What's the best way for me to sell my house and offer seller financing?
In the tanking Florida market there’s no way we can sell our place. But we just want to buy a house and not carry two places, we don’t need the cash for a downpayment. We have that.
I’m hoping to attract buyers with offering only 5% down, fixed 25 year loan. How can I set this up so that we don’t get taken and it’s legal, and most importantly I have legal recourse if they don’t pay?
Anyone done this before?
Tags: downpayment, florida market, legal recourse, pay anyone, t pay
July 3rd, 2011 at 9:20 pm
YOU ARE SMART!
If you can afford to do that, then it’s a great way to sell your house and make some money each month to boot.
All you have to do is get a real estate attorney to draw up a note with the terms. You get listed as the lienholder, just like the bank, and a Deed of Trust is filed.
In the event of a default, you get to foreclose, get the house back, and sell it again if you wish, plus sue the owners for anything that they didn’t pay you.
This is a very common thing for real estate attorney’s to draw up, and shouldn’t cost more than $200 or so.
July 3rd, 2011 at 9:20 pm
The easiest way is to require that anyone that wants to purchase provide a credit report. You’ll have a legal land contract and allow a 3rd party such as a bank or escrow company collect the payments and record when they come in etc. The land contract will have the tax bill sent to the new "owners" for payment. Request that you get a follow up copy in case they are not paid timely or you might want to consider requiring that a portion of the tax bill get paid each month.
July 3rd, 2011 at 9:20 pm
Yes..getting a credit report is important but, verification of employment is even more important. When your verification is done also look up the entity in your states website to verify that the employer’s license is active and they exist. I am not trying to frighten you but, you would be surprise what people try to pull. Heaven forbid you get someone in your property and the fail to pay.
I think your offer is very attractive but, I would enlist the services of "Assist You Sell" or an organization of that sort to insure all your bases are covered. You will need a title report etc so that research can be performed on the buyers names in case there are liens (tax liens etc…) attached to their names which become attached to any property they buy and could garnish wages needed for payments to you.
Best wishes
July 3rd, 2011 at 9:20 pm
People looking for sellers to carry the financing are people that already have trashed credit. It will be of no consequence to them to default on your loan (except having to move again), they have nothing to lose.
Owner carry financing is typically set up one of a few ways. One: the buyers have trashed credit, so they need some time to clean it up. Seller and buyer enter an agreement that the seller will carry the note for a period of time, usually a couple years. At that time, the buyer obtains their own mortgage and buys the home in a traditional manner. Two: The buyer doesn’t have down payment. A portion of the monthly payment is deposited in an account and at the end of the agreement, the buyer has "saved" for a downpayment. Three: The seller carries the loan the entire period.
The downside to owner carry is that you may have to go through an eviction process more than once if you get bad buyers. One of these said buyers may trash your house, and then you will have to deal with repairs.
Choose your buyers carefully, and it may come out just fine.
Have a RE attorney draft the contract. It needs to be rock solid so your property is protected. Include things such as who will pay for taxes, insurance, utilities, maintenance of the property and who pays for big ticket items (new roof, etc.)