Owner Financing to Sell your Home

Although there are many options and resources available for standard home and property sales,  for multiple reasons it can sometimes be difficult to sell traditionally in the ever-changing market landscape. For those who've experienced such troubles, with a property sitting on the market for months or even years, Owner Financing may be a viable solution. 

Owner Financing 

​In owner financing, or seller financing, the home buyer finances the home purchase directly with the seller, typically eliminating the involvement of a bank or mortgage lender- although sometimes there may be a small amount loaned to the buyer by an institution in combination with the owner financing. The seller extends enough credit to the buyer to cover the cost of the home, and then the buyer makes regular payments to the seller until the cost of the home is paid for in full. The amount of credit extended is typically the price of the home minus any expenses for closing costs and a down payment if applicable. The seller determines the interest rate and all details of the transaction are documented and signed into contract by both parties.
 
This is where a real estate promissory note is created. The buyer signs a document, the promissory note, which details all the terms of the loan, including the interest rates, the repayment schedule, and any applicable consequences should the buyer enter into default. Now, the seller takes back the note and both parties enter into terms of the agreement. The seller is a note holder and receives scheduled payments for the property.

Why Owner Financing?

             "Owner financing opens your property to a broader market of buyers"
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Owner Financing can be a mutually beneficial dynamic for both Buyers and Sellers. Why?

Buyers

·      Save the points and fees associated with institutional financing
·      Buyers who may own the maximum number of properties they are allowed to finance from lending institutions can work with you
·      Some professions, such as full time property investors, may not be able to prove to lending institutions that they have the necessary income to obtain a loan
​ ·      Buyer may not qualify for institutional financing for a variety of reasons- and many of these reasons do not translate simply into the buyer being a risk

Sellers

·      Higher pricing due to targeting those who may be unable to get institutional financing ·      Potentially better interest rate received than bank would
·      Spreading out the gain on the property sale over many years, avoiding being bumped immediately into a higher tax bracket
​ ·      Faster sale due to buyer not having to wait 45 days for fulfillment of institutional funding requirements

While the prospect of owner finance is definitely a long term commitment and may seem daunting, I personally have an option which would allows sellers to utilize the market appeal of owner finance to sell their home while you reaping the benefits of a traditional home sale- the profits gained from selling outright. This option is called a simultaneous closing.

Simultaneous Closing: 

If you are a seller who hasn't closed yet, it may be worth it to consider owner-financing as a method of selling your home or property. The flexibility and increased options for buyers opens up your market potential, and once this process is initiated, I can partner with you: as the home is sold and you take possession of the owner carry back note (mortgage note) I can buy the note from you for cash. This way you still walk away with the value of your home in the large payment you hoped for.

1. Advertise your home as being available for owner financing- I can refer you to real estate agents who will work with you to sell your home this way, professional experts with experience in these transactions.

2. When you have procured an interested buyer and are prepared to close, we work together to get the paperwork in order for the simultaneous closing.

3. As the home is sold, I will purchase the note, and you will walk away with a lump sum of cash.

If you are interested in exploring owner financing to sell your home, or in setting up a simultaneous closing, With Purpose, Forward is here to help! Contact me today.