Profile picture for want_to_selll_it

Should we think about seller financing?

Had a potential buyer ask if we might do seller financing.  He wants to put approximately 50% down and have us carry the other half.  We own our home outright so this is plausible.  What are the pros and cons of seller financing?  
  • November 05 2011 - US
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Answers (8)

Sounds like a good start to Seller financing.  Have escrow draw up the documents for you or a good Real Estate attorney and make sure you obtain title insurance. Ther are other legal and tax consequences, so be sure to check with you advisors,

Jack
  • December 04 2011
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Profile picture for Cindy Quinton
I think there is a LOT more owner financing going on than you would get anyone HERE to admit (because most of the posting here is from people in the "biz" not your average person like me who is currently obsessed with real estate, lol!). For one thing most of the professionals on Zillow totally lose out when an owner finance happens....no mortgage professional gets a brokerage fee and no realtor gets commission. However, I personally know quite a few people who have or are currently on one end or the other of an owner finance. But I do agree with some of what is being said about using a real estate attorney and drawing up an excellent contract.
 
As far as people wanting to do an owner finance being a bigger risk, it is harder than hell to get money for a home from a bank right now. And there may be a million reasons why a person would want to go that route; however they have managed to aquire a decent downpayment in this case....so they've done something right.

Also as  far as your end of the deal, look at it this way, what were you going to do with the money? If you were going to put most of it into savings you certainly weren't going to make any money with it there with current interest rates. And if you were going to put it back into a house look at it this way,..with interest rates the way they are now, you could borrow the money for your new house and still be making a LOT of money on your owner financed home in the meantime, especially if you charge the buyers a high interest rate which you should since there is obviously somewhat higher risk.

Anyway, I'm just saying it's VERY difficult to get an answer about ANYTHING here without having to weigh the biases and professional concerns of whomever is answering you. I can't fall under suspicion though because I am "JUST" a lowly future home buyer! Hahaha!
  • December 04 2011
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Profile picture for sryan1980
50% would be an oustanding deposit on a seller-financed home. Make sure to check the buyer's credit and demand proof of income.
  • December 04 2011
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Over the long run, owner financing can create a profitable venture, provided the person you sell to pays you the mortgage.   
  • November 28 2011
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Profile picture for Crazy Deacon Bob
WETDAWGS has the correct idea.  Determine three things...The highest reasonable price for your house, the highest reasonable interest rate (10% or more), , and the buyers source of income.  Do these 3 things and you can sell the mortgage on the market. [contact information and website deleted by Zillow moderator.  Please see our Good Neighbor Policy]
  • November 25 2011
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Profile picture for palmbayrealtor

Seller financing can be a win win situation for both the Seller and Buyer. Seller sells the house and a Buyer is able to buy a propery that they might not be able to buy other wise.  The question you have to ask is will this work for you. The 50% down is a great start but what are the other terms. This is a great way for you to have monthly income. You might want to consult a Financial Advisor or an Attorney. Good Luck

  • November 05 2011
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Profile picture for wetdawgs
Pros: if you want to sell the house and are having difficulties, then you will have sold the house.

Cons:   People wanting seller financing have been rejected by lenders for a reason.  Therefore, consider a higher than market interest rate (often double or more the current market rate), nonrefundable 50% down, a deadline for getting their own financing,  and a legal contract prepared by your attorney that allows you to foreclose easily if they forget to pay. 

Other cons  your cash is not freed up.
  • November 05 2011
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Profile picture for sunnyview
You need an air tight contract drawn up by a sharp attorney and a nonrefundable down that is large enough to cover ANY possible damage to the property. If the buyer is willing to sign your contract, commit all or most of their down payment as a non refundable deposit and limit the amount of time for your owner carry to no more than 3 years without a signed extension signed by both parties, you might consider it.

Many owner finances fall through so you do not want the buyer to walk away with their down money if they change their mind later. Protect yourself.
  • November 05 2011
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