If you’re thinking of selling your house using owner financing, make sure you read this blog post to learn the 6 owner financing tips for sellers in Raleigh…
There are numerous ways to sell a house. You could put it up for sale and see what sellers are willing to pay. You could work with a real estate buying company (such as Present Day Properties) and receive a fair all-cash offer, or you could opt for owner financing and act as the bank, selling your house to a buyer and collecting payments over time.
Owner financing is a valuable but underutilized method of selling a home. This is where you offer the buyer terms for making regular payments to you (just like a mortgage). Here are 6 owner financing tips for sellers in Raleigh…
Owner Financing Tip #1: Don’t Focus Only On Price
Price is just one component. Of course, you’ll want to find a price that is reasonable for both of you, but there are additional factors to consider (which could benefit you more than the asking price).
Owner Financing Tip #2: Timeline
Think about the timeline you want to be paid in. Banks might offer 5, 10, 15, 20, and 25-year mortgages. Are you willing to accept payments over that time period? Your buyer will also want to establish a timeframe that works for them: they might not want to be paying you 25 years down the road!
Owner Financing Tip #3: Terms
The terms of the deal are one of the most critical yet frequently overlooked aspects of the transaction. The terms may include the amount of downpayment required, whether there is an early repayment or late payment penalty, and – most importantly – the rate of interest charged.
Owner Financing Tip #4: Protect Yourself
Even if you enter into an agreement with someone who is completely trustworthy, things could still go wrong – so make sure you protect yourself. For instance, ensure that both you and the other person are insured against the various contingencies that may arise. Additionally, consider including a clause reserving ownership of the house in your name until it is paid in full.
Owner Financing Tip #5: Build Contingencies
Most of your owner financing agreement will be based on an “ideal scenario” – what would occur if everything went perfectly. However, because unexpected events do happen, having contingencies in place enables you to make more informed decisions when the unexpected occurs. For instance, what if the buyer no longer wants the house, cannot pay, wishes to pay early, or wishes to use the house differently than anticipated? Or what if your circumstances change and you decide you no longer want to sell or need to sell even more quickly? Agree on contingencies with your buyer in advance, and the transaction will go much more smoothly.
Owner Financing Tip #6: Get An Attorney
Whatever structure you ultimately choose for your owner financing transaction, ensure that you work closely with an attorney who can assist you. A poorly worded agreement may work against you; an attorney can help you.