Are you considering selling your home with owner financing? Generally when you are offering owner financing as a means of purchase for your home, you can commend top dollar and a great interest rate. Here are six techniques you can use to lower your risk.
1. Collect a 10% cash down payment as part of the owner financing agreement.
2. Seek additional security. If the buyer has part of the down payment and you feel comfortable that the buyer can pay the payments, as for additional security such as a car title that can be released after a short period of time, for example 2 or 3 years, if payments are made as agreed.
3. Check the buyers credit. Don’t take the buyers word for it; get a copy of their credit report. Get the buyer to provide you with a copy of their credit report. They can get one on the internet from Equifax or one of the other major national providers.
4. Trust yourself. If something doesn’t feel right about the transaction, it likely isn’t right. You are entering into a long term relationship that shouldn’t be taken likely. You need to be 100% comfortable with the deal before you move forward.
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.
Offering seller financing makes it easier to sell, and to get a higher price. Just be safe about it. Have a real estate lawyer review your paperwork, and use the tips here.
Hubert Miles is the founder of Waterfront Houses USA, an online marketing service that provides Waterfront Homes and Waterfront Homes For Sale in the US and Canada.
