Dawna is a real pro! I am so glad she was on our team. For nearly four years she guided us through the volatility of the San Luis Obispo housing market, answering our questions from a far (we live in Montana) and flagging appropriate properties or developments along the way. When the timing was right and we found just what we were looking for, Dawna expertly guided us through the negotiations and inspections. This wasn't our first home buying experience, but we really appreciated how easy Dawna and her assistant made the whole process. We successfully closed in less than 30 days.
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.