In this article I will discuss certain tips which you can use to offer seller financing safely. But before I go deep into the topic let me explain you what is seller financing and why you should take up this creative financing method.
What is seller financing?
It is the loan which the seller provides to the buyer. The loan amount is lend by the seller and may cover either the part or whole of the sale price of the property. This is one of the creative financing options which are gaining importance among the home owners and buyers. This is also known as owner financing or owner carry back.
Why you should offer seller financing?
There are many reasons. Seller financing offer you higher price for the property that you owe. Seller financing is all about making the payment terms easy for the buyer. The buyer will readily accept your offer if the terms are easy and give him certain level of flexibility. Thus seller financing helps you to sell your property faster.
It is also a better concept if you owe a property that carries a high market value and is difficult to owe using conventional means of financing. Seller financing makes the terms easy and helps you to sell your property that is otherwise difficult to sell. Moreover you can use a part of the income or return to pay back your own mortgage or credit card loan.
How can you offer seller financing safely?
You should consider certain tings to increase your return and decrease the chances of losses.
For this first and foremost check the credit score of the buyer. The credit score reflects the credit worthiness of the buyer and also highlight whether the buyer is in a condition to repay the loan. If they have unpaid loans in their record then avoid entering into a contract.
Once you are satisfied with the credit score ask the buyer to pay you a large down payment. For this pre-decide the amount that you want and give the buyer a number slightly higher. This is because buyers always tend to negotiate.
Look at the whole thing carefully. If you have another means to arrange some amount to pay your loan then offer the buyer a slightly lower price. But here don't compromise your profit. Make sure that you earn slightly higher amount so that you don't burden yourself with your loan repayments. Make the price low for the buyer but high for yourself. For this you can make the installment amount slightly lower for the buyer but extend them over the years so that you earn slightly higher interest.
If the buyer is determined to offer down then ask him to keep some property that he owe as collateral.
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