Can a Seller offer a 'owner finance' if thier property is listed on th MLS?

Question

Hello all. I have a homeowner that is willing to sell me their house via owner financing. However the house is currently listed on the MLS. Can they still offer owner financing on a MLS listed property? If yes, how does the realtor receive his/her compensation? Thanks in advance for all of your valuable time and expertise...

Jon Holdman · Answer

There's nothing tricky here.  The very first house I ever bought was right off the MLS and we did seller financing.  Seller financing doesn't mean no down payment.  You just need the down payment to be big enough to cover the sellers closing costs plus the commissions or else the seller will be out of pocket for those costs.  That's perfectly fine, too, if the seller is willing.

OTOH, if you're trying to buy with no or a low down payment and the seller doesn't want to be out of pocket for their closing costs then you're stuck.  The agents are going to have to be willing to accept payments (from the seller) for their commissions.

Wayne Brooks · Answer

You'd have to bring enough cash to the table to cover the agent's commission, plus enough to make the seller happy.  The seller otherwise could pay the agent out of his pocket, or pay the commission in installments over time, partially or in whole, but both are unlikely.

James Wise · Answer

You can easily owner finance an MLS deal.

When I say easily I don't mean its easy to find sellers who want to do this, rather the actual process of the transaction is easy after you have reached an agreement.

Odds are seller is going to want you to show up to closing with enough to cover the agent(s) commission, your closing costs & put something in their pocket.

Or

if you guys agreed on a down payment that was less then the amount needed to cover those costs the seller would just have to come to closing with cash in hand to pay those costs.

J. Martin · Answer

In short, YES.

The seller financing just has to do with how the property is PAID for. Not how it is SOLD.

I think what you're asking is since the property was listed, can you now cut out the real estate agent and deal directly with the seller...

Depends on the seller and real estate agent's agreement, but most likely, they will represent both the buyer and seller if you don't have your own agent. I don't think the seller is going to short change the listing agent like that, unless the agent did nothing, and you found it outside the MLS...

James Wise · Answer

Thats some pretty favorable terms for you. Seller sounds like they are going to want you to pay 11% down. ($9790) 6% (assuming thats what it is) so he can cover his agents commission & 5% to pay his closing costs & walk away.

Account Closed · Answer

What are the numbers?  It's the seller's responsibility to deal with the commission if he choses to accept your offer.  Is your down payment enough that the seller can pay off the agent in full?  If not, can you up your down to accommodate the commission? And/or can the seller negotiate a reduced commission?  It sounds like the seller found a buyer through their own efforts, so sometimes the agent i willing to work with the seller on the commission.  Sometimes agents will accept promissory notes against commissions owed. The seller is free to bring cash to closing as well.

Matthew Hudson · Answer

i just had a similar question. I guess in a little moment of "not enough coffee yet" i did a google search. That search brought me right back here. This community is so supportive and helpful.  The biggerpockets admin team has done an amazing job steering people to the most informative site concerning real estate on the planet.

Thanks BP community

Thanks BP admins

Account Closed · Answer

This is one of the problems in attempting to do owner finance with a property on the MLS.  @Wayne Brooks is right, you're going to have to put cash in the deal.  And understand this, even if the agent is willing to go along with your and carry his part of the commission, he works for a broker, who chances are will not carry his commission.  In addition, the seller will have probably signed an exclusive listing agreement, meaning that if the seller finds his own buyer, the agent is still compensated.

In my experience agents/brokers want their commission in cash.  Now as said above, the seller could bring money to the closing table and pay himself.  But that's probably not going to happen either.

Owner finance via the MLS is problematical, someone has to put money in the deal.

When does the listing expire?  Maybe you could wait until then.  Or, about a year ago I bought a deal on owner finance.  Before I made an offer, the seller cancelled her listing agreement.  I put enough money in the deal, the seller just didn't want to spend it on commission.  Their choice, their agreement.

Chris Seveney · Answer

@Reginald S.

Yes seller financing can be done.

The owner is responsible for paying the realtor whether from proceeds from the sale or out of pocket, as well as all other closing costs they may incur.

So the seller better make sure to get a big down payment otherwise they are out of pocket and if borrower defaults then they would be out even more $ so make sure seller financing is really worth it

Eliott Elias · Answer

Yes, I have a listing and am only offering owner finance. The realtors would get paid from the down payment

Can a Seller offer a 'owner finance' if thier property is listed on th MLS?

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