Seller Financing with an Agent?

Question

Hi All,

I'm hoping to get some insight on seller financing. We found a property we hope to purchase and wanted to ask the seller if they're open to seller financing. The property has been on the MLS for almost 40 days now and if the seller agrees to seller financing, she may be able to sell it sooner. How does that work if she has an agent and we have an agent? Are they paid at all or are they removed from the transaction if they agree to go the seller financing route?

Thanks for your input!

Arsen Atanasovski · Answer

@Alexandra Sales the agents will get paid at closing from the seller. Agents tend to push away from land contracts due to the fact that the seller needs a sufficient enough down payment from the buyer to cover all of closing costs and hopefully walk away with a few dollars. In many cases land contracts or seller financing gets a very bad reputation from agents because as I mentioned in previous posts non-investor oriented agents do not know the power of land contracts. The power? Seller gets a nice check every month from a responsible investor (yourself) you get a awesome deal with out the banks! It is very difficult to get a hold of the seller but your agent should be able to provide you with their address or if they are living at the property your seeking to buy think about sending them a letter and explaining to them all the positive in seller financing and try to sell in that way. Trust me the seller agent will try as hard as they can to not have the seller accept a land contract, I don’t know why but as an agent I hear it all the time and it’s crazy! When I submit land contract offers I get a email almost immediately stated the seller is not interested in land contracts, I usually submit after research that there is no mortgage and the seller can do seller financing, (and then I send in the offer). Once I receive the email reply like in 5 min. I ask the agent weather or not they gave the seller the offer to review and explained to the seller what is a land contract? Most of time I get the famous reply...... they want CASH!
Really?

We all want cash!

So sorry for the long reply but if your offering land contract on a MLS listing just giving you a heads up that seller agents hate land contracts.

We all want cash!

So sorry for the long reply but if your offering land contract on a MLS listing just giving you a heads up that seller agents hate land contracts.

Tom Gimer · Answer

The agents get paid (the listing agent per the listing agreement and the selling agent per the % advertised on the MLS). If the down payment by the buyer isn't large enough to pay the commission, the seller will need to come out of pocket.

Joel Owens · Answer

That kind of stuff was more common 7 to 10 years ago at the bottom of the cycle recovery. A buyer could find a seller sometimes willing to owner finance. By the time the note came due most properties value went up so could refi and payoff the seller note.

If you both have agents likely need at least 15% down for owner finance. That is because in general might be around 6% agent fees, about 3 to 4 percent closing costs, and seller would want coin in their pocket in case they need to foreclose on the borrower later.

Regular loan could get in with maybe 3 to 10% down so no clue why you want owner finance.

No legal advice given.

Steve Vaughan · Answer

They won't agree, but yes. Agents are paid, deservedly so, upon a sale.  The commission will come from your down payment and /or the seller's pocket.

I've purchased a lot of seller financed property. Houses and apt buildings.  They've all been off-market with tired landlords that owned free and clear.  Jack and Jill homeowner need to buy again.

I've wrapped a couple buys but it's tough.  Off-market sudden seller with a job transfer.  Not needing to buy for a year plus.  Rare.

Why the need for seller financing?  Find tired landlords👍

Andre' Arceneaux · Answer

@Alexandra Sales Depends on the nature of the mortgage, one can do a wrap around loan where the mortgage is packaged into the seller financed agreement and the rate is higher than the mortgage being wrapped, so the seller can actually make some cash and see an incentive behind such an agreement.  Again, depends on the type of mortgage, and could be tricky because most have a "dur on sale" clause which could trigger the full amount due. Most don't come after homes like that, but the language is there.

https://www.investopedia.com/terms/w/wrap-around-loan.asp

Alexandra Sales · Answer

@Arsen Atanasovski @Tom Gimer

Thank you for your responses! So if the seller has a mortgage on the property they cannot do seller financing?

If they do agree to seller financing - the agents are still paid on that transaction?

Seller Financing with an Agent?

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