller Financing, comes an increase in poorly structured transactions. Overly eager sellers are entering into poorly written contracts with risky buyers. Simple negligence or serious errors may occur during any of these procedures:

  • Marketing
  • Buyer due diligence
  • Negotiations
  • Disclosures
  • Loan documentation
  • Loan term structuring
  • Compliance with federal regulations
  • Loan servicing after closing
  • Note liquidation

Weaknesses in any of these areas can result in a poor-quality note, or worse, a failed transaction. These deficiencies can be attributed to a singular source: the real estate industry has lacked a well-defined category of experts who can orchestrate the entire Seller Finance process from beginning to end.

The designation of Note Pro has been established to address this critical need. The Note Pro is a seasoned professional with expert knowledge in all aspects of seller financing. He or she uses standardized procedures to ensure that all required criteria are properly met and that all documents are completed accurately. This is in stark contrast to the majority of seller financed transactions, which are "homemade" and, therefore, subject to problems that lessen the quality, value and safety of the financing.

Maintaining & Protecting Your Note Investment

You've sold your property with owner financing and now own a promissory note and mortgage. The monthly payments you receive from the purchaser is an excellent source of income. Especially for people who don't feel comfortable investing in the stock market, but want to earn a better rate of interest than the banks are paying. Just like any other investment, however, it is important to know how to protect the value of your note.

Unlike many other investments, the note created when you sell property is backed by specific collateral. Protecting this collateral is imperative to maintaining the quality and health of your investment.


As a mortgage holder, you have the ability to protect your collateral built into the mortgage document. Once you begin collecting payments it becomes your responsibility to monitor and enforce these provisions. In the remainder of this section, we present some important steps you can take to help protect your investment.

Maintaining & Protecting Your Note Investment

You've sold your property with owner financing and now own a promissory note and mortgage. The monthly payments you receive from the purchaser is an excellent source of income. Especially for people who don't feel comfortable investing in the stock market, but want to earn a better rate of interest than the banks are paying. Just like any other investment, however, it is important to know how to protect the value of your note.

Unlike many other investments, the note created when you sell property is backed by specific collateral. Protecting this collateral is imperative to maintaining the quality and health of your investment.


As a mortgage holder, you have the ability to protect your collateral built into the mortgage document. Once you begin collecting payments it becomes your responsibility to monitor and enforce these provisions. In the remainder of this section, we present some important steps you can take to help protect your investment.
Maintaining & Protecting Your Note Investment

You've sold your property with owner financing and now own a promissory note and mortgage. The monthly payments you receive from the purchaser is an excellent source of income. Especially for people who don't feel comfortable investing in the stock market, but want to earn a better rate of interest than the banks are paying. Just like any other investment, however, it is important to know how to protect the value of your note.

Unlike many other investments, the note created when you sell property is backed by specific collateral. Protecting this collateral is imperative to maintaining the quality and health of your investment.

As a mortgage holder, you have the ability to protect your collateral built into the mortgage document. Once you begin collecting payments it becomes your responsibility to monitor and enforce these provisions. In the remainder of this section, we present some important steps you can take to help protect your investment
Unlike many other investments, the note created when you sell property is backed by specific collateral. Protecting this collateral is imperative to maintaining the quality and health of your investment

 

Seller financing is rapidly emerging as THE solution to the current crisis in conventional lending. It's responding to the sluggish real estate market by presenting a smart alternative to conventionling lending. By offering to finance the sale of their properties, owners are selling up to 70% faster than those that are available for purchase only through conventional loans or cash. They're also selling at prices much closer to market values.

Many times a property owner considers using owner-financing as a quick and easy way to sell their property. In fact, sometimes they ignore the questions of qualifying the buyer and properly underwriting the sale (obtaining an adequate down payment, interest rate, etc.). You can't assume that your investment is protected simply because it is secured by your property. You may be able to get the house back in the event of a foreclosure, but what if your potential buyer destroys the property?

In most real estate markets - those that have fairly aggressive lender underwriting and affordable interest rates - most properties sell with a 3rd party qualifying the borrower and the collateral (the property) and then extending a loan. So the issue is, how can I determine if the property I'm selling falls outside of what most traditional mortgage lenders want. Secondly, when can I safely owner-finance a property to a buyer who cannot get a conventional loan or doesn't want to get a conventional loan.

First let's focus on the property. Traditional third party lenders tend to shy away from single-family homes with any of the following issues: sale price range (usually under $60,000 in value), repair or condition problems, improvement to land ratio (i.e. small house on 25 acres). In addition, other types of property such as land only, and unique commercial property are all difficult to finance through a third party. If a property of any type is quickly and easily financed by a third party, why should I owner-finance it? The answer is maybe you shouldn't. It depends on the amount of time, energy and money you have to devote to maintaining and showing the house. Each market determines the amount of time it takes before a property will sell and each day that your property is not sold is costing you time and money.

Seller Financing is suitable for a variety of properties, including single family homes, multi-family units, commercial properties, mobile homes, farm acreage, ranches, and raw land. Once limited to low-cost properties, seller financing is now offered on million-dollar homes. With all the lending issues involved with jumbo loans (typcially over $417,000) we are seeing more and more high end homes selling with Seller Financing.

The popularity of Seller Financing is staggering. Two years ago, only one in four hundred real estate transactions used Seller Financing. Today, that number has increased to one in every fifty.







Owner Financing Advantages for the Seller
  • The number of potential buyers will increase significantly.
  • The sale price should not have to be reduced below market value.
  • The sale will close more quickly than with bank financing.
  • Any potential income tax liability from the sale may be able to be deferred.
  • Lower over all closing costs and time invested.
  • In most cases, the note you create can be sold and converted into cash at any time.
  • In some cases owner financing is the only way to sell the property especially when we start looking at land ratios, condos, or high priced houses situations.
  • The seller can receive a higher yield on his/her investment by receiving equity with interest.
  • The seller could negotiate a higher interest rate.
  • The seller could negotiate a higher selling price.
  • The property could be sold 'as is' so there will be no need for repairs.
  • The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.
Owner Financing Advantages for the Buyer
  • The buyer will not have to meet rigid bank qualifying standards.
  • The buyer may be able to purchase a property the banks would not qualify him for.
  • The buyer will pay lower closing costs.
  • The buyer may be able to make a smaller down payment than the banks would require.
  • The buyer may have the option of creating flexible payment terms.
  • The buyer won’t have to pay origination points or mortgage insurance.
  • The buyer may not have to establish a prepaid escrow account for taxes and insurance.
  • The buyer can request special conditions for the purchase, such as inclusion of household appliances.
  • Both the buyer and the seller can make substantial savings in closing costs.
  • They can negotiate interest rate, repayment schedule, and other conditions of the loan.
  • The borrower does not have to qualify with a loan underwriter.
The demand for owner financing has increased significantly since 2007 and will continue to climb as more borrowers find they don't qualify for conventional financing. Offering owner financing to potential buyers is a more powerful marketing tool now than ever before.

 

As a mortgage holder, you have the ability to protect your collateral built into the mortgage document. Once you begin collecting payments it becomes your responsibility to monitor and enforce these provisions. In the remainder of this section, we present some important steps you can take to help protect your investment.

Selling Your Note

First, congratulations on being a Note Holder. Having a Note where payments are due you is easier to get cash from than it is to get your equity out of a piece of real estate. Whether you followed our plan to properly set up your seller-financed transaction or not you may be able to still receive CASH for the future payments you will be receiving.

To understand getting money for your note you need to understand the following factors (which we will cover):

  1. Factors that affect a Notes Value: This is covered under the menu option: Understanding A Notes True Value.
  2. The Benefits of Selling Your Mortgage Note
  3. Selling Full verses Selling Partial
  4. Current Value of Money verses Future Value
  5. The Note Selling Process

Free Professional Note Appraisal

Getting a Professional Note Appraisal is done to determine the current market value of your note. There are many situations where one would want to do this, especially when trying to raise cash or trying to determine an actual value of a held note.

Every note, mortgage, trust deed, land contract or contract for deed has a unique market value. The market value of a note is the highest cash price an informed and proactive seller can sell it for on the open market. Getting a Note Appraised is a simple process for the note holder. It all starts with filling out a Mortgage Quote Sheet. We have to get all the specific information about the actual terms and condition of the Note to determine it's value.


Should I Owner-Finance?

Without notice mortgage originators have stopped creating sub-prime loans and this large group of buyers/borrowers is now left with nowhere to secure financing. Today, there is a staggering number of potential real estate buyers who can only look to the property seller for the financing they need. While this seemingly simple step of financing the buyer may seem like a good idea, we recommend you learn some fundamental elements of the business before becoming a mortgage lender.

Owner financing is a sensible way to sell property and extremely common all over the United States. (It has been estimated that approximately 10% to 15% of property sold is now sold with seller financing.) Offering to finance the purchaser of your property can help you sell it quickly, may provide tax benefits and will give you a nice source of monthly income.
 
Seller financing is rapidly emerging as THE solution to the current crisis in conventional lending. It's responding to the sluggish real estate market by presenting a smart alternative to conventionling lending. By offering to finance the sale of their properties, owners are selling up to 70% faster than those that are available for purchase only through conventional loans or cash. They're also selling at prices much closer to market values.

Many times a property owner considers using owner-financing as a quick and easy way to sell their property. In fact, sometimes they ignore the questions of qualifying the buyer and properly underwriting the sale (obtaining an adequate down payment, interest rate, etc.). You can't assume that your investment is protected simply because it is secured by your property. You may be able to get the house back in the event of a foreclosure, but what if your potential buyer destroys the property?

In most real estate markets - those that have fairly aggressive lender underwriting and affordable interest rates - most properties sell with a 3rd party qualifying the borrower and the collateral (the property) and then extending a loan. So the issue is, how can I determine if the property I'm selling falls outside of what most traditional mortgage lenders want. Secondly, when can I safely owner-finance a property to a buyer who cannot get a conventional loan or doesn't want to get a conventional loan.

First let's focus on the property. Traditional third party lenders tend to shy away from single-family homes with any of the following issues: sale price range (usually under $60,000 in value), repair or condition problems, improvement to land ratio (i.e. small house on 25 acres). In addition, other types of property such as land only, and unique commercial property are all difficult to finance through a third party. If a property of any type is quickly and easily financed by a third party, why should I owner-finance it? The answer is maybe you shouldn't. It depends on the amount of time, energy and money you have to devote to maintaining and showing the house. Each market determines the amount of time it takes before a property will sell and each day that your property is not sold is costing you time and money.

Seller Financing is suitable for a variety of properties, including single family homes, multi-family units, commercial properties, mobile homes, farm acreage, ranches, and raw land. Once limited to low-cost properties, seller financing is now offered on million-dollar homes. With all the lending issues involved with jumbo loans (typcially over $417,000) we are seeing more and more high end homes selling with Seller Financing.

The popularity of Seller Financing is staggering. Two years ago, only one in four hundred real estate transactions used Seller Financing. Today, that number has increased to one in every fifty.







Owner Financing Advantages for the Seller
  • The number of potential buyers will increase significantly.
  • The sale price should not have to be reduced below market value.
  • The sale will close more quickly than with bank financing.
  • Any potential income tax liability from the sale may be able to be deferred.
  • Lower over all closing costs and time invested.
  • In most cases, the note you create can be sold and converted into cash at any time.
  • In some cases owner financing is the only way to sell the property especially when we start looking at land ratios, condos, or high priced houses situations.
  • The seller can receive a higher yield on his/her investment by receiving equity with interest.
  • The seller could negotiate a higher interest rate.
  • The seller could negotiate a higher selling price.
  • The property could be sold 'as is' so there will be no need for repairs.
  • The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.
Owner Financing Advantages for the Buyer
  • The buyer will not have to meet rigid bank qualifying standards.
  • The buyer may be able to purchase a property the banks would not qualify him for.
  • The buyer will pay lower closing costs.
  • The buyer may be able to make a smaller down payment than the banks would require.
  • The buyer may have the option of creating flexible payment terms.
  • The buyer won’t have to pay origination points or mortgage insurance.
  • The buyer may not have to establish a prepaid escrow account for taxes and insurance.
  • The buyer can request special conditions for the purchase, such as inclusion of household appliances.
  • Both the buyer and the seller can make substantial savings in closing costs.
  • They can negotiate interest rate, repayment schedule, and other conditions of the loan.
  • The borrower does not have to qualify with a loan underwriter.
The demand for owner financing has increased significantly since 2007 and will continue to climb as more borrowers find they don't qualify for conventional financing. Offering owner financing to potential buyers is a more powerful marketing tool now than ever before.

If you are considering selling a property with Seller Financing give us a call so we can provide you with the right resources to make the most out of selling your property.
Should I Owner-Finance?


Without notice mortgage originators have stopped creating sub-prime loans and this large group of buyers/borrowers is now left with nowhere to secure financing. Today, there is a staggering number of potential real estate buyers who can only look to the property seller for the financing they need. While this seemingly simple step of financing the buyer may seem like a good idea, we recommend you learn some fundamental elements of the business before becoming a mortgage lender.

Owner financing is a sensible way to sell property and extremely common all over the United States. (It has been estimated that approximately 10% to 15% of property sold is now sold with seller financing.) Offering to finance the purchaser of your property can help you sell it quickly, may provide tax benefits and will give you a nice source of monthly income.

 
Seller financing is rapidly emerging as THE solution to the current crisis in conventional lending. It's responding to the sluggish real estate market by presenting a smart alternative to conventionling lending. By offering to finance the sale of their properties, owners are selling up to 70% faster than those that are available for purchase only through conventional loans or cash. They're also selling at prices much closer to market values.

Many times a property owner considers using owner-financing as a quick and easy way to sell their property. In fact, sometimes they ignore the questions of qualifying the buyer and properly underwriting the sale (obtaining an adequate down payment, interest rate, etc.). You can't assume that your investment is protected simply because it is secured by your property. You may be able to get the house back in the event of a foreclosure, but what if your potential buyer destroys the property?

In most real estate markets - those that have fairly aggressive lender underwriting and affordable interest rates - most properties sell with a 3rd party qualifying the borrower and the collateral (the property) and then extending a loan. So the issue is, how can I determine if the property I'm selling falls outside of what most traditional mortgage lenders want. Secondly, when can I safely owner-finance a property to a buyer who cannot get a conventional loan or doesn't want to get a conventional loan.

First let's focus on the property. Traditional third party lenders tend to shy away from single-family homes with any of the following issues: sale price range (usually under $60,000 in value), repair or condition problems, improvement to land ratio (i.e. small house on 25 acres). In addition, other types of property such as land only, and unique commercial property are all difficult to finance through a third party. If a property of any type is quickly and easily financed by a third party, why should I owner-finance it? The answer is maybe you shouldn't. It depends on the amount of time, energy and money you have to devote to maintaining and showing the house. Each market determines the amount of time it takes before a property will sell and each day that your property is not sold is costing you time and money.

Seller Financing is suitable for a variety of properties, including single family homes, multi-family units, commercial properties, mobile homes, farm acreage, ranches, and raw land. Once limited to low-cost properties, seller financing is now offered on million-dollar homes. With all the lending issues involved with jumbo loans (typcially over $417,000) we are seeing more and more high end homes selling with Seller Financing.

The popularity of Seller Financing is staggering. Two years ago, only one in four hundred real estate transactions used Seller Financing. Today, that number has increased to one in every fifty.







If you are considering selling a property with Seller Financing give us a call so we can provide you with the right resources to make the most out of selling your property.

 

Should I Owner-Finance?

Without notice mortgage originators have stopped creating sub-prime loans and this large group of buyers/borrowers is now left with nowhere to secure financing. Today, there is a staggering number of potential real estate buyers who can only look to the property seller for the financing they need. While this seemingly simple step of financing the buyer may seem like a good idea, we recommend you learn some fundamental elements of the business before becoming a mortgage lender.

Owner financing is a sensible way to sell property and extremely common all over the United States. (It has been estimated that approximately 10% to 15% of property sold is now sold with seller financing.) Offering to finance the purchaser of your property can help you sell it quickly, may provide tax benefits and will give you a nice source of monthly income.

 
Seller financing is rapidly emerging as THE solution to the current crisis in conventional lending. It's responding to the sluggish real estate market by presenting a smart alternative to conventionling lending. By offering to finance the sale of their properties, owners are selling up to 70% faster than those that are available for purchase only through conventional loans or cash. They're also selling at prices much closer to market values.

Many times a property owner considers using owner-financing as a quick and easy way to sell their property. In fact, sometimes they ignore the questions of qualifying the buyer and properly underwriting the sale (obtaining an adequate down payment, interest rate, etc.). You can't assume that your investment is protected simply because it is secured by your property. You may be able to get the house back in the event of a foreclosure, but what if your potential buyer destroys the property?

In most real estate markets - those that have fairly aggressive lender underwriting and affordable interest rates - most properties sell with a 3rd party qualifying the borrower and the collateral (the property) and then extending a loan. So the issue is, how can I determine if the property I'm selling falls outside of what most traditional mortgage lenders want. Secondly, when can I safely owner-finance a property to a buyer who cannot get a conventional loan or doesn't want to get a conventional loan.

First let's focus on the property. Traditional third party lenders tend to shy away from single-family homes with any of the following issues: sale price range (usually under $60,000 in value), repair or condition problems, improvement to land ratio (i.e. small house on 25 acres). In addition, other types of property such as land only, and unique commercial property are all difficult to finance through a third party. If a property of any type is quickly and easily financed by a third party, why should I owner-finance it? The answer is maybe you shouldn't. It depends on the amount of time, energy and money you have to devote to maintaining and showing the house. Each market determines the amount of time it takes before a property will sell and each day that your property is not sold is costing you time and money.

Seller Financing is suitable for a variety of properties, including single family homes, multi-family units, commercial properties, mobile homes, farm acreage, ranches, and raw land. Once limited to low-cost properties, seller financing is now offered on million-dollar homes. With all the lending issues involved with jumbo loans (typcially over $417,000) we are seeing more and more high end homes selling with Seller Financing.

The popularity of Seller Financing is staggering. Two years ago, only one in four hundred real estate transactions used Seller Financing. Today, that number has increased to one in every fifty.







Owner Financing Advantages for the Seller
  • The number of potential buyers will increase significantly.
  • The sale price should not have to be reduced below market value.
  • The sale will close more quickly than with bank financing.
  • Any potential income tax liability from the sale may be able to be deferred.
  • Lower over all closing costs and time invested.
  • In most cases, the note you create can be sold and converted into cash at any time.
  • In some cases owner financing is the only way to sell the property especially when we start looking at land ratios, condos, or high priced houses situations.
  • The seller can receive a higher yield on his/her investment by receiving equity with interest.
  • The seller could negotiate a higher interest rate.
  • The seller could negotiate a higher selling price.
  • The property could be sold 'as is' so there will be no need for repairs.
  • The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.
Owner Financing Advantages for the Buyer
  • The buyer will not have to meet rigid bank qualifying standards.
  • The buyer may be able to purchase a property the banks would not qualify him for.
  • The buyer will pay lower closing costs.
  • The buyer may be able to make a smaller down payment than the banks would require.
  • The buyer may have the option of creating flexible payment terms.
  • The buyer won’t have to pay origination points or mortgage insurance.
  • The buyer may not have to establish a prepaid escrow account for taxes and insurance.
  • The buyer can request special conditions for the purchase, such as inclusion of household appliances.
  • Both the buyer and the seller can make substantial savings in closing costs.
  • They can negotiate interest rate, repayment schedule, and other conditions of the loan.
  • The borrower does not have to qualify with a loan underwriter.
The demand for owner financing has increased significantly since 2007 and will continue to climb as more borrowers find they don't qualify for conventional financing. Offering owner financing to potential buyers is a more powerful marketing tool now than ever before.

If you are considering selling a property with Seller Financing give us a call so we can provide you with the right resources to make the most out of selling your property.

 

    A diverse range of real estate professionals and property owners alike are affected by the collapse of the mortgage industry. Virtually any property seller who is motivated and unable to sell in a desired time frame using conventional financing is a candidate for seller financing. The Note Coach is here to help answer all your questions about Seller Financing and to help you with the Creation (Note Manufacturing) and/or Sale of your note so that you can get the most out selling your property in today’s market. We offer a broad range of services to individuals, lending institutions, business owners, real estate agents, and many other professionals nationwide.




    • Individual property sellers who are offering seller financing but could benefit from the NotePro's expertise
    • Individual sellers whose property has remained on the market for extended periods. If you are looking to sell your house fast - seller financing is selling houses up to 70% faster nationwide.
    • Homeowners facing foreclosure and who are either unsure what to do or working with an uncooperative lender.
    • Existing Note Holders who are needing some immediate cash inexchange for the collection of all or some of their note's payments.
    • Real Estate Agents whose clients are anxious, even desperate to sell their properties and Real Estate Agents who just want to close more deals.
    • Builders with unsold inventories whose commercial bankers would welcome well-structured seller financing to avoid bank foreclosures and bankruptcies.
    • Auction house companies, which sell large inventories of foreclosed properties for lenders.
    • Real estate investors who can't sell or refinance property inventories
    • Lenders and mortgage companies who have swelling inventories of non-performing loans and real estate owned assets from foreclosures.
    • Home buyers who cannot qualify for conventional financing but still are good candidates for purchasing a home.
    • Private Investors looking for safe collateral based investments, whether paper or real estate.
    To provide free information and education on the use of Seller Financing and/or installment sales.
    1. Help to Standardize the practice of Seller Financing so that every transaction is handled properly from the initial determination of its suitability as the financing method, through the many steps of the process itself, to the post-transaction communication with the seller. This includes gathering all pertinent information, evaluating findings, arranging due diligence, presenting sound advice, and following every necessary procedure to the letter.
    2. Create quality notes that will serve the seller well, whether the note is retained over time or resold for cash. By following standardized procedures, we can help minimize the seller’s risk and maximize the value of the note.
    3. Enhance the reputation of Seller-Financing and broaden it’s use.
    4. Deliver a quality service for the benefit of buyers and sellers alike.
     
    We offer honest solutions – even when you don’t want to hear it. We are not Real Estate Agents, Mortgage Brokers, or Attorneys but we work with many of them on your behalf. We understand how difficult and stressful it is to sell a house or to face a foreclosure situation. With this in mind, our caring specialists are dedicated to making this process as smooth and as stress-free as possible for all parties.

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