When you sell a house with seller financing you will be the lender & provide financing to the buyer.
This can be an attractive option for buyers who may have difficulty qualifying for traditional financing, and it can also be a way for you to sell your house quickly and potentially earn a higher return on your investment. Here are some steps to follow to sell a house with seller financing.
(If you already hold owner financing (a real estate note, mortgage, trust deed or land contract) and would like to determine its value, call us at 772-232-2383 or fill out the short form on our home page, here.)
Determine your selling terms:
Determine the price of the house, the down payment amount, and the interest rate you will charge. You can work with a real estate attorney or a mortgage broker to help you determine these terms.
Advertise the property:
Advertise the property in real estate listings, local newspapers, and online marketplaces. Make sure to include that the property is being offered with seller financing. You might even advertise the terms. You might advertise something like this… Lovely 3 bedroom, 2 bath home located at “123 Main Street” for sale by owner for $200,000. Can be financed by the owner at 7%… must have $20,000 to put down and a minimum 620 credit score.
Pre-screen potential buyers:
Pre-screen potential buyers to ensure they have the means to make the down payment and pay the monthly mortgage payments. It’s a good idea to have potential buyers fill out a financial statement like a FNMA 10003… which should be available at your local bank.
Negotiate the terms with the buyer:
Once you have found a potential buyer, negotiate the terms of the sale. Don’t prepare the paperwork yourself. Work with a real estate attorney to draft a purchase agreement, a promissory note and security agreement (mortgage or trust deed).
Conduct due diligence:
Conduct due diligence on the buyer, including a credit check and verification of income and employment. You may also want to have an appraisal of the property done to validate the asking price.
Close the sale:
Once the due diligence is complete, you can close the sale. You will need to transfer the deed of the property to the buyer and create a mortgage or deed of trust for the property. Make sure you work with a title company or a real estate attorney to help you with the closing process.
Selling a house with owner financing can be a complex process, and it’s important to seek the advice of a real estate attorney to help you navigate the legal and financial aspects of the transaction.
You may check this additional reference material:
Ins and Outs of Seller Financed Real Estate Deals
Or, if you hold a seller Financed note which you may like to sell fill out the form on our home page or give us a call at 772-232-2383.