Selling real estate can be a tough job, and it can be even harder when banks aren’t offering loans. So what can you do to sell more homes to more clients? Look into seller financed homes. Seller finance is a process where the owner of a home loans to a buyer all or part of the purchase price and the buyer then makes payments directly to the seller. Unlike a traditional loan from a bank, the potential buyer does not need to have amazing credit or make a huge down payment. Because of this, seller finance opens up a whole other buying option for many potential buyers.
Many home owners who are looking to sell their home could benefit from seller financing. Why? Because there are thousands of people looking to by homes, but very few can qualify for a typical loan from a bank. Additionally, most sellers don’t want their home to sit on the market for months or even years, and seller finance can prevent this from happening. Here are a few instances to take on a seller finance transaction:
1) The potential buyer does not qualify for conventional loans: If the potential buyer has made late payments on bills and/or credit cards, declared bankruptcy or had an unsteady income, then they could have a poor credit score preventing them from getting a loan with rates they can afford. Even though a seller will still likely ask for a credit report, an explanation of circumstances could grant the buyer much more leniency and consideration.
2) The potential buyer cannot afford a large down payment or closing costs: A typical home loan requires a 20% down payment. This is much more than many people can manage to save up. Closing costs can also add thousands of dollars to the purchase of a home. While these costs can and most likely will still be required of a buyer, they can be lowered drastically. Much of these costs, along with some other fees, can be negotiated between the buyer and seller.
3) The potential buyer is in a hurry to relocate. Sometimes people need to move in a hurry to relocate for a job or family circumstances. Seller finance can be a less lengthy process than working with a bank for loan approval.
Seller finance will not only benefit your clients but will benefit you as the agent. With seller finance you can have faster closings, allowing you to take on more customers. You will have more qualified buyers. You also have the option to collect commissions over time as a steady income until the loan is paid off, or all at once upfront.
If you have not taken on clients looking to sell or buy a seller financed home, there is no better time than the present. Do some research, and you might find that this is a real estate market that could really benefit your company and your clients.
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