Dawna is a real pro! I am so glad she was on our team. For nearly four years she guided us through the volatility of the San Luis Obispo housing market, answering our questions from a far (we live in Montana) and flagging appropriate properties or developments along the way. When the timing was right and we found just what we were looking for, Dawna expertly guided us through the negotiations and inspections. This wasn't our first home buying experience, but we really appreciated how easy Dawna and her assistant made the whole process. We successfully closed in less than 30 days.
1. It can make a purchase faster, easier, and save you money. Seller financing is not a ‘hard money loan”. Closing costs for your purchase will be lower because there is no conventional lender involved. You can negotiate the payment amount, term of payments, interest rate, payoff date (often a balloon payment), etc. In fact, the interest rate and terms on the note and trust deed may be comparable to market interest rate and terms for conventional loans.
2. Not every seller wants or needs cash at the end of the closed sale. Work with your agent to learn what the seller is seeking (high interest rate, high payments, large down payment, etc.). Once you know what the seller wants, you can tailor the other transaction terms to better meet your own needs. As with all real estate transactions, there may be tax implications to your purchase and seller financing that you should review with your tax advisor.
3. Seller financing can be a great benefit to the seller. It is a way to give the seller their asking price, on your terms. In fact, sellers may get a better price and faster sale by carrying financing.
4. Sellers are cautious. Many fear that they will have to foreclose on the property because the buyer may not make payments. You should establish credibility by providing proactive documentation with your offer to the seller. This can include copies of notes and trust deeds that you have already paid off, your paystub, financial statements, credit report, etc.
5. The party receiving your note payments can change. The note and trust deed is a future saleable asset for the seller. They may sell or transfer to another party who will then receive your note payments. The note and trust deed can even be used to trade for property or other things of value.