If you are selling a property and can’t find a “qualified” buyer, your real estate broker may suggest you consider owner financing. At this point, your immediate reaction may be to respond with a loud “No way.” Why? Two primary reasons: You want to cash out now and you don’t want to feel like a landlord.
But suppose you knew that you could cash out shortly after closing – say, 1-6 months. And, as a consequence, you will not be a landlord forever – you just will receive a few monthly payments from the new owner, then cash out and move on with your life. Would this make a difference?
Maybe it would – maybe it would not. But a little information and a little knowledge can sometimes change the thinking of the most reluctant seller. Let’s take a quick look at why you might get the idea of being a landlord forever out of your mind and sell your home to a qualified buyer at your price. Being willing to owner finance could accomplish the following:
1. More Potential Buyers. In a tight credit market, there will be more “qualified” potential buyers for your home. Why? Because a little glitch on a credit report may negate a bank loan but still make your buyer a very attractive prospect to purchase your home.
2. Attract 1st Time Buyers. 1st time buyers have been on the sidelines the past few years, waiting to get into the game. The real estate market needs them. Offering owner financing helps the overall real estate market.
3. Neighbors Are Happy. We all want friendly, caring and invested neighbors. Your neighbors will be happy knowing their new neighbor was vetted by you and is as committed to the neighborhood as they are.
4. Note Buyers Will Want to Buy The Note. If you structure your note properly – good down payment, good interest rate, shortest term possible, etc., you will attract buyers who will be willing to pay the highest price possible. Your broker can check credit scores and history and someone like me can assist in suggesting note terms.
5. You Can Move On. You should be able to sell your note as soon as receiving one monthly payment( though we prefer at least six). You don’t need to be a landlord forever. You don’t need to hold the note forever. You can move on!
True, your note will be discounted – you will receive less than your principal balance. Why? Risk. Risk is inherent in owner financing. But, you are getting cash today. You don’t have to receive payments over the next 20 or 30 years. And, perhaps most importantly, you can have peace of mind.
Think about it!
