Why would a property owner sell with owner financing, allowing the buyer to make payments over time? Wouldn’t they prefer as much cash as possible now?
5 Reasons to Sell Real Estate With Owner Financing:
1. Get It Under Contract Without Price Reductions
Let’s say your listing has been on the market for 60 or 90 days. What’s the first thing most real estate agents do? They reduce the price. Next thing you know, your listing includes the tagline “price reduced” and buyers smell blood in the water.
Buyers provided with financing can pay full price in exchange for benefits they receive with owner financing. To begin with, they save money by not paying expensive loan fees, origination fees, and points.
2. Market To A Greater Number of Prospective Buyers
Almost 40 percent of Americans are unable to qualify for bank financing. Offering owner financing opens the market to more buyers.
Yes, some who may be interested assume they’ll be able to purchase with no down payment or bad credit. And, there’s no point in selling to someone who may not be able to make payments. Fortunately, there’s a process for filtering out those who don’t qualify.
Add “Owner Financing Available” to your ads and the MLS listing. The phone will ring off the hook.
3. Reduced Closing Times
Another advantage of offering owner financing is faster closing times. A closing involving a conventional lender can take six to eight weeks. Seller-financed transactions through a reputable title company can take as little as two to three weeks. This is due to the reduced paperwork and less restrictive process.
4. Investing In Difficult to Finance Properties
There are many properties that encounter financing difficulties including mixed-use property, land, mobile and land, non-conforming, low value, and others. Investors realize excellent returns by paying a reduced price on the hard-to-finance property. Then they resell at a higher retail price with easy financing terms.
5. Interest Income
Why let banks earn all the interest? Sellers can keep income even after they sell by offering owner financing. For example, a $100,000 mortgage at 9 percent with monthly payments of $804.62 will pay back $289,663.20 over 30 years. That additional $189,663.20 (over the $100,000 mortgage) is power of interest income!
Work with Owner Financing Specialists
Considering selling with owner financing? Be sure to consult with a qualified professional to properly document the transaction.
It also helps to speak with note buyers to gain insight on appealing terms and structuring techniques. This assures the best pricing should you ever want to convert the payments to cash by assigning your note, mortgage, deed of trust, or contract to an investor.