Seller Financing: Money For Your Property
If you're like most people selling a property, than you want to get as much money for it as possible. Regardless of whether you're planning to sell it yourself or to work with a real estate professional, seller take-back financing is a surefire strategy that can help you sell your property more quickly for top dollar. Seller take-back financing has long been an extremely popular technique with knowledgeable sellers of real estate because it has proven to be an effective way to increase profits. Aside from enabling a seller to receive a higher sale price, seller take-back financing, when structured properly is usually very safe, easy and extremely profitable.
By way of quick review, a seller take-back loan is created when the seller of a property agrees to "lend" the buyer a certain amount of money toward the property purchase price. In doing so, the seller, "takes back" the amount in the form of a note. This "seller take-back note" is secured by property. In turn, the buyer agrees to repay the seller the amount of the loan, including interest, over a period of time. Let's take a quick look at this technique works and how is helps both buyer and sellers.
In this example, Mr. and Mrs. Green put their house on the market with an asking price of $250,000, a price that is totally appropriate for existing market conditions. Mr. and Mrs. Brown, in the market for a home, see it and fall in love with it. As a result, the Browns make the Greens an offer of $225,000. The Browns also indicate that they will only be able to make a maximum down of 20% of their offering price (or $45,000). Since the Greens have an interested qualified buyer capable of making a substantial down payment, they don't want to lose the sale. But they also don't want to take less than their asking price. To help close the deal quickly, the Greens make the Browns a counter offer involving a seller take-back loan. Instead of dropping the sales price, the Greens propose to assist Mr. and Mrs. Brown in completing the purchase by giving them a seller take-back loan of $205,000, which is the difference between the $250,000 asking price less the Brown's down payment of $45,000. The Greens outline favorable terms, which include a fair and competitive interest rate, resulting in easy-to-make monthly payment and a comfortable payout period. The Browns, realizing an opportunity to get their "dream house," accept the proposal and the deal quickly closes.
As you can see from this example, both the buyer and seller derived substantial benefits from using the seller take-back financing technique. And the best deal always benefits all of the parties involved. In this case, the buyers were able to purchase the house without having to increase their down payment. The buyers also greatly benefited by working out favorable repayment terms on the seller take-back loan that fit their repayment budget and timetable.
The seller benefited by selling the house more quickly and by receiving the asking price, which is more than they might have received in a traditional transaction. In addition, the seller received additional benefits by creating a steady monthly cash flow in the amount of the payments. As an added benefit, the seller will get many additional profits above the selling price, in the form of interest earned on the seller take-back loan, and always has the option of selling the loan at any time for a lump sum of cash.
In summary, using seller take-back financing techniques not only helps sell a property for more, it also benefits both parties in ways that help close quickly. If you're planning to sell a property and would like to learn more about how you can use seller take-back financing most effectively, contact my office.
Sell Mortgage Note