Seller Financing - VA Attorney/Title Co Recommendation

14 Replies

Hey BPers!

I am currently in negotiation with a seller in Arlington on a seller financing deal, and it's looking likely we can come to an agreement that works for us both.

Can anyone in the Northern Virginia (NoVA) area who has successfully done a seller financing deal recommend the attorney and/or title company they used? Happy to share my experience with the community if/when the deal gets done.

Hmm.. can it be possible that no one here in Northern Virginia has ever done a seller finance deal? I can't believe it...

@Chris Seveney Thanks for following. Since you are interested, I called around today and one attorney I talked to very kindly referred me to another attorney he works with that was - ahem - more suited to someone who is doing a one off residential deal. Yes, folks, I'm not at the level where I need an HOA set up.. yet :)

The second attorney was also very helpful- and, so far, it seems the process is going to be more straightforward than I assumed. Will do a write up here on BP once the dust settles. I know I would have found it helpful to read someone's experience, since it seems most of the BP seller finance inquiries on here are more about "how can I get a seller finance deal... or is this a good deal?" and not so much on the mechanics of how you pull it off once the parties have all agreed to the terms (who writes the contract? can you use the standard real estate contract form? what other addenda do you need? who drafts the promissory note? How do you set up payments? etc...)

This is so much more fun than going through the conventional loan process! Don't want to jinx it though since it is not a done deal yet. Stay tuned!

I will follow this thread as well. I wish I could help you Tanya but I just became interested in real estate investment and have very little knowledge so far. I did recently finish listening to Millionaire Real Estate Investor by Gary Keller and am excited to learn more. Best of luck though I know you'll do great.

Under contract! And the process is not as complicated as one might think... so far. We used the standard VA sales contract, plus a standard seller financing addendum (two pages). Yes, VA has a standard form for this also. Seller's attorney is preparing the promissory note and loan documents (very similar to what Fannie requires). I'm using the second attorney I spoke to for settlement and he was able to review the standard sales contract and addendum before I signed. Not that complicated.

The standard VA seller financing addendum gives you a couple options you can negotiate with the seller. I chose no prepayment penalty of the loan, and the ability to pay taxes and insurance on my own and just provide proof of timely payment to the seller within 7 days of payment.

The only hurdles left are home inspection and seller's review of my finances. Financing agreed to was a bit over $500k, 30 yr amortized loan at 3.5%, 5 year balloon, with a 20% down payment. House comes with tenants, which was another great bonus, since I'll be overseas and won't be able to live in it for the next 3 years at least. When I'm back, I can just move in and refi as an owner occupant. In the meantime, I avoid the investor bank rates as well as all of the origination fees for the loan. I'm liking this seller financing business :)

Dear @Tanya S. ,

Congratulations on your real estate deal! That is great news. I was wondering how you identified the deal? I am new to real estate and am curious how investors find deals. And also, how did you find and decide to use your real estate attorney?

Kindly,

Arjan G. Amiri

Thank you John Amiri Believe it or not, I actually found this house on the MLS on a public site that anyone can see. In the listing remarks for the public, the listing agent had written "seller finance available." Since the house was exactly the type of house I had been looking for my growing family, I attended the one and only public open house the agent held when it hit the market, and then called her immediately afterward, since the house fit all my criteria and then some.

At the time, I was in the process of waiting for my VA real estate license to get processed so disclosed that I was an agent. Negotiations took about 5 days. When we finally came to an agreement, listing agent wrote up the contract with me as an unrepresented buyer since my license was still pending.

In the end, I think the seller financing was a strong selling point - I did the math and showed the seller how much more he would make in interest if he financed the deal over 5 years (around $80k!!) Plus I also explained the tax benefits of spreading out the sale, as well as the fact that he would continue to get a fixed monthly payment without all the headaches of being a landlord or paying increasing property taxes. That made my offer a lot more interesting than others' using conventional financing.

In the end, I was able to negotiate a significant chunk of the buyer's agent commission off list price, so he ended up with a better net price and I also ended up getting a $10k discount off the list price, which was already extremely competitive. And all this in a hot hot hot market! Knowledge is power. If you know your numbers and focus on why your deal is better for the seller AND the agent, you can get it done. 

I also say agent, because I followed up with the listing agent daily so she knew I was a serious buyer who could close. I also emphasized that I could close the sale faster than others with conventional financing. After all, since we are not using a bank, we don't need to wait for underwriting to give the ok after 30 days or wondering whether or not the property will appraise. If all goes well, we should go to settlement in less than 2 weeks. 

As for choosing the attorney, since I did not find any fellow investors who had any recommendations, I just did a web search, specifically looked for a local attorney specializing in real estate transactions and called around. I think you can get a good sense of people by talking to them, and the attorney I chose was very helpful in that initial phone call - giving me solid advice for free on how I should proceed. He did not try to sell me on why he should do the transaction. So far, he has been great.

Hello Tanya,

That's fantastic! I only own one SFH, but I am planning on seller financing being my introduction to MFH.

How is it the agent makes commission on this transaction? I would also like to know the site you used if you do not mind to share.

Thank you!

Hi @Reece O'Bryan Sorry for taking awhile to respond. To answer your questions - the house was advertised on the MLS as a regular sale, so the seller was already willing to pay the listing agent's commission and a buyer's agent commission. The listing agent still got her three percent of the purchase price (I assume out of my down payment), and I passed on my side of the commission to make the numbers work better for both the seller and for me. I preferred a lower purchase price and not having to pay any income tax on a commission instead of receiving the buyer's agent commission on a full list price offer. As for websites, the property was widely advertised on public websites including Redfin, Zillow, Realtor.com, etc. Very easy to find. Good luck with seller financing. It worked out very well for me - hope it does for you too!

@Ryan S. Wish I could find more seller finance deals -- love them! -- but it's much more difficult when overseas :) will PM you with my attorney's info in a second. Thanks for the colleague request.

Hey @Tanya S. ,

Could you share with me the contact info of the Title attorney you used that was so helpful on your seller financing deal in arlington Virginia.  I am looking for a attorney ...this guy sounds like he is alright. Also congrats on getting the deal done :)