Category: 
January 25, 2010
How To Owner Finance Your Home
You\’ve seen the real estate ads in the classifieds section of the newspaper: \”Owner Financing Available\” or \”Owner Will Carry\”. An owner financed real estate transaction enables the buyer of the property to make payments directly to the seller.
This allows the buyer to purchase the real estate without having to apply for a mortgage from a bank or financial institution. The seller also has the option of selling the loan to an investor for cash.
Of course, there are lots of variables that work into a price offer including type of property, location, age of house, equity, is the buyer making the monthly payments, etc. These are just some of the things an investor likes to see. Investors buy all sorts of real estate notes and deeds of trust. Every house is different, every loan is different and every deal is different. Use the above list to make the loan more attractive to an investor.
ADVANTAGES OF OWNER FINANCING THE SALE
Sell Your Property For Your Desired Asking Price
A buyer may be perfectly happy to pay market value (and maybe more) for a house that requires a smaller down payment and that a bank won\’t help them finance.
Charge a Higher Interest Rate Than a Bank Would Give
By charging a higher interest rate than a bank (say 7.5 – 8.5%) you are, in effect, increasing the overall sales price of the property, and making the note more attractive for an investor.
Faster Sell
You can sell a home with owner financing a lot quicker than with bank financing and there can be tax advantages in spreading the buyer\’s payments out over time (talk with an accountant about that).
Great Monthly Cash Flow Investment
Many owners simply like the idea that they can receive a monthly income and a high interest rate from a property even after they have sold it – and no longer have to worry about repairing leaky roofs or replacing dead water heaters.
Sell The Note To An Investor
A seller who owner financed the deal also has the option of selling that note to an investor for cash either right after closing or after waiting a number of months or years (give me a call or email and I can get you more information about selling your note).
DISADVANTAGES OF OWNER FINANCING THE SALE
Cash At Sale = Small Down Payment
Seller receives only a small or even no down payment.
Buyer Won\’t Pay
The seller takes the risk that the buyer will not make payments and will have to be foreclosed on.
Due-On-Sale Clause
If I owner finance my house won\’t I activate the Due-On-Sale Clause in my mortgage and if I\’m only getting a small down payment and monthly installments how will I pay the bank loan back?
The Due-on-Sale Clause is a provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.
The link below is to a great article by real estate lawyer William Bronchick and will dispel any misunderstandings you may have about the due-on-sale and suggest some simple, yet effective strategies to get around it.
You can also do a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note from an investor.
If you\’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the whole process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.
REAL ESTATE PROFESSIONALS – Providing owner financing could mean the difference in having your client sell their house quickly or having it sit on the market for months, years or not selling it at all.
Asking a seller to offer owner financing to buy their home can be a tricky proposition. Sellers often reject the suggestion of owner financing because nobody has explained the benefits or proposed owner financing as a way to sell the home. Most sellers\’ knowledge is limited to traditional bank mortgages.
If you would like to share the option of owner financing with your client, download my free ebook, \”How To Owner Finance Your Home\”, which explains the owner finance process in detail. Download it and you\’re more than welcome to put your own name and business logo on it and hand it out. It\’s a great way to introduce the concept of owner financing to your client.
BIG TIP OF THE DAY:If you\’re going to draw up a contract to owner finance the sale of your house have an experienced real estate attorney look it over. It might cost you $400 or $500 (maybe more, maybe less depending on what state you are in) but it might save you a lot of heart ache in the end if the buyer stops making payments, they make unauthorized modifications to the house, which might still be in your name, or there is some other unforeseen event (you know there will be).
An experienced real estate attorney has drawn up hundreds of these kinds of contracts and will be able to give you great advice. Well worth the money.
About Author
Craig Meriwether is owner of Kula Investments, a company founded you help you get top dollar for you owner financed real estate loan. www.ioubuyer.com
For a more in depth discussion of owner financed loans please download my free ebook “How To Owner Finance Your Home”
Horaayy..there are 18 comment(s) for me so far ;)
it’s almost like a photo
great painting 
Even if a bank had originally loaned you the money you need to qualify for a refinance. The house still has to be appraised, you still need good credit, you still need good income, etc etc.
If the deed is in your name this is a refinance. If the deed is not, and I am sure it is not, then you need to qualify for a purchase.
The purchase is better, you can qualify for less, a refinance is not for more then 80% of the appraisal.
i use photoshop
dude, you own! this looks identical to a photograph
It is usually high, because you are usually a very bad risk, 8-9%.
I'm a real estate investor in Ocean Springs. I have a very nice house available right now. If you'll contact me I can discuss the details with you.
BTW, Welcome back!
Awesome work Williamsshamir
Great video.
Much love Kat
Do you REALLY want to owner finance ? You know what types of buyers you will attract. It will be those who can't get their own financing, based upon their credit situations. Always remember that you will be in the same situation a lender finds themselves in if such a buyer defaults. You will end up foreclosing, and the place may not be in the same shape it was in when you sold it.
If you still elect this route, insure that you have a qualified real estate attorney to prepare any 'lending documents' for you, such that you are properly covered should a default arise.
All that really matters is if the deed was transferred in your/his name.
If the contract transfers the deed later, which will happen if there are any liens or mortgages, you will not be able to claim the credit, as you do not really own it.
I did this before and it was a big headache. It's just like renting – tenants can be unreliable. And yes, it still shows up on your credit, including late payments.
awesome stuff man,….ama practice hard to get to yo level!
wich program he is for doing this ? beside a tablet ofc
véiiiiiiiiiiiiiiii, que difuu
A-W-E-S-O-M-E your works is very awesome! cool!!!! very good
Yes, you can sell it "subject to" your mortgage. However, most mortgages contain a provision that says if title (ownership) changes they have the option of calling the loan due.
realtor.sailor
There is no such thing. Tell your real estate agent that you can only qualify for seller financing and ask him or her to watch out for one that meets your needs.
HOLY CRAP! Comparing this to the original picture, they’re identical!