If you’re thinking of selling your house using owner financing, make sure you read this blog post to learn the 6 owner financing tips for sellers in Kansas City…
There are many ways to sell a property. You can list the home with a traditional agent; you can sell the property to a direct house buyer such as us here at Green Sparrow Properties; or you can “become the bank” and accept payments for your house over time (known as owner/seller financing).
Seller financing is a powerful, but often overlooked strategy. It’s where you offer terms to the buyer to pay you regular payments (just like a mortgage). Here are 6 owner financing tips for sellers in Kansas City…
Owner Financing Tip #1: Don’t Focus Only On Price
Don’t get too hung up on the price. Of course both parties need to find a price that makes sense in order to do the deal, but there are other factors in the deal (such as the terms of the payments) that can be even more important!
Owner Financing Tip #2: Timeline
Think about what timeline you would like to be paid over. A bank may offer mortgages for home purchasers over a 5, 10, 15, or 30 year term. But does that term work for you and the buyer?
Owner Financing Tip #3: Terms
Terms are equally important to price when looking at selling your home via owner financing. There is a saying, “My price and your terms, or your price and my terms.” Things such as interest rate, down payments, etc can make or break a deal.
Owner Financing Tip #4: Protect Yourself
When you enter into an agreement to sell such a large asset as a house, make sure that your interests are protected. Even if the buyer is trustworthy and well intentioned, things still happen. So make sure that you have the correct paperwork, maintain insurance, and write the contract to ensure that you can protect your interests if things go sideways. You want the ability to foreclose on the buyer and take the property back if they stop making payments for instance.
Owner Financing Tip #5: Build Contingencies
Most of your owner financing agreement will be built around the “ideal plan” – of what would happen if everything goes perfectly. But sometimes things happen outside of our control, so building contingencies allow you to make better decisions if the unexpected happens. For example, what if the buyer no longer wants the house, or can longer pay, or wants to pay early, or wants to use the house in a different way than expected? Or what if your circumstances change and you no longer want to sell or you need to sell even faster? Agree to the contingencies with your buyer ahead of time and the arrangement will be so much smoother.
Owner Financing Tip #6: Get An Attorney
Having an attorney in your corner can greatly help to protect your interests through a properly drafted legal agreement. They will be able to relatively cheaply draft a seller financing contract to ensure that everything goes smoothly!