Selling Homes with Owner Financing and Private Lending

Real Estate Agent with Adams, Cameron & Co., Realtors

I'm selling homes in this market with Owner Financing and Private Lending!


If you are an owner and own your home free and clear, you should consider owner financing in this market.  With Owner Financing, you close the purchase of your home just like any other real estate sale.  The only difference is that you are the bank.  The title company or attorney will set up your mortgage/note and you will negotiate the terms you desire with the buyer. 

Here are two recent examples I have had.  One owner was looking for consistent income over a period of time.  Therefore, he sold his home with a 10% down payment, we verified the buyer's occupation and income, pulled credit (yes, there were credit issues which we have the explanation and the owner was satisfied), and decided on the terms of the loan.  The owner did a 20 year fixed rate fully amortized loan at 6.5% with no pre-payment penalty.  The buyer is responsible to pay taxes and their own insurance, remember they own the home! 

Another owner did 30% down on a 3 year balloon at 7% interest only payments.  Interest Rates

Buyers have the option of obtaining private financing too!  Generally, private financing will research the home for market value and want a minimum of 40% down with interest rates ranging from 9-12%.

In the event the buyer of the home defaults, well the "bank" (previous owner) will have to begin foreclosure proceedings, and yes, this will cost money.  In the end, however, the owner has the original deposit and possibly the property (asset) to re-sell. 

In the event of the balloon, if the buyer can not pay off the loan at the end of the term, the private lender or owner would then refinance the buyer and, of course, renegotiate the terms.

I think this is a great alternative for owner's that are in a position to do this.  Where, in this market, can one make this kind of return? 

Visit me to help you with selling your home, creatively! 

Posted by
Kristin Petersen is an award winning real estate agent at Re/Max Property Centre located in Ormond Beach Florida .  With over 20 years experience, including real estate finance and appraisals,  you are in good hands.  NOTHING Beats experience! Contact Kristin Petersen today.  
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Comments (2)

David Gibson CNE, 719-304-4684 ~ Colorado Springs Relocation
Colorado Real Estate Advisers LLC - Colorado Springs, CO
Relocation, Luxury & Lifestyle residential

Kristin when the seller is willing to take a second lien they can ask for additional collateral in addition to the second lien on the house. If the buyer has a paid for car, take a lien on that as well. Maybe a family member has collateral they are willing to pledge. Credit unions often work best for second lien loan scenarios.

Aug 26, 2011 04:06 AM
Kristin Petersen
Adams, Cameron & Co., Realtors - Ormond Beach, FL
Realtor - Daytona Beach, Ormond Beach - Ormond by

That's a good suggestion David!  Creativity is King in our market today!

Aug 26, 2011 04:10 AM