Seller Financing - Six Safety Tips
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Seller Financing: Six Essential Safety Tips
Offering seller financing can be a smart strategy when selling your home or investment property. It can lead to a higher sales price, a steady return on your investment, a quicker sale, and help move a property that's tough to sell. Here's how to ensure it's done safely.
1. Secure a Large Downpayment: This is the most straightforward way to protect yourself, though it might not always be feasible.
2. Obtain Additional Security: If a buyer offers a small downpayment but the return looks promising, consider securing a mortgage on another property they own. You can release it once they’ve paid down the balance to a certain level.
3. Review Their Credit: Ask the buyer to provide a credit report at their expense. While some bad credit can be acceptable, focus on the types of debts. For instance, disputes over hospital bills are less concerning than unpaid loans.
4. Trust Your Instincts: If you have a good sense of character judgment, trust your gut. A person who feels a moral obligation to pay debts is often more reliable than someone with a temporary high income.
5. Evaluate the Whole Deal: Consider situations like a bank offering 90% financing if you agree to a $5,000 second mortgage. If you're making $6,000 more by meeting the buyer’s needs, consider the potential risks. You're still ahead if they default on the $5,000.
6. Consult a Lawyer: Legal processes vary, so it's crucial to know the specifics in your area. Foreclosure timelines differ ?" it might take two years for a mortgage but only six months for a "contract for sale." Understanding these nuances helps ensure a safe transaction.
Offering seller financing can make selling your property easier and more profitable. Ensure your protection by having a real estate lawyer review your documents, and apply these safety tips.
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