Six Ways You Can Protect Yourself In Seller Financing Your Home For Sale

Having trouble selling? Have you considered owner financing the deal? Owner financing tends to yield a higher selling price and excellent return on your money. But there are some risks involved. Here are 6 tips to help you minimize your risk.

1. Collect a large cash down payment of at least 10%.

2. Seek additional security. If the buyer has part of the down payment and you feel comfortable that the buyer can pay the payments, as for additional security such as a car title that can be released after a short period of time, for example 2 or 3 years, if payments are made as agreed.

3. Check their credit. There are many options for obtaining a credit report. Have the buyer obtain a credit report with a credit score and bring it with them when applying for the loan. Bed credit is okay, as long as the issues have been resolved and they have recovered financially.

4. Trust your gut. I know it sounds clich but usually your gut instinct is the best instinct. If you do not feel comfortable with the person buying the home, you may need to walk away. Remember you are entering into a long-term relationship with the buyer and you need to be comfortable with the transaction.

5. Consider the whole picture. If the bank is willing to loan the buyer 90% of the homes value, and is okay with you holding a second mortgage on the house if the buyer puts 5% down in cash, it’s a win win for everyone. The whole picture is you’ll be getting 95% of the value up front, even if the buyer never pays a dime on the second mortgage. Worst case scenario is that you foreclose on the house that the buyer paid you 95% of the value for.

6. Talk to a lawyer. Find out exactly what the foreclosure laws are in your area. By finding out the worst case scenario up front, you can determine how you should proceed.

Providing seller financing allows you to get the most money possible for your home. Be smart about it and this can be a winning transaction for you and the buyer.

Waterfront Houses USA is a real estate listing service that provides Waterfront Homes and Waterfront Homes For Sale in the US and Canada.