A seller financed home is where the home owner is acting as the bank. You make your monthly payment to the seller rather than to a bank or finance company. The promise to pay note is usually drawn up by a real estate law attorney. Just like a bank, the seller financing the home will collect or charge you interest on the principal. And just like a bank, the property seller will have the legal remedies in which they can foreclose and take back the property if the payments are not made, or other conditions such as not keeping insurance on the property are not met.
Owner financed homes for sale are a great way for a buyer to get into a piece of property in a much shorter time frame. Most sellers financing the buyer will not run the back ground checks and credit checks that a bank or finance company would. There is usually not as much paper work involved in getting the ok or approval if any from the seller. The terms of the note itself (interest rate, number of payments, payment amount) are negotiable as well as the down payment and when the first payment and following payments are due. The property itself also does not have to meet the lenders approval, be appraised, inspected, or surveyed unless you as the seller want this done.
As a seller the advantage of a seller financed home is usually a quicker close. Not having to do any repairs, Getting to collect the interest and creating a monthly income until the note is paid off.. Not having to pay a big tax bill to Uncle Sam since in most cases you only get taxed on what you collect, not what is owed to you. My favorite as a seller financing homes, is collecting that monthly income and the possibility that the buyer of the property can not make their payment and I get to foreclose on the property and get to sell the property again and collect another down payment.
We had one house we sold three times before it was paid off by the last buyer. We would sell it, collect a down payment and monthly payments for a couple years. Then the payments would stop. We would send them a letter and start the foreclosure process. We would go in, take the property back and resell it again. With the normal increase in real estate values at that time we would be able to sell it for a higher price each time.
Now in any of these situations you would want your real estate law attorney looking over your shoulder making sure you are protected in the transaction. Don’t believe that just because the other side of the transaction used a lawyer you are OK. Their real estate lawyer is watching out for them, NOT YOU!!
Now just because the seller is offering financing, this does not mean that you can not ask for the seller to make repairs. Some will tell you that is why they are financing the property is so they do not have to make any repairs, Others are just trying to get the property sold and might be willing to do some things to get the property sold.
As in any other real estate transaction, everything is negotiable!!