Seller Financing - Structuring Terms

3 Replies

I have identified a property that is in my neighborhood that I would like to purchase. The original owner passed away several year ago and the house transferred over to his son who lives in another state. He only visits the house once every couple weeks and is losing around $3,000 a year in property taxes and home insurance. Since the property is paid off, he is no longer able to deduct the mortgage insurance on the property. 

Currently, I don't have the capital to buy it a market price while utilizing traditional financing. He could sell it for more at market price. However, if he were to sell it at market price he would have to pay a Realtor, take time and money to clean the property up, and then let the property continue to sit vacant while he's waiting for it to sell. 

How do I structure the terms of the offer such that he sees the value of selling it to me at a below market price? My intention is that make it a win-win for the both of us, not just one of us. 

@Henry Catalan

Thanks for the advice - Those are great ideas to get some cash out of the deal if I can't own the property myself. I was talking to someone in my office about drafting the following terms:

  1. 1. 5% Down Payment 
  2. 2. 5% Owner Financing (No interest, just principal payments)
  3. 3. 5 Year Repayment (Will refinance in 5 years with a conventional loan and pay off the seller)