Is Seller Financing Right For You?
With mortgage money a bit harder to get these days, should you consider offering seller financing to your prospective buyers?
That depends. Seller financing—when sellers provide buyers with credit and let them pay out all or part of the purchase price over time—has its pros and cons.
One major pro is that seller financing can give you a competitive edge when it comes to selling your home. Banks have tightened their lending standards, and even buyers with good credit may find it challenging to obtain traditional mortgage financing these days. By offering to take back a mortgage, you help buyers bypass the rigorous bank application process, thereby shortening the period between contract and closing.
Seller financing can be particularly valuable to buyers who are self-employed or who may have difficulty verifying their income or assets. People with less than perfect credit are good candidates for a seller take-back as well.
Another advantage to seller financing: a steady income stream. Assuming you don’t need the equity from your present home to purchase a new one, mortgage payments can provide you with regular income, usually at a return in excess of what you could get by otherwise investing your money.
Obviously, there are risks to holding a mortgage. If the buyer defaults, your income stream will cease, and you may need to foreclose to reclaim your property.
To protect yourself, make sure the buyer puts down a sufficient down payment, and check his or her credit carefully. Consider looking up your buyer on social networking sites like Facebook or YouTube to get a feel for the type of person he is.
It’s essential to work with an attorney familiar with these types of transactions.
If you’re considering offering seller financing, give our office a call, and a CENTURY 21 Professional Champion will help you get the ball rolling.
With mortgage money a bit harder to get these days, should you consider offering seller financing to your prospective buyers?
That depends. Seller financing—when sellers provide buyers with credit and let them pay out all or part of the purchase price over time—has its pros and cons.
One major pro is that seller financing can give you a competitive edge when it comes to selling your home. Banks have tightened their lending standards, and even buyers with good credit may find it challenging to obtain traditional mortgage financing these days. By offering to take back a mortgage, you help buyers bypass the rigorous bank application process, thereby shortening the period between contract and closing.
Seller financing can be particularly valuable to buyers who are self-employed or who may have difficulty verifying their income or assets. People with less than perfect credit are good candidates for a seller take-back as well.
Another advantage to seller financing: a steady income stream. Assuming you don’t need the equity from your present home to purchase a new one, mortgage payments can provide you with regular income, usually at a return in excess of what you could get by otherwise investing your money.
Obviously, there are risks to holding a mortgage. If the buyer defaults, your income stream will cease, and you may need to foreclose to reclaim your property.
To protect yourself, make sure the buyer puts down a sufficient down payment, and check his or her credit carefully. Consider looking up your buyer on social networking sites like Facebook or YouTube to get a feel for the type of person he is.
It’s essential to work with an attorney familiar with these types of transactions.
If you’re considering offering seller financing, give our office a call, and a CENTURY 21 Professional Champion will help you get the ball rolling.
Licence # 00781844 © 2009 Century 21 Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Century 21© is a registered trademark licensed to Century 21 Real Estate LLC. Each CENTURY 21 office is independently owned and operated. All rights reserved.
