Most home sellers don't use owner financing because they need the cash to pay off an existing mortgage or put money down on a new home. In their minds they know that they can't offer owner financing and get cash at the same time because it just doesn't work that way. But this is not true.
Most home sellers (and even most experienced realtors) just do not know that they can in fact provide their buyer with owner financing and then get the cash they need by selling the note that they have created (the stream of payments from the buyer secured by the property) simultaneously with the sale of the property.
This subject is covered in great detail in our eBook Mortgage Magic. However, our purpose on this web site is simple and direct: 1) to show you why you should sell your home using owner financing, and 2) to help you do it step-by-step.
Because it will bring you many more buyers than will standard buyer-sourced financing.
Because of greater buyer competition, you can demand a higher price. You can insist upon full appraised value.
Because you attract so many buyers, you will sell faster.
Because you sell faster, you can sell "by owner" comfortably and avoid "FSBO burnout" - i.e., giving up on the process and hiring a costly agent.
Because you stand to net 93 percent of appraised value.
1. Advertise your home: "Owner Will Finance" and interview buyers. We give you detailed instructions on this.
2. Select the most qualified buyer. S/he will need to bring in a minimum 5% cash. We do the qualifying for you. If you wish to carry a small note to help a buyer with only a small down payment, we can arrange it.
3. Enter into a Purchase Agreement providing for a carryback (purchase money) note. We help with the documentation. Go to this link: Seller Carryback Program Documentation. The Step By Step Instructions for advertising, handling calls, and interviewing Buyers apply to both owner-carryback and owner-assisted permanent financing. The only difference is in the handling the paperwork. This is because different funders are involved.
4. Close the home sale transaction and simultaneously sell the note to our investors for a predetermined cash amount. Both transactions take place at approximately the same time in a single escrow. The cash proceeds pay off existing loans and the balance is yours. We see to the details.
5. The note that you create for your seller is purchased by our investors at a discount. Don't let the word put you off. You will find the amount of cash you net from the transaction is more than you would have ended up with after reducing your price for a regular bank-financed buyer, especially if you had paid a listing agent's commission. Have a look at our background reports on the subject of discounts, especially How the Seller Assist Program Stacks Up, which compares the Owner Carryback scenario with the standard listing process.
Financing sells property. It's so obvious that we don't even think about it. Almost every home in the United States is purchased with a loan. "No loan - no home." So, the easier it is to get a loan, the easier it is to buy a home.
Many worthy prospective buyers are unable or unwilling to qualify for a conventional loan from standard sources like banks and S&Ls. This is why owner financing, which is so easy to arrange, is so attractive.
Buyers like it because:
They can get financing even if new to the area, newly employed, self-employed, newly divorced, or recovering from credit problems.
There are no predetermined rules for qualifying, no debt ratios, no points, no junk fees, no mortgage insurance, etc.
There are smaller down payment requirements than with conventional programs and most government sponsored programs.
There is less paperwork.
The terms are flexible.
The transaction costs are less.
It brings in the buyers and gets maximum price in minimum time. Owner financing makes your home a magnet for potential buyers who may have been rejected for regular bank financing. Owner financing makes your property "special."
There is no risk to the seller, because the sale of the property is conditional upon the seller realizing previously agreed cash proceeds from the sale of the note that the seller has created.
We provide no cost, step-by-step professional consulting throughout the process, from advertising to closing.
The Simultaneous Note Purchase Plan in fact mirrors (but with much less formality) what happens with the creation of a regular mortgage when a house gets sold.
When a conventional lender provides the buyer with money for the purchase of a home, a Note and Deed of Trust (Mortgage) is created. This is the obligation of the purchaser to pay money to the lender in accordance with an agreed schedule. The lender almost always sells this obligation on the secondary mortgage market.
The Simultaneous Note Purchase Plan is really no different because:
Because:
1) The value of the home or the equity you have in it are only an expression of its worth. Neither value, equity, or worth are the same as cash.
2) You stand to net more with the Seller Assist transaction than with a regular real estate listing.
Refer to our four background reports:
Explaining Equity, Cash and the Discount
Another Look at the "Cash/Equity Equation"
Other Equity-Value Factors
How the Seller Assist Program Stacks Up