OWNER Financing – a great idea!

August 2, 2010



With real estate, we are taught to always talk in positive terms and believe me…I am positive. I’m positive that things are TOUGH right now and values are stable but nowhere near historic highs. I am positive that INTEREST RATES are low but no one can get a loan. I’m positive that we have a long time to heal in this economy with Congress seemingly lethargic and running scared. In the words of an old song “we need a hero”.

One of the things that Sellers in today’s market should consider is OWNER FINANCING. It’s not just a great opportunity to make good money it’s a FANTASTIC opportunity. Why rent your home waiting for the market to turn when you can sell and earn interest on the loan? As a seller, you have a secured asset and you have a plethora of worthy borrowers but you can’t get a fair market value for your home. Owner financing may solve your problem.

Seller financing works when:

  • Property has been on the market a long time with no buyers.
  • Property may too high priced for loans (jumbo loans are still a tough get)
  • Price is too high for current appraised values
  • No move up buyers in this market
  • Home needs updating or work.

OWNER financing works with:

  • Buyers may have some glitches on their credit and can’t get bank financing.
  • Buyers may be self-employed and have trouble getting financing.
  • Buyers may desire for many other reasons not to use bank financing.

A savvy seller realizes that there are good buyers out there who have lost their homes but have steady employment and could afford mortgage payments. They are ideal for owner financing and worth the risk.

What’s in it for the Seller? A great return on their investment. The seller sets the price, the interest rate and the payment plan. The Seller returns to a power position and reaps a great yield on interest since most of the payment during the first ten years of any loan goes to interest and not to principal.

The downside remains that the borrower may default but you simply foreclosure and the property is returned to the Seller. It’s not easy or fun but it’s all legal.

To the Seller who can afford to hold financing – take 10% down and hold a balloon mortgage for seven years at 7% and watch your money grow in this economy. It’s so simple that I can’t believe more Sellers aren’t doing it. Take a leap of faith and reap the rewards.


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