Did You Know: Owner Financing

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     Engaging in the buying or selling of assets on the real estate market can be a simplistic task. On the contrary, many road blocks can emerge that can make the endeavor seem unattainable. In both scenarios it is critical to be aware of all the tools that can make the difference between a smooth or a turbulent transaction. This “Did you know” segment is to shed light on one of those tools, the owner finance option. Also known as seller financing, owner financing is the process of the seller/owner assuming the role of the bank and they allow you to make payments directly to them. This essentially cuts out the middle man by eliminating the need for a bank or mortgage lender.

     Your real estate expert finds a piece of property that meets all of your specifications and owner financing is an option, what does that entail? Once the final price on the property has been set, your real estate agent then negotiates a down payment. That down payment will then be subtracted from the total cost and the buyer will sign a promissory note on the remaining total. This note will include the interest rate, repayment schedule, and the consequences if you default on the note. As mentioned above, the financial institution that accompanies most deals is removed from the equation and you will be making installment payments to the owner.

Owner financing is advantageous for both sides of the transaction which I will highlight with a list of pros.

Buyer Pros:
> Anyone who needs financing and was turned down by a bank or traditional lender can use the owner financing option to buy a home or piece of land.
> The down payment percentage is part of the negotiation process, so your real estate expert can work with the seller to get the down payment to where you need it to be.
> By cutting out the middle man, the closing process is faster and cheaper.

Seller Pros:
> Owner financing gives you the potential to get a better interest rate than on other investments.
> Lenders often require you to make costly repairs on a home, whereas owner financing gives you the option to sell “as is”.
> If the buyer defaults and quits making payments, not only do you get your property back but can keep the down payment and any money paid in.
> An owner financing option allows your property to stand out in today’s real estate market. A home or piece of land that has had trouble selling at your desired price may have a better chance with this option.
> The note that is signed by both parties can be sold to an investor for a lump sum of money at any time.

     The potential for owner financing is evident and if you think it could be the difference maker in your real estate goals I urge you to contact Sparks Realty Inc. We have owner financing options available as well as expertise in the process to get these deals done.

Sparks Realty Inc.      (501) 888-1000         sparksrealtyinc@gmail.com
William Sparks           (501) 539-3662         williamlsparks@hotmail.com