Seller Financing - Six Safety Tips
By Steve Gillman - 2006
Why offer seller financing when you sell? You get a higher
price, a good return on your money, a faster sale and you can
sell a property that's otherwise difficult to sell. Some great
reasons, now how do you do it safely?
1. Large down payment. The most obvious way to be safe, but
not always possible.
2. Other security. If they want it with a low down payment,
and you like the return you'll get, make it safe by putting an
additional mortgage on other property the buyer owns, to be released
when they've paid down the balance to a certain level.
3. Credit check. Have the buyer pay for and bring you a credit
report. Bad credit might be okay, but the type of bad credit
is important. Unpaid, disputed hospital bills are not as relevant
as unpaid loans.
4. Use your instincts. If you're usually right about people,
give weight to your judgment of their character. I'd trust a
man who felt morally obliged to pay debts over a playboy that
happens to have decent income at the moment.
5. Look at the whole picture. Suppose that a bank will loan
90%, and is okay with you taking back a $5,000 second mortgage,
allowing the buyer to buy with what cash he has. If you get $6,000
more than you expected by accommodating the buyer's needs, where's
the loss? You'll be okay if he never pays the $5,000, right?
6. Use a lawyer for knowledge. Perhaps in your area it takes
two years to get a foreclosure on a mortgage through the courts,
and only six months to foreclose on a "contract for sale."
Knowing that, and other things a lawyer should know can help
you sell in the safest way.
Seller financing makes it easier to sell, and to get a higher
price. Just be careful about it. Get a real estate lawyer to
review your paperwork, and use the tips here.
Check out my book, now free: How
to Sell a House
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