Seller financing and realtors

[Agustin Rossi]

Does seller financing works when there is a realtor involved helping the seller sell their home? Thanks!

[Steve Vaughan]

Quote from @Agustin Rossi:

Does seller financing works when there is a realtor involved helping the seller sell their home? Thanks!

Not generally. They know nothing but cost a lot, raising the dp requirement out of affordability.  

[Don Konipol]

Quote from @Agustin Rossi:

Does seller financing works when there is a realtor involved helping the seller sell their home? Thanks!

 It can, BUT, sellers who list with a real estate broker are generally looking for retail prices and retail terms.  If there’s an existing mortgage on the property, a subject to combined with a seller second, or a wrap around loan, carry significant risk and possible negative credit impact for the seller (and buyer).  A broker representing the seller has a fiduciary duty to warn the seller as to the risk involved and advise the seller to seek independent legal counsel. 

If we’re talking about commercial property, owned by an investor, then owner financing may be much more likely.  Commercial brokers understand that seller financing, either as a first lien on property the seller owns free and clear, or as a second or wrap, can be necessary to conclude a sale.  

In GENERAL, the lowest price one will pay for a property will be when they pay cash, being able to make an offer without a financing contingency, and with a quick close.  An offer subject to financing will usually be for a higher price. And seller financing will often set the price at a premium.  

[Tom Gimer]

On a long-listed property not only can this work but the agent/broker may agree to contribute (or discount) some commission to make it work. A reduced commission late in the game is better than no commission from an expired listing. 

[Agustin Rossi]

Quote from @Don Konipol:

Quote from @Agustin Rossi:

Does seller financing works when there is a realtor involved helping the seller sell their home? Thanks!

 It can, BUT, sellers who list with a real estate broker are generally looking for retail prices and retail terms.  If there’s an existing mortgage on the property, a subject to combined with a seller second, or a wrap around loan, carry significant risk and possible negative credit impact for the seller (and buyer).  A broker representing the seller has a fiduciary duty to warn the seller as to the risk involved and advise the seller to seek independent legal counsel. 

If we’re talking about commercial property, owned by an investor, then owner financing may be much more likely.  Commercial brokers understand that seller financing, either as a first lien on property the seller owns free and clear, or as a second or wrap, can be necessary to conclude a sale.  

In GENERAL, the lowest price one will pay for a property will be when they pay cash, being able to make an offer without a financing contingency, and with a quick close.  An offer subject to financing will usually be for a higher price. And seller financing will often set the price at a premium.  

 Thanks Don!

[Agustin Rossi]

Quote from @Tom Gimer:

On a long-listed property not only can this work but the agent/broker may agree to contribute (or discount) some commission to make it work. A reduced commission late in the game is better than no commission from an expired listing. 

 Thanks Tom!

[Marco Bario]

Quote from @Agustin Rossi:

Does seller financing works when there is a realtor involved helping the seller sell their home? Thanks!

I've done it. I took time to educate my agent... part of that was emphasizing that we'd be able to market to a broader audience, close faster, and sell at a slight premium. 

Also, I use professional underwriting and follow regulations and best practices. I can't emphasize enough that when working with other professionals, your reputation is on the line, and that of the other professionals. 

[Agustin Rossi]

Thanks Marco!

[John Ojo]

I am a real estate agent, and I would work with seller utilizing seller financing deal; however, the must make sense. The coolest thing about seller financing is that you can create the terms you want (in reason) to the offer. A lot of people can easily not value what an agent offers because they don't have a clear understanding of what an agent does. An agent is truly there to negotiate and market for you. Seller financing offers the ability to market to more people. You can truly increase your profits if you are paired with the right agent. 

[Agustin Rossi]

Thanks John!

[Mohammed Rahman]

Hey @Agustin Rossi - the answer is that it depends on your offer. 

Seller financing is a great way for the seller to avoid a lump sum capital gains tax, and still make steady/expected income on a property even after they sell it. 

However, if a property is on the market then most times the seller is looking for a retail buyer to buy it so they can net the full amount (minus their liabilities). 

Having a broker represent the seller isn't necessarily a deal killer, but you have to ensure that you're explaining what the offer structure is to them clearly because they will have to explain it to the seller as well. 

Additionally - it helps if you reinforce to the broker that their commission will still be paid out. 

Most brokers have no idea how seller financing or creative financing deals work and are averse to presenting it to their clients because of that AND because they're concerned how it will affect their pocket - like all of us probably would be too if we were in their shoes. 

[Agustin Rossi]

Thanks Mo! Understood!