One of the most misunderstood topics in real estate is Seller Finance. This is probably due to the fact that the sales finance is usually discussed from the buyers perspective. And in most cases the buyer is a first time investor trying to get a good deal or they start buying real estate with no money down. But too often the agreement falls apart and the stories are exploding about the problems with the sellers financing.
Its time to develop the power of seller financing and the simple secrets and techniques to keep the transaction a positive experience for everyone. While most can explain the benefits of the seller financing for a buyer what most do not understand is that the seller financing is actually better for the seller than it is for the buyer. Here are several ways that the seller can benefit from offering the seller financing on his property.
Timing. The seller has complete control over the time of sale when offering the financing. The seller can decide how long it will be before the sale closes. The seller can decide how long they can stay in the house after the sale closes. The seller can determine exactly how long the buyer has to pay on the mortgage and when they need to refinance and pay off the loan. And by offering the seller financing they can get their homes sold faster due to the appeal of the seller financing to the market in general.
Higher Sales Price. Market value is based on supply and demand. Most sellers do not offer the seller financing so there is a limited supply but there is a high demand. As a result the price of the home in higher than the other comparable housing in the neighborhood. Since the traditional cost of mortgages is no longer available in the equation you can also collect the money as much as .5% of the housing value as part of the sales price.
Cash at closing. There is nothing that says a seller must finance the entire purchase price of the property. The seller may require a prepayment that will give a little money upon closing. There are more advanced ways to collect money upon closing which goes far beyond a payment but may result in a zero down for the buyer.
Payments over Time. When the seller finances equity in his property these payments will be a stable income stream for the seller. This will be a fantastic income stream for someone who can be downsizing or who does not want their property for any reason this is especially good at investment properties.
High return on investment. With regard to equity as an investment payments from sales finance are better than you would expect from a savings account CD or fund. Although the interest on the seller finances the mortgage is small the principal balance of the investment is greater than the seller could have gained through traditional sales.
Hard properties sell easily. Sellers who have difficulty selling real estate can sell them with sales finance. Again demand for any property increases as more people are eligible to buy them.
Collateralization. The seller checks the terms of the mortgage and may require additional collateral to secure the loan. This extra security can come in many ways. Obviously the seller may require a large payment. But some other options include additional c.signers on the loan or equity in a 2nd property. If the buyer owns another home or own investor the seller may attach his sales finance to the other property. This will make it more painful for the buyer to default because the seller can claim the extra property in the event of a foreclosure.
When selling a property it is the owner who has control over the entire transaction when offering sales financing. The seller checks all aspects of the sale including the date price terms return on investment and security and protection of equity. Because the seller has the flexibility to make a sale meets all his needs why would you sell it in any other way?
How do you want to offer sales finance but remove all personal responsibility for the property after the sale? How do you want to increase your income from your rental property and get rid of ALL property management? How do you want to pay twice what your property is worth? How do you want to sell your investment property and never pay capital gains taxes? Get ready for some practical examples of sales finance tips and techniques that will keep you worried when selling your property.