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Owner financing - What's in it for you?

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By : Dan Joseph    99 or more times read
Below are benefits of an owner finance house deal for both the buyer and the seller.

Benefits for the seller

Most of us want to pay as little tax as legally possible and getting a large sum of cash at closing requires us to pay a hefty tax bill either then or ultimately come tax time. Sellers can pay a much smaller amount of taxes by selling via owner finance or seller financing than if the seller went the usual all cash sale route. Let’s look below for some benefits:

Highest Price. A seller can most often receive the highest price when offering owner financing. Additionally it makes the house or property much easier to sell especially if the market is slow it will make this seller’s property stand out and thus garnering more traffic than if just traditional financing was offered. Often the seller can receive more than the fair market value of the property by offering these terms. People are always willing to pay more for easy qualify owner or seller type financing.

Seller Financing. Because owner financing or seller finance terms are offered the chance of a sale increases dramatically since more people will be able to get the financing and can legitimately pursue the house purchase. In addition the seller may be subject to capital gains tax. In the case of a sale of a property using owner financing it would decrease the sellers tax burden immensely and spread it out over time plus quite possibly provide a nice monthly income.

Fast Closing. You can close quickly as no bank financing is involved. Some financing can take months to get completed but in an owner finance sale you can usually close as soon as the title work is ready and inspections (if any) have been completed.

A seller can save the Broker fee or commission from selling via owner finance as well.

There are several and many significant benefits for the seller but there are benefits for the buyer as well. Please see below.

Benefits for the buyer

Sometimes when a buyer chooses this method of buying, the interest rates can be much higher but the good news is that if you shop around for seller financing you will see there are plenty of good deals and remember “everything is negotiable”.

Easy Qualify. The buyer may want owner financing for more than just because they have bad credit and need time to rebuild it. It could be that they just started a new job or could be recently divorced etc' the list goes on. In today’s real estate market place it is difficult to get financing even with good credit and owner financing options are becoming quite popular regardless of the credit score. The buyer advantage here is easy qualifying usually just a down payment and the first month but of course this can vary and is negotiable varying as much as the sellers themselves.

Improve credit. An owner finance sale gives the buyer time to improve their credit rating by owning a home and making timely payments.

Lower Loan Costs. One of the biggest benefits for the buyer is not having to pay the costs associated with conventional loans. Points, origination fees, underwriting charges, appraisal, credit reports, title insurance etc' etc' charged by conventional lenders can amount to thousands of dollars at closing. The buyer usually does not have these type of expenses on a seller finance type sale.

Quick Closing. A buyer can commonly close and move into their new home quickly usually within several days or a couple of weeks of contract signing since there are no banks involved. If you choose owner finance as the way to purchase your next home or to sell your house be smart and always engage the services of a “competent” real estate attorney!
Dan Joseph

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