Selling a House By Owner Financing

 

The fastest way to sell a house in the Dallas area, where the house is owned free and clear, is through an Owner Financing sale.

An Owner Financing sale involves the home seller creating a loan for the buyer to buy the house with. If the seller owns the house free and clear, the loan can be created with a simple note. If the seller already has a loan on the house, the loan payments can be assigned, using a mortgage payment assignment sale, or a new loan can be created using a wrap-around mortgage sale.

 

Owner Financing House Sale Example

 

  • Actual Appraised House Value: $200,000
  • Existing loan to payoff: $0  (100% owned)
  • Sales price: $210,000
  • New Loan: $10,000 down, $200,000 balance,
  • Interest Rate: To Be Negotiated

In this case, the house is sold at a premium price by creating a loan that is made by the seller and given to the buyer. Because the house is sold with financing, it will generally sell FASTER and at a PREMIUM PRICE.

 

The exact terms, including the interest rate and monthly payment are negotiated with the buyer. In general, properties sold with financing will demand interest rates above what lending institutions offer. Most of the down payment will go towards fees and closing costs.

DallasHousesforCash.com can manage this entire process for you by contracting to buy your Dallas House from you, creating the loan and all necessary paperwork, and then assigning the contract to a buyer that would like to buy a property with owner financing.

 

Owner Financing Sale Pros and Cons

 The advantage to selling a house through owner financing is that it will typically sell much FASTER and even at a premium price because it comes with financing. Also, because the interest rate is at a premium, you DO get a nice return on your money. Additionally, because you have a first lien on the house, it is a secured investment.

The disadvantage to selling a house with owner financing is that you don’t get all of your money at the sale – instead you get it in the form of monthly payments.

If you want to place a time limit on the loan you are making, you CAN put a balloon term in the note, making the loan to expire after a few years at which point the buyer will be required to refinance and you will receive all of your money.

For many home sellers this is ideal – fast sale and excellent return on their money. For others, they would prefer to sell FAST and at a PREMIUM PRICE and get ALL OF THE MONEY up front. Unfortunately, such options don’t exist, so you have to choose between the tradeoffs of selling using the various options listed in on this website.

For people that own houses free-and-clear the best options are generally owner financing, fast cash offer, or traditional listings.

 

Questions about an Owner Financing Sale

 

Q: How long does this process take?

A: Normally 2-10 weeks, but it could be less than a week! Most of this time is used showing the house to a list of buyers that have already been found that are looking for properties, like yours, offered for sale with financing. Like in any sale, you can negotiate the closing date with the buyer.

Q: What are the odds of success?

A: Good! Of course many factors affect the odds of success – most notably, would anyone want this house with the payment? It has always been true that offering a house with financing, as is done with owner financing, allows a house owner to sell a house FASTER than any other method of selling a house.

Q: What if the buyer stops making the payments?

A: If payments are missed, you have the right to foreclose on the house and get it back. In most cases it would be preferable, however, to call the buyer (or let the loan serving company do this) and try to resolve the situation, by telling the buyer to deed the house back using a deed-in-lieu, so that a foreclosure on them (and the destruction of their credit) is not necessary. In all cases if there is trouble with the buyer, call Dallas Houses for Cash, and we will be happy to help resolve the problem and/or get the house back so that we can quickly buy and sell it again.

Q: What if the buyer trashes the house?

A: The advantage of SELLING a house through owner financing is that the buyers are actually buying the house and not renting. In most cases buyers have a pride in property ownership and care more for the property than renters. Additionally, these buyers are bringing their hard earned money to closing when they buy. So unlike renters who are just putting down a small deposit, the buyers have much more skin in the game, in the form of their down payment. They may even make substantial improvements to the property after they buy it as is the case with many homeowners. Finally, if you threaten to foreclose on a buyer, you can also often negotiate the terms under which the buyer will return the house to you, in exchange for you treating them more fairly in a foreclosure proceeding. For example, you can offer to allow them to stay in the property for an extra so many days in exchange for them cleaning and make-readying the property for a new buyer and deeding the property back to you so that you don’t have to foreclose. Regardless of the condition of the house, it can always be offered to a new buyer as-is.

Q: What about 1098 Interest statement and other documents that need to be issued each year?

A: You can generate these yourself, or a loan servicing company can generate these for you.

Q: What kind of end buyer will buy the property?

A: A person with less than perfect credit, but with an income sufficient to make the monthly payments, and enough up front cash necessary to pay most of the fees, and closing costs associated with the Mortgage Payment Assignment Program. Possibly a self-employed person that can’t get a conventional loan in the current lending environment. In some cases a buyer with excellent credit and income that simply does not want to put down the very high down payment required in the current financial environment.

 

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