What do I need to know about Seller Financing?

Question

I have a property that I want to make an offer on, and I'm considering negotiating for seller financing. The property has been on the market for some time and I have watched the asking price drop over ther course of 3 months. Before I make an offer I have some questions about seller financing since this will be my first attempt at it?

1. If I go through my realtor how do they get paid since I'm not using a lender?

2. If I don't use a realtor where can I go to have a contract written up?

3. Are the closing cost more or less?

Any information will help. I want to make sure I understand want I am offering before I jump in. Thanks again BP!

Jairo Rincon · Answer

@Brandon Sturgill This is great information! I have not yet reached out to get in depth information on the property , so not sure if it is owned free and clear. I have been watching the steady decline of the purchase and it is stating to get my attention. I will definitely keep you updated and I may reaching out to you in a PM.

Benjamin Piecenski · Answer

One of my clients uses Brandon Sturgill as his Realtor, and he has a great, in-depth article on his website regarding your first seller financing deal.  I've only dealt with "traditional" financing, so I found the article really informative.  Here's the link!  https://www.investhypothetical.com/learn/e-book-close-your-first-seller-financed-deal

Jairo Rincon · Answer

@Benjamin Piecenski thank you!

Brandon Sturgill · Answer

Thanks for the mention @Benjamin Piecenski

@Jairo Rincon To respond to your direct questions...maybe I can start with a question.

What is the situation and is the property owned free and clear? This will dictate your next moves. If there is no lien on the property you can structure a purchase money mortgage and take title...the biggest obstacle for you will be dealing with the real estate agents...they usually get lost in what's happening...but it's essentially the same as any other transaction they have closed....just make that clear. a. contract b. title work c. due diligence d. close

1. The listing agreement likely spells out the commission rate...that does not mean that you can't alter it...you want the best terms possible with the least out-of-pocket. I will tell you that I am not normal...that said, if the deal is a real sweetheart, I will offer to pay not only the agents commissions but the closing costs as well...this is the easiest way to get everyone to the table quickly...but the deal must be stellar. Since it sounds like this is an MLS-listed deal, you can propose many things related to commissions...just remember that commissions are negotiable if they want to get the deal done.

2. You don't need a formal contract, but for $200 you can likely have a good one drafted by an attorney...this is a worthwhile fee. The next best option is to look to the local board of realtors and look for a contract that meets your needs...sometimes your local REIA will have a solid contract you can use. Ultimately, the title company is the one closing this deal, so ask them what they want...odds are they can provide a contract they prefer to work with.

3. Closing costs are negotiable...it all depends.

Shoot me a PM or let me know if you want to chat more about your deal.

Best of luck.