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5 Reasons Owners Offer Seller Financing

Why would a seller allow a buyer to make payments over time for the purchase of property?

Wouldn’t the seller rather get paid now and require the buyer to obtain a bank loan?

Here are 5 reasons property owners offer seller financing:

1. Reduced Marketing Times

What is the first thing a real estate agent does when property is not moving and has been on the market for 60 to 90 days? They reduce the price and add the tagline “price reduced” to all advertising and signs. Rather than reduce the price, it might be beneficial for the seller to offer financing. Buyers provided with financing can certainly pay full price in exchange for the many benefits they receive with owner financing, including the money they save by not paying expensive loan fees, origination fees, and points.

2. Increased Inventory of Prospective Purchasers

By offering owner financing, the seller increases marketability with a wider group of available purchasers. Statistics show that almost 40 percent of the American population is unable to qualify for traditional bank financing. While not all of the “unqualified” group would be an acceptable risk for owner financing, it still widens the market of prospective buyers considerably. Anyone who has added the words “Owner Will Finance” or “Easy Terms” to a For Sale ad or Multiple Listing Service (MLS) listing knows the phone will ring off the hook with interested prospects.

3. Reduced Closing Times

Another advantage of offering owner financing is substantially lower closing times. A closing involving a third-party conventional lender can take six to eight weeks while closing a seller-financed transaction through a reputable title company can take as little as two to three weeks. This is due to the reduced paperwork and less restrictive due diligence process.

4. Investment Strategy for Hard 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 cash or wholesale price on a hard-to-finance property and then reselling at a higher retail price with easy financing terms.

5. Interest Income

Why let the banks earn all the interest? Sellers can keep the property-earning 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

If considering seller financing, be sure to consult with a qualified professional to properly document the transaction.

It also helps to speak with note investors to gain insight on appealing terms and structuring techniques. This assures top-dollar pricing should you ever want to convert the payments to cash by assigning your note, mortgage, deed of trust, or contract to an investor.

 

Safekeeping the Original Mortgage Note

Can you easily locate the original mortgage note? This important legal document should be kept in a safe place, and here is why! The promissory note is a promise to pay or IOU from the property buyer. It spells out the amount due and terms of repayment. In legal jargon it is known as a […]

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Avoid Three Seller Financing Mistakes

Would you rather have $97,000 to sell your $100,000 note or only $80,000? The difference in usually comes down to the big three. Here’s the three biggest mistakes note sellers make and how to avoid flushing money down the drain. Mistake #1 – Failing to Check Credit The payer’s credit report lets you know how […]

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Seller Financing – How Much Can The Buyer Afford?

Many sellers accept owner financing without any idea of how much the buyer can actually afford to pay. The last thing a seller wants is to stress over receiving monthly payments or worse, getting the property back through foreclosure. 3 Ways to Calculate Payment Affordability Before Accepting Seller Financing The amount a buyer can afford […]

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Seller Financed Notes and Interest Rates

The interest rate a seller agrees to accept when providing owner financing to the buyer has a large impact on the note’s value. Unfortunately, many sellers overlook this important decision. Why Private Mortgage Note Interest Rates Matter Inflation Fighter Each year it seems the cost to buy the basics just keeps going up. It’s not […]

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What is Seller Financing?

When a seller allows a buyer to make payments over time for the purchase of property, it is known as owner financing or seller financing. This private financing by the seller can take the place of a bank loan or be in addition to a conventional mortgage. The payment amount, interest rate, and other terms […]

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Use Outside Closings To Sell Mortgage Notes!

Ready to sell mortgage notes? Protect yourself with outside closings! When an investor has performed their research and is ready to purchase a private mortgage note they will ask the seller to deliver original documents (note, recorded mortgage, etc.) and sign the transfer package. The Note Buyer The note buyer will want these original documents […]

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Sell Property Fast With Owner Financing

When a property isn’t selling most real estate agents are quick to suggest a reduction to the sales price. It is common to see the tag line “Price Reduced” added to for sale signs, listings and ads. Rather than just reducing price… consider offering owner financing to sell a property quickly! In today’s real estate […]

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Safe Seller Financing Tips

It’s a tough time to sell a house. Hoping to stand out from the crowd, sellers are advertising “Owner Will Finance!” Accepting payments over time provides buyers an alternative to bank financing. Of course sellers don’t want to trade a house that won’t sell for a buyer that won’t pay. Before you agree to “Be […]

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Can I Sell Part of My Mortgage Note?

Can I Sell Part of My Mortgage Note?

Owner Financing doesn’t have to mean waiting years or decades to receive money. Sellers have the choice to sell all or just part of their future payments for cash today. Option 1 – When note buyers purchase all the remaining payments on a land contract, mortgage note, or trust deed it is considered a full […]

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How We Can Help!

Receiving payments on property sold?

Tired of waiting of your money?

Worried the buyer will stop paying?

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We Buy Mortgage Note, Trust Deeds, and Contract Nationwide!

 
Accepting payments on the sale of real estate might have made sense at the time, but circumstances change.

Many sellers discover they would now prefer cash today rather than the small amount that trickles in each month.

Here are just a few reasons people have sold all or part of their seller financed mortgage notes for cash:
 

  • Retirement
  • Taxes
  • Investment Opportunity
  • Expensive Medical Care
  • Vacation
  • College Tuition
  • Unexpected Financial Changes
  • Peace of Mind – no more worrying if the buyer is going to make late payments or having to foreclose
  • Accounting headaches, IRS regulations, paperwork hassles and the list goes on…

 
The only way to decide what is best for your situation is to know the options available.

Discover Your Options - Request A Free Note Analysis!