Dawna Davies and her assistant Jodi Blanchard did an exceptional job in helping us sell our home in San Luis Obispo. Dawna’s intelligence and knowledge of the business made the whole complex process easy for us to understand and navigate. What seemed like counter-intuitive advice at the start—that we should be extremely thorough in discovering any possible problems with the forty year old house and present them in advance—turned out to streamline the final transaction by building trust in potential buyers and removing the possibility of unpleasant surprises and uncertainty for us. Her contacts with a wide range of local business people who carried out many preparatory operations quickly and economically offered another unique benefit. Her tact and amiability made our numerous interactions pleasant rather than wary. And Jodi’s work in converting the box full of documents from our files into a coherent house-maintenance-history binder meticulous and creative. From start to finish our involvement with Davies Company was personally as well as financially rewarding.
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.