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Rainmaker
3,427,435
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

For some borrowers, it is the only financing option available. 

Is it deja vu or wasn't this question just asked yesterday?   

Sep 07, 2017 09:59 AM
Rainer
53,318
Joe D'Agostino
NMLS# 729950 - Manahawkin, NJ
Mortgage Officer 46 years!

Morgan: As a mortgage banker with 50 years in the business,let me say this:

As a Realtor, the "Seller Finance" deals are like a cash deal. You need 1) No Appraisal 2) No mortgage approval 3) No applications. The mortgage world Does not exist. As a Realtor,with the exception of a cash buyer,I would do this "all day long." You sell the home, collect your commission and Go Home,what is wrong with that? As for the seller...he can accept a no down payment, but I would insist on at least 20% . He can charge whatever interest rate he wants under the "Usury Laws" of that state,and make a nice return on his money. He may even structure the mortgage with a balloon payment. These deals are done everyday and I have assisted many buyers and sellers on this type of transaction. There are many reasons why this is done. Some involve retirement,past credit history,etc. If it happens in your deal, be happy.

Sep 07, 2017 10:19 AM
Rainmaker
2,826,541
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

You get loan financed and you pay a higher premium. 

Question was asked as recently as yesterday.

Sep 08, 2017 09:20 AM
Rainmaker
941,240
Thomas J. Nelson, Realtor e-Pro, CRS, RCS-D, Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

I bought my first two homes this way combined with one initially being a rent to own.

PROs:

Seller makes great ROI

Buyer gets a loan when banks say no and it's usually less than hard money.

Cons:

Seller becomes the bank.

Buyer pays higher interest with a deadline on a balloon payment typically,

Sep 08, 2017 06:56 AM
Rainmaker
3,213,210
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

In 25 years I've yet to see a seller take the risk to finance a mortgage.

Sep 07, 2017 12:11 PM
Rainmaker
3,366,061
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Advantage is the speed it can be done even if the buyer has questionable credit. Disadvantage to the seller is he does not have his money. 

Sep 07, 2017 11:50 AM
Rainmaker
3,983,713
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Richard hits it on the head.

Sep 07, 2017 09:55 AM
Rainmaker
3,128,475
Richard Weeks
Dallas, TX
REALTOR®, Broker

Advantages: Quicker close, more lenient regarding credit scores.

Disadvantage: Higher interest rates.

Sep 07, 2017 09:53 AM
Rainmaker
5,121,084
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

for those with low credit scores, it's a lifesaver.... pay the vig though!!

for those who are credit worthy, they may close quickly and for minimal closing costs and worth it, if it's very short term...

Sep 07, 2017 09:39 AM
Rainmaker
5,506,548
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Some home buyers are unable to qualify for institutional mortgage financing.

Sep 07, 2017 09:30 AM
Rainmaker
547,457
Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

I have found that the only time that a seller is willing to finance is...

  • They can't dump their property
  • It is over priced, so will not appraise
  • They want to make a $high$ interest rate
  • They have a buyer with crappy credit

Eve

Sep 07, 2017 09:26 AM
Rainmaker
1,258,183
Valeria Mola
SIB Realty - Miami, Sunny Isles Beach - Sunny Isles Beach, FL
305-607-0709 SIB Realty Condos for Sale and Rent

Advantage - fast closing

Disadvantage - higher rate.

Sep 03, 2018 08:06 PM
Rainmaker
4,160,435
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

So far, have not seen any seller financing.

Sep 10, 2017 03:55 PM
Ambassador
1,926,397
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

disadvantage the buyer can stop paying the lein  holder (seller ) and declare bankruptcy  and the seller can lose his money . Not alway as good as it sounds

Sep 09, 2017 08:15 PM
Rainmaker
1,559,430
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Geneva Financial, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Usually, it is a short term and a higher rate. Advantages as Michael Jacobs noted

Sep 09, 2017 03:49 PM
Rainmaker
4,432,467
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Others he answered.

Sep 08, 2017 01:12 PM
Rainmaker
3,243,249
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Not a fan at all, why would they want to tie up their money and have something go wrong with their credit.

 

Sep 08, 2017 09:49 AM
Rainmaker
4,797,822
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Typically the biggest disadvantage is the risk.  The advantage is the possibility of a better than average return.

Sep 08, 2017 09:46 AM
Rainmaker
569,260
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

The greatest disadvantage is that they fall apart 80% of the time. The greatest advantage is that a Seller can leverage the likelihood of failure to their advantage with non-refundable down payments, higher rates, etc.

Sep 08, 2017 06:50 AM
Rainmaker
745,275
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Easer credit, but tougher terms.

Sep 08, 2017 06:20 AM
Rainmaker
1,384,227
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Morgan Rivas Advantage: Easier to qualify; Disadvantage: Higher interest rates

Sep 08, 2017 06:08 AM
Rainmaker
3,054,229
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

In 15 years I've seen it only once - for a small second mortgage

Sep 08, 2017 05:51 AM
Ambassador
4,301,228
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Morgan Rivas - some buyers may not be eligible for a regular mortgage so that is to their advantage.

Sep 07, 2017 10:49 PM
Ambassador
2,363,990
Fred Griffin, on leave of absence from ActiveRain
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

No underwriters, no loan costs.

You will usually pay a higher interest rate than market.

Sep 07, 2017 09:07 PM
Ambassador
4,371,362
Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Sometimes it is the only option.

Sep 07, 2017 08:44 PM
Rainmaker
1,035,503
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Default

Buyer not eligible for regular mortgage.

Sep 07, 2017 06:01 PM
Rainmaker
525,764
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

The seller can create a high yield income stream secured by real estate.

Sep 07, 2017 04:43 PM
Rainmaker
3,051,794
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

In a declinging market when homes ar enot selling, sellers need to finance in order to sell and can get a better price. In this market, things sell fast enough with out putting aseller at risk

Sep 07, 2017 04:37 PM
Ambassador
3,983,717
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

My goodness that is a whole blog topic. The answer may be included in your prelicense textbook too.

Sep 07, 2017 04:04 PM
Rainmaker
417,685
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

Advantages - buyer can purchase when they may not qualify for conventional financing and seller gets regular checks each month and can foreclose on the property if the buyer doesn't pay. Disadvantages - seller may have to foreclose on property and doesn't get full funds out of the home right away.

Sep 07, 2017 03:33 PM
Ambassador
1,656,141
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Too broad of a question.

Sep 07, 2017 02:59 PM
Rainmaker
1,264,022
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Very unlikely to see this in real life.  Most sellers need the money and can't qualify for their purchase with the house still on their balance sheet.

 

I have seen some investment properties (three city blocks of condos, about 20 units total), where the seller mandated that seller financing was to happen for most or all of the loan.  That was a really wierd one and I steered clear from it.

Sep 07, 2017 02:40 PM
Rainmaker
110,319
sandy straley
Rindlesbach Homes - Salt Lake City, UT
Selling Homes for over 40 Years

Back in the day when mortgages were assumeable. . . they were a great way to sell a home and the seller could make above average interest rate and more money over time if they did not not need all their equity.  .. . Now days, I would tred lightly because of the non assumption clauses, cover all basis and know exactly what your are doing.  Usually all inclusive trust deed is the best should the seller have to foreclose on the buyer. Have a experience title company and collection agency work with you. . .  , personally now days I would wait for a well qualified buyer.

Sep 07, 2017 01:42 PM
Rainmaker
4,574,276
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Morgan,

Great answers here already.  A

Sep 07, 2017 12:20 PM
Rainmaker
1,846,854
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Quicker settlement ! Lower costs !

Sep 07, 2017 11:37 AM