Having trouble selling? Have you considered owner financing the deal? Owner financing tends to yield a higher selling price and excellent return on your money. But there are some risks involved. Here are 6 tips to help you minimize your risk.
1. Collect a large cash down payment of at least 10%.
2. Ask for additional collateral. If the buyer does not have the required down payment and you feel comfortable with the transaction, proceed as planned be require additional security in place of the down payment such as a car title.
3. Check their credit. There are many options for obtaining a credit report. Have the buyer obtain a credit report with a credit score and bring it with them when applying for the loan. Bed credit is okay, as long as the issues have been resolved and they have recovered financially.
4. Trust your gut. I know it sounds clich but usually your gut instinct is the best instinct. If you do not feel comfortable with the person buying the home, you may need to walk away. Remember you are entering into a long-term relationship with the buyer and you need to be comfortable with the transaction.
5. Look at the big picture. The buyer has found a lender that is willing to give them a mortgage for 90% of the homes value. They have agreed to allow the buyer to put 5% down if you hold a 5% second mortgage on the house. The big picture is you\’ll receive 95% of the purchase price up front and the remainder in payments over say 5 years. Worst case scenario, you never get paid and foreclose on a home you were paid 95% on already.
6. Talk to an attorney. Determine what the foreclosure period is in your state. Each state sets different periods for foreclosure through the courts. Knowing these things can help you sell in the safest way.
Providing seller financing allows you to get the most money possible for your home. Be smart about it and this can be a winning transaction for you and the buyer.
Hubert Miles is the founder of Waterfront Houses USA, an internet advertising service that provides River Land For Sale and Coast Real Estate in the US and Canada.
categories: real estate,land,house,home,financing,finance,business,mortgage,coastal,river homes
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