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Seller Financing? Yes!! It's the way to go!

Property sitting on the market too long? Agents are encouraged to introduce the idea of seller financing to all the FSBO's out there. So MANY do-it-yourself sellers have no clue on how to properly sell their home, and when it sits on the market, they wonder why. You can't save enough in commissions than hiring an expert.

A great angle to take when calling FSBO's is to "advise" them on offering their property using seller financing. By a seller offering this creative way of selling their property, the seller is saying that they will finance the deal after the buyer pays the standard 5% to 10% down payment. This will attract a large pool of buyers that do not have the best credit score to obtain a mortgage privately through the seller and not have to go to a bank.

This is a win-win-win for everyone involved. Why?

1) The seller has sold his/her property quickly

2) The agent who advised the seller on offering seller financing has given the listing to that agent.

3) Once the deal is done, the seller can sell his future cash payments on the note for a lump sum of cash.

There are literally billions of dollars of seller financed notes in the marketplace. More so now then ever before due to the overwhelming inventory. Essentially, sellers almost need to offer seller financing during these times. It's the way to go!!

Posted by Jared M. Wiener on 08/27/2008 05:42 PM

Comments (12)

seller financing, fsbo, advice, comments

Post is included in group: Active Rain Newbies
Post is included in group: Realtors®

12 Comments on Seller Financing? Yes!! It's the way to go!

AUG

There are some causes for concern with seller financing as well. If the seller is carrying a mortgage they need to be sure they don't have an acceleration clause in their loan agreement. There's also the real possibility that the person with a low credit score will default. Guess how gets to pay for the cost of the foreclosure process? The seller!

This may be a viable option for some sellers however they need to make sure they really understand what they're getting into.

Thanks for the post Jared. Brian makes a good point. I would be interested to hear you elaborate more...

These days. . that maybe the only way a seller can get the price they are looking for

I would like to know some specialists who actually can specialize in these types of closings. If I had a team of people ready to move forward with the paperwork, such as title companies and the like, then it would work out perfectly.

Have any suggestions on what type of people I may need on my team for seller financing?

Kind Regards,

Manolis

Jared. Thanks for sharing about that. Royal..

Brian,

I completely agree with you. A seller must proceed with due diligence when taking back a mortgage note. I specifically created this blog because my company provides lumps sums of cash for sellers of owner financed notes who wish to sell their future monthly payments for one large sum. By doing this, the seller relieves themselves of any chance of foreclosure and the funder of the note takes on all the risk. Most owners of mortgage notes do not want to hold on to their anyway. They want and need the lump sum rather than worrying about whether or not they will be receiving their check every month. That's where I come in! :)

When advising this method to a seller, the amount of the discount value of the note comes into play. The seller may be better off discounting the home price to attract a buyer than selling the home and discounting the note. At least with the lower sales price you know what is happening as it happens instead of guessing what the note value might be after the sale.

AUG

Interesting Jared. I will pass this on.

Jared,

Thanks for clearing that up. Like Robert points out the seller also runs the risk of holding paper that is not worth as much as they sold the house for. Would you explain where the upside is for your company? There has to be are reason for you to take on the risk.

Hey Brian,

To elaborate on my last blog, my company does not literally fund the note. My company is an independent representative of a funder based in Texas. What I do is find the note holders, submit it to my funder for a price, then quote that price back to the note holder less my commission. The funder assumes the risk because they purchase the note at a discount. Their profit is almost immediate as soon as they take on the note. Of course, the worse the credit of the payor, the less the amount is offered for that note.

Thanks for sharing the post.

Jared,

You make a strong point in that "Seller financing" can prove to be beneficial to the savvy seller and real estate professional. I think often we look at the glass half empty and rob ourselves of many benefits simply because we don't educate ourselves on the process. We must shift our thinking. Every investment or transaction comes with a certain level of risk, it's up to us as articulate and reasoning professionals to reduce the level of high risks through due diligence and then go for it.

I work with a network of investors, Realtors, builders and mortgage professionals countrywide and Seller financing is truly the name of the game.

Jared, let's talk, I would be interested in doing business with you.

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