Maybe Seller Financing is the Answer!

Are you stuck with a property that won't sell because getting it financed seems next to impossible?  Conventional lenders will not finance certain types of properties because they feel it is too risky.  A single-wide mobile home, a small house with multiple acres, and a property with condition problems are a few property types that are difficult to get financed through a conventional lender.  Sometimes the individual requesting funding has less than perfect credit but is still capable of making complete payments in a timely manner.

In these types of scenarios, it may be beneficial for the seller to finance the deal.  Before doing so, the seller should obtain a credit report on the potential buyer and become familiar with structuring seller financing (also known as owner financing).  Just as a bank does prior to lending, a seller who decides to owner finance should evaluate the buyer's ability to make full payments on a consistent basis.

I should point out a significant difference between bank and seller financing.  Bank financing involves the lending of money, where as, seller financing does not.  When a seller finances a transaction, he/she is extending a credit to the buyer, who agrees to make monthly payments at a given interest rate for a specific amount of time.  Also, owner financing often requires that a balloon payment be made by a certain date.  This simply means that full payment of the remaining balance is due by a specific date.

When seller financing is effective, the buyer gets the property they want and the seller receives payment over time from the sale.  It is a win-win situation when borrowing from a lender is not possible.  As long as the seller determines that the buyer will make timely payments based on credit history and income, seller financing is an effective strategy in completing real estate transactions. 

A difficult aspect for some sellers, though, is the fact that full payment is not received upfront when providing owner financing.  The seller may have to wait years before full payment is received.  An option to remedy this situation is for the seller to sell the future note payments they are scheduled to receive, for a discounted lump sum of cash.  This enables the seller to access their cash flow in a short period of time for any reason they may have.  The money could be used to fund another real estate project, invest in a business venture, pay medical expenses, reduce debt, or utilize for a number of other purposes.  Additionally, a lump sum can be paid out for all remaining note payments or just a portion of remaining payments!  If one chooses to sell a partial number of payments, the note reverts back to the seller once the note buyer collects the entire payment stream which was purchased.

To learn about seller-financing as an option for difficult-to-finance scenarios, you can download a FREE e-book which explains what needs to be done prior to the sale, how to structure the financing, and how to handle legal issues of creating and servicing a seller-financed note.  Visit www.StreetwiseSellerFinancing.com and enter Access Code: 2947 when you download this FREE resource.