Seller financing or owner financing is a real estate agreement whereby a homeowner extends credit to a buyer to purchase their home. The buyer is expected to pay back in monthly installments with interest within a specified period (usually 5 – 30 years, though it can be less) – just like bank mortgages.
Often, homeowners offer seller financing when their buyers can’t meet the banks’ mortgage requirements. However, that is not the only time you should consider offering seller financing. In this article, we explore the other situations where seller financing might be an excellent choice for you as a home seller.
1. When you want to sell fast
Real estate agents are quick to suggest price reduction of the property if your house is taking too long on the market. In many cases, they are right. Overpricing is one of the biggest reasons why houses don’t sell on time. However, if you (and your agent) are sure your home is rightly valued and want to sell fast, you should consider offering seller financing.
There are many benefits to having an owner financing option on your home. First, you are likely to attract a large pool of buyers, as many prospective homeowners may want to avoid the traditional mortgage process.
Also, you will get to sell your house at your preferred price. Most owner-financed home buyers are willing to pay more provided that the repayment plan is convenient for them. Lastly, you don’t have to worry about being stuck with your buyer. You can choose to sell your agreement note to an investor if an emergency comes up in the future.
2. When selling to an investor
Selling your property to an investor is an excellent option if what you seek is convenience and speed during the selling process. You get to sell your house as-is, get your money in cash, and close in days.
If you find yourself in a situation that requires you to sell to an investor, you may want to offer them a seller financing option. Providing this option is especially vital if your house requires many repairs as it may not meet the investor’s lender’s requirements.
One hidden advantage of offering your investor seller financing is that it may get you a higher sale price. This is because homeowner financing is usually less expensive than most short-term financing options available to investors.
3. When selling a house with a tenant
Some of us are multiple homeowners. We have houses with tenants in them for passive income. However, in times as volatile as this – no thanks to COVID-19 – you may want to get rid of one of the properties.
With homeowner financing, you can offer your tenant the opportunity to own the home they already live in. Taking this step will save you the trouble of preparing your home for sale or having to look for a buyer.
Another benefit is that seller financing can give you a better profit margin than a traditional home sale. Additionally, your tenants may be glad that they can still live in the property and own it in the coming years.
All you have to do is contact a reliable firm, such as Bost Redevelopment. We will help you draft an agreement between you and your tenant to ensure a smooth transition.
4. For investment
One of the primary reasons why homeowners offer seller financing is for investment purposes. It offers budding investors the opportunity to earn a stable passive income. It also provides them the potential to earn a better rate than if they sell outrightly.
The risk involved in an owner financing investment is minimal, provided that there is a good agreement in place. If the buyer defaults, you get your house back! You can hire a professional loan servicing company to serve as a bridge between you and your buyer. This will save you time and eliminate the need to manage payment collection on your own.
Want to talk about your options today?
Are you considering selling your home via seller financing? Do you need help marketing your home and attracting the right buyers? We are here to help you.
At Bost Redevelopment, we are experts at handling every home selling problem you may be facing. We would use our marketing expertise to ensure you get the best buyer for your home at the maximum value possible. Want to talk more about your options? Please leave us a message below with your contact information and let us know how we can help you.