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. Seller financing can be a great benefit to you. “Carrying back paper” is a way for you to get your price, and let your equity in the property go to work for you.
2. It can be a generous income stream with minimal work. If you have had your property as a rental, this may be a way for you to get the same or higher income without the hassle of property management and expenses of property ownership.
3. It can make your property more marketable to a wider array of buyers. Financing with conventional lenders is more complicated than it was in the past. Many highly-qualified buyers want to buy in today’s market, but cannot qualify for conventional loan standards due to self-employment status, unconventional income sources, recently resolved credit issues, etc. Note: the Dodd-Frank Act legislation has regulations for seller financing of primary residences.
4. Not every seller needs a lump sum of cash at closing of a real estate sale. If a buyer will pay you a desirable interest rate on the note and trust deed, it may give you better rate of return than other places to put your cash (like a savings account). In fact, you can sell your secured note and trust deed against the property if you need cash instead. As with all real estate transactions, there may be tax implications to your sale and seller financing that you should review with your tax advisor.
5. It is possible to get the property back in foreclosure. If the buyer does not make the payments, you should refer to the terms in the note and trust deed. Your recourse against the borrower may include receiving the property back, while you keep the buyer’s initial down payment, and all payments made to date.