In most cases, owner financing a real estate transaction is a win-win situation. It helps the seller get rid of his or her property, and it helps the buyer purchase property with little if no money down. In today’s real estate market, owner financing is truly cutting out the middle man and is helping sellers unload their “burden” in today’s financial market. If you know what you are looking for, understand the basics of negotiation, and know how to design a contract in your favor, it is very easy to find sellers willing to sell on your terms. The key is to find sellers that are truly motivated by an urgent situation to sell their homes. Once you do that, the rest comes easy.
Benefits for the Seller
- Perhaps the biggest benefit sellers have when they offer owner financing, or owner-carry financing, is that they can always get their asking price and in many cases, considerably more.
- Another benefit of an owner-carry transaction is that the seller can save thousands in fees by selling the home themselves. One of the biggest headaches for a seller is the approval process of the potential buyer. Seller financing means there is no waiting, no appraisal or underwriting fees and less stress.
- There are many tax advantages to an installment sale. Sellers will only have to pay taxes on the payments they received each year, versus the entire purchase price.
Benefits for the Buyer
- Of course, the biggest benefit for the buyer is the easy qualification process. This is the perfect opportunity for people who have suffered past credit problems and are unable to qualify for a conventional mortgage.
- Buyers of an installment sale do not have the pay the high costs associated with conventional loans such as underwriting, appraisal, title insurance and other so-called necessary fees.
- Purchasing a property that is owner financed also allows the buyer to close within a matter of days, not months. In many cases, especially these days, the buyer is solving a serious financial problem for the seller. In this case, the quicker the closing the better.