Seller Financing the Sale of a House

 What is Seller Financing the Sale of a House?

Seller financing is one of the easiest, and oldest, ways of buying and selling a home. It is also referred to as “owner financing” or “lease-purchase”. But note; it is not the same as “lease-option” (we can explain those differences later). It works best when both parties have different motivations. For a seller, the need to sell the house is not immediate. And for the buyer, the down payment, loan origination points, legal fees and closing costs may be reduced significantly since there is no bank involved.

The Seller is the Bank

For a homeowner, the idea of “being the bank” can be a little concerning. The idea of being responsible with someone else creates uncertainty. It isn’t a rental agreement or a lease with option to buy. In the case of a seller financed agreement, both the seller and the buyer have agreed to a price and there is a mortgage in place. 

A Mortgage between Sellers and Buyers

In a seller (owner) financed sale, both parties will work with an attorney (or two) to create a mortgage. This is critical because it is the legal and financial document that protects both the seller and the buyer. For a seller, it is no different than the mortgage with a bank. It provides the seller with the legal protection to reclaim the property should the buyer default on payments. For buyers, it ensures that a fixed purchase price and term period have been defined with a fixed interest rate. Thus, regardless of the market (home values going up or down), a buyer is assured of the final sales price and payment terms. 

Working with an Investor

As an investor, we purchase with seller financing. It is a fantastic option for property owners not motivated to sell immediately. Instead, the home is contracted with a down payment, monthly payments and is paid off within a defined period (typically 12 months or less). 

When we work with a seller to acquire their home, we start with a few simple steps. We tour the property, identify any conditions that can affect the market value and then we provide written offers. With GLG Homes, we make sure that sellers know there are options before committing to seller financing. But, for those owners where financing makes sense, we provide a written offer with plans to close on the property within 1-2 weeks.

The only key difference between us and a traditional home buyer, is that we also provide a Promissory Note which is a legal document protecting both us and the seller. But, we also put a Mortgage in place to protect the seller and we will put them on as a second beneficiary for the insurance.

Get started today. Here’s our simple, 3 step process to get you the options and information you need to sell your home. https://www.glghomes.org/selling-a-home-3-simple-steps/

Take Confidence with Seller Financing

From the day that we close on the transaction, we assume all liabilities. We take over the insurance, taxes and utilities. And, of course, we start cleaning out the house and getting it ready for renovation. At GLG Homes, we work quickly to move the property into a sellable (or rent ready) condition. Typically, we arrange our contracts for 12 months (or less). 

Seller financing offers property owners an option that eliminates headaches. If you have questions, please give us a call. 

Thanks,

g.

Need more information?

Here’s a few links that will tell you more about seller (owner) financing:

https://www.investopedia.com/terms/s/seller-financing.asp

https://www.nolo.com/legal-encyclopedia/seller-financing-home-sales-30164.html

https://www.thebalance.com/owner-financing-in-real-estate-1798416