Вы просматриваете: Главная > Room > What’s this about seller financing

What’s this about seller financing

What’s This About Seller Financing?

Seller financing is known to be a very beneficial deal for some buyers. This is because the financially capable owner decides to fund for the mortgages so he could easily sell the home and profit massively from the sales. This rare deal is then a useful strategy to quickly close a deal.

In most cases, this type of financing has some aspects similar to conventional loans. The contract agreement is still present, which both the buyer and seller must strictly abide by. The typical contract, however, for this set up gives more power to the seller. This is because he plays double role – financier and homeowner. He could immediately end the deal when the buyer does not comply with any particularities of the payment. Also, this set up may materialize in two ways – full loan for the purchase price and lease to own. The first option maintains a short term agreement. A large balloon payment is also part of the deal. The other one allows the buyer to lease the property for 2 to 3 years but with a higher demand for down payment. Upon initial negotiations, a portion of the monthly payments would be allocated for the total price of the home. Moreover owner financing may also be considered a wraparound financing wherein the loan could serve to cover for another existing funding.

If this is the nature of the real estate transaction, both the buyer and the seller are in for many advantages. Firstly, they are both directly involved in finalizing the terms and conditions of the deal. Thus, the arrangement could easily close as their preferences are prioritized. The closing costs are also less expensive. Since they are the main players in the transaction, there is no need to pay for massive agent fees and other expenditure related with closing the deal. Conversely, satisfactory results could only be expected if both parties are knowledgeable in this kind of set up or else their finances would go to waste.

There are also specific advantages for the seller. As said above, he has more control of the situation as the finances are mostly dependent on him. He has then the authority to formulate the repayment schedule. The usual timeframe is from 5 to 10 years. A balloon payment could also be demanded as the payment period approaches the end. If this is the case, such expense could be shouldered by the buyer or third party lender.

With conventional loan set ups, the lending agency or bank usually benefits from the profits of the sale. With owner financing, the seller then diverts the gains to his own pockets instead. The owner could massively benefit from a higher yield as he would also receive the interest-bound equity. Moreover, earnings could be higher too. Higher asking price is possible as this type of financing allows a buyer to give lower down payment. Lastly, expenses for showcasing the home are relatively fewer. The property could be sold “as is”. However, it still must be in livable condition.

This deal also benefits the buyer. Firstly, it is easier to qualify in purchasing an owner-financed home as there are fewer requirements. In some cases, the buyer is not required to qualify with a loan underwriter or purchase private mortgage insurance policy. Also, the repayment period is a sufficient timeframe in accumulating savings to pay for the loan. In case finances are still lacking, this period remains ample to improve credit score so as to easily obtain other loans to complete the payment term. Another common favorable scenario is that the buyer may possibly request the seller to include appliances, furniture and even vehicles in the purchase deal.

Note that in any case the buyer fails to fully pay the seller exceeding the settled payment period, the latter party could repossess and then resell the home. So both parties of the transaction could benefit massively, all responsibilities should be accomplished under the negotiated terms and conditions.

  • Добавить ВКонтакте заметку об этой странице
  • Мой Мир
  • Facebook
  • Twitter
  • LiveJournal
  • MySpace
  • FriendFeed
  • В закладки Google
  • Google Buzz
  • Яндекс.Закладки
  • LinkedIn
  • Reddit
  • StumbleUpon
  • Technorati
  • del.icio.us
  • Digg
  • БобрДобр
  • MisterWong.RU
  • Memori.ru
  • МоёМесто.ru
  • Сто закладок

Метки: , , , ,

Оставить комментарий