Owner Financing Makes Sense in a Buyers Market

If you have owned your property for many years and do not have a mortgage, then you should seriously consider owner financing. Not to be confused with a lease option or lease to own, where the buyer leases for a period of time prior to purchasing the property. Owner financing is selling the property to the buyers and they accept the deed to the property. The original owner becomes a lien holder to the property. Should the buyers default on the loan, the original owner can then foreclose on the property (according to each States foreclosure laws) and can then take possession of the property again.

Of course, the goal is not to foreclose, but to sell in a buyers market and recoup more equity through the financing of the property. Generally, owner financing will garner a higher interest than a traditional mortgage and can be tied to a balloon mortgage (such as a 5 year or 10 year balloon). So even though the sales price will be lower, any loss can be recaptured through mortgage interest.

Here are some other benefits to Sellers:

• Maximize Profit in a "Buyer's Market"

Due to unprecenedted amount of foreclosures in Brevard County, prices have declined to record lows. It will take many years for significant price apppreciation.

• Relief of Property Tax Burden

Buyer will be responsible for all Property Taxes

• Relief of Hazard Insurance Burden

Buyer will be responsible for Hazard Insurance

• Steady Stream of Monthly Income

Buyer generally pays monthly interest only payments

• Sell Homes before Further Depreciation and/or Deterioration

Since many homes are vacant, they are sugject to deterioration due to inclement weather, vandalism, and pests, etc.

• Homes Sell More Quickly

Ability to price home competitively and offer financing which can be hard for a buyer to obtain in this market.

• Lower closing costs

Real Estate Commissions, Tax Stamps and Title Insurance will be based on the lower sales price.

• Another Financial Option for Buyers

There are very few financial options for Buyers without large down payments or excellent credit scores. Many qualified buyers can not buy due to new restrictions.

• Lower Monthly Payments for Buyers

Interest Only payments are lower than a conventional fixed loan, freeing up cash to enable the buyer to do improvements to the property.

• No Appraisal Necessary

Appraisal is not necessary for loan and condition of the property is not a deterrent as it might be with FHA or VA loans.

Of course, this type of transaction should not be undertaken without performing your due diligence and scrutinizing your potential buyers ability to afford the purchase. And as always, you should review all contracts with your attorney and tax consultant.