Spam prevention
Rainmaker
3,839,328
Richard Weeks
Dallas, TX
REALTOR®, Broker

Advantages = quicker close, easier to qualify

Disadvatage = higher interest rate

Mar 26, 2019 10:45 AM
Rainmaker
3,867,343
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Risk to the seller. Why would a buyer typically need seller financing? Probably because a financial institution considers them too much of a risk.

Mar 26, 2019 10:41 AM
Rainmaker
5,570,474
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Richard Weeks has this one....

Mar 26, 2019 11:02 AM
Rainmaker
863,423
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

https://activerain.com/blogsview/4863251/seller-financing---when--owner-will-carry-

Mar 26, 2019 10:39 AM
Rainmaker
1,132,570
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

 Your classmates beat you to it already. When in doubt you may type in the question in SEARCH BOX.

Mar 26, 2019 10:45 AM
Rainmaker
827,758
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

Sellers might not need all of the money at once, and can charge a higher interest rate. They still should require a downpayment of at least 20% in most cases. A disadvantage could be that buyer defaults and disappears and they have to do a take back.

Mar 26, 2019 04:31 PM
Rainmaker
1,706,140
Anthony Acosta - ALLATLANTACONDOS.COM
Harry Norman, REALTORS® - Atlanta, GA
Associate Broker

Richard Weeks and your answer.

Mar 26, 2019 04:06 PM
Rainmaker
1,826,276
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

I never had that situation kennith Frazier 

Mar 26, 2019 01:37 PM
Rainmaker
2,605,794
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Actually what could be better security than the home that was sold? Of course there has to be lots of equity there and the seller not needing all $$$$. The interest rate would beat banks however is the seller in a position to take the home back if defaulted? Would they want to?

Mar 26, 2019 12:33 PM
Rainmaker
1,357,243
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Seller gets the house back if buyer defaults.

Mar 26, 2019 12:13 PM
Rainmaker
862,009
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

There are tax and deferred income to the seller...may more.

The seller takes the typical lender risk or slow or no payment, collection and possible foreclosure.

For the buyer: perhaps easy qualifying. Perhaps no appraisal. Maybe other savings.

Mar 26, 2019 11:45 AM
Rainmaker
3,982,389
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Not a popular option for the last 10-12 years a a minimum. If a buyer can’t qualify in today’s age they should not own!
In the days of yester year when rates were in the high teens, a seller might gamble if they needed to sell and off lower rate financing to make it happen.

Mar 26, 2019 11:36 AM
Rainmaker
468,109
Dan Pittsenbarger
Keller Williams Western Realty - Bellingham, WA
Improving Conditions

Avantages for buyers - typically no loan fees, keeps their available credit free for other project, they can possibly find a seller that's comfortable with their financial scene when traditional lenders aren't.

 

Avantages for seller - they can probably get a better return in interest than many other forms of investment and it's secured by a property they are familiar with. Tax benenfits for receiving money over time rather than all in one tax year.  Are the two big adavntages that stand out in my mind.

 

Advantage for both sides - no appraisal. No appraisal fees for the buyer, no appraisal work orders for the seller. No deal breaking low appraisal issues for either side.

 

Disadvantages - it's a pain in the neck and can be expensive to foreclose so there's risk. To keep things straight one will want to set up a collection/escrow account to handle the monthly collection of payments and distributions and handle the transfer of title and/or lien release at the end so there's a fee for this service than is not needed with a traditional loan from a lender.

Mar 26, 2019 11:11 AM
Ambassador
5,175,471
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

Can sell the property for a higher price, but you may get it back in pretty rough condition.

Mar 26, 2019 10:51 AM
Rainmaker
2,061,599
Evelina Tsigelnitskaya
SIB Realty - Sunny Isles Beach, FL
www.SIBRealty.org 305-931-6931

I am with Richard.

Jun 18, 2019 04:11 PM
Rainer
300,871
Caroline Gerardo
Sun West Mortgage Corporation - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Seller financing is a difficult one. Seller usually has no idea if they will get paid back. Seller has to do accounting for the payments and send the IRS and state the records every February. Seller may have to foreclose and take the property back in poor condition. Seller has to keep records, what if they suddenly want to make lump sum payment or have a fire?

Advantages for Buyer- qualifying might be faster and easier.

Mar 27, 2019 05:29 PM
Rainmaker
932,978
Diana Zaccaro
Tropical Beachside brokered by eXp - Cocoa Beach, FL
"The Accidental Blogger" Cocoa Beach, Florida

It depends on the type of propert and many other factors. Default is one of the biggest concerns.

Mar 27, 2019 01:30 PM
Rainmaker
2,008,499
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Seller can spread out their capital gain into multi years to avoid a higher tax rate

Mar 27, 2019 04:55 AM
Rainmaker
3,293,205
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

They are used more in a recession than this market. I see them most often in investment property and not owner occupied. It lets someone buy a home who does not qualify conventionally

Mar 27, 2019 04:32 AM
Rainmaker
522,604
Lynnea Miller
Bend Premier Real Estate - Bend, OR
Premier Real Estate Service in Central Oregon

Seller get a buyer into their questionable property and the buyer has ownership of a property they couldn't qualify for by conventional means.  If the buyer doesn't fulfill the terms of the loan, the seller gets the property back.

Mar 26, 2019 09:07 PM
Ambassador
4,056,251
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Risky for sellers, a dream for buyers who can't qualify for a traditional mortgage.

Mar 26, 2019 08:22 PM
Rainmaker
6,323,045
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

The advantage is to the buyer when they have no other options and to the seller when it meets their needs.

Mar 26, 2019 04:44 PM
Rainmaker
1,164,311
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

Instead of 20 Questions per day...

Mar 26, 2019 02:02 PM
Ambassador
2,992,691
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

I wish you all the best with your real estate studies.

Mar 26, 2019 11:37 AM
Rainmaker
1,654,690
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

It depends on which side of the transaction you're on.  It can be a win/win done correctly with honest parties involved... and THAT, my dear Kennith, is the caveat. 

Mar 26, 2019 11:17 AM
Rainmaker
519,101
Greg Cremia
Shore Realty of the Outer Banks - Nags Head, NC

For sellers the risk is loan default and the subsequent foreclosure process. I never reccomend it with houses unless the buyer is stellar but it is usually a good deal for the seller on raw land.

Mar 26, 2019 11:07 AM
Rainmaker
1,596,146
Valeria Mola
SIB Realty - Miami, Sunny Isles Beach - Sunny Isles Beach, FL
305-607-0709 SIB Realty Condos for Sale and Rent

No idea. 

Jun 19, 2019 08:31 AM
Rainmaker
4,697,407
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Have yet to have one.

Apr 01, 2019 04:00 PM
Rainmaker
865,881
Annette Lawrence , Palm Harbor, FL 727-420-4041
ReMax Realtec Group - Palm Harbor, FL
Making FLORIDA Real Estate EZ

The reason the banks have all the money is because there is LOTS of money to be made in lending.

When you can be the bank, you can make a lot of money and solve some problems for those who find themselves a bit short.

RED ALERT
Lending money to a occupant buyer can be a speedy path to bankruptcy. Make sure you know more than the borrower. If they know more than you...you're toast.

...

Mar 27, 2019 05:17 AM
Rainer
171,652
Dr. Karen Lewis, Broker 954-2489149
K1 Realty Group - Miramar, FL
No Compromise When it Comes to Our Clients!

Great answers already..I have to think about it..

Mar 27, 2019 04:11 AM
Rainmaker
5,323,182
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

You have the answers from our illustrious membership.  Always advise your clients to talk to a financial expert, before making this decision.  A

Mar 26, 2019 11:03 AM