SELLER FINANCING IS THE FUTURE

By
Services for Real Estate Pros with A+ NOTE LISTING SERVICE

 I think most people look at seller financing as an ends-to-a-means in facilitating a tough real estate sale and in many cases it is. The need to sell a property due to a divorce, illness,or a looming default can cause a Home Owner to create a private mortgage that,quite often,favors the buyer and frequently puts the seller in an undesirable position.

 Many mortgagees are creating private mortgages that require little or no money down,which can be a fatal mistake. The new Home Owner has no investment to secure against default. They are basically paying rent from month to month and when times get tough,they vacate. Their credit score takes a hit but they aren't out ten to twenty thousand dollars. If you add to the no money down,an interest only payment plan, you'd almost be inviting disaster.

 Seller financing is an excellent long-term investment. If created properly,the seller will make tens of thousands or more over their asking price. The seller should always remember that they are,in most cases doing a favor for the buyer by providing the financing.

 While the length of the loan and interest rate are negotiable,two things should always happen. First,there should be enough down payment to cover foreclosure costs,just in case,and second,there should be some pay down of principal with each monthly payment. Consider the down payment as foreclosure insurance and the mortgagor will build some equity,create a payment history and improve their credit score. The mortgagor will have a good chance of refinancing if they stay in good standing.

 With the current state of the economy and the inability for many to get bank financing,there is certainly going to be an upsurge in private financing and what most people don't realize is that there are thousands of potential buyers constantly shopping for trust deeds and promissory notes to invest in. If the mortgagee takes care in creating a quality note,they can receive a down payment,collect monthly payments for 12 to 24 months and then sell a well seasoned note for a good price and clean up.

Comments (0)