Seller financing is a win/win for seller and buyer

Published: Thursday, August 14, 2014 at 03:08 PM.

Carlton Sheets was the patriarch guru for shedding light for “No Money Down” creative finance deals for real estate dating back to the 1960’s.  Today, creative financing for real estate has become a necessity in some cases to consider.

If you are trying to sell a property that has had little or no activity, seller financing is a perfect option. On the flip side, if you are a buyer and you cannot currently pass through the qualification process because of a foreclosure, lack of credit, or other reasons that can be cured with time and the re-establishing of your credit, seller financing would make sense for you.

Sellers love the idea of being able to collect interest of 5 percent (or more) instead of the 1 percent banks offer. Usually, in a seller financing transaction, the seller will net the buyers’ 5-25 percent down payment and all liabilities (such as maintenance/repairs, mortgage payments, taxes and insurance) will transfer to the purchaser. The best part for a seller; they will usually get full price market value of their property.

The advantage to the seller is that the payments that they have been receiving have been mostly interest so they have in actuality likely realized more than full price for their home.

Of course this type of a transaction would require that the seller has 100 percent equity in the property. For a seller whose equity position is not that favorable, a "lease option" or "contract for deed" may be the answer.          

Purchasers love the idea of being able to make improvements that make the home feel like a "real home;” the way they envision the property. Typically a five-year balloon is due. After five years the house has appreciated in value, the buyers’ credit problems have been cured and they can now qualify for a FHA, VA or conventional loan.

At Destin Palms Real Estate we have been handling these transactions for decades both as principles and for customers. We are happy to answer any questions you have if traditional financing isn’t an option for you, or if your property isn’t selling.



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