As a property management company, we see a large number of homes that are in excellent condition in great neighborhoods that only 5 years ago were the hottest houses on the market. Now, these homes have mortgages that are equal to what the house is worth. The problem is the house will not sell because of the cost to sell the home requires the homeowner to bring money to closing. This is why an Owner Financed home solves both the seller’s as well as the buyer’s problem. Below are 3 reasons to sell your home with Owner Financing.
Reason number one is the ability to sell the home without bringing money to closing. If the home is worth $150,000 and the loan balance is $152,000, selling the traditional way would require the seller to bring between $15,000-$18,000 to closing. Add up the Realtor commissions, closing cost, seller concessions, time on the market, and the ability to close becomes very difficult. Many of the homeowners I speak with choose to avoid selling with an agent to hopefully save the Realtor commissions. Statistically speaking, the chances of selling a home FSBO are far below the averages of selling with an agent. When you sell with Owner Financing you avoid the high commissions, closing cost, many concessions, and time on the market. Why? If a seller can offer financing, then a buyer doesn’t have to incur the expense of a traditional sale along with the strict bank qualifying we are seeing today. By offering Owner Financing, you can sell the home for what it is worth and many times what is owed. This is very attractive to buyers.
Reason number two would have to be time. Days on the market in our surrounding area varies from 6-12 months. This varies from price range to area. Our average is under 8 weeks. Why? We have more buyers than houses. The mortgage industry has made buying a home extremely difficult. Or, at least like it was prior to 2000. If the buyer is self-employed, then the chances are somewhere between slim and none. In fact, I can’t get financed and I’ve been been buying, selling, and managing properties for more than 9 years with good credit.
Last, but not least is number three. Options. If you have to sell and owe more than the house is worth or close to it, what are the options? There are 10 ways to deal with real estate. You can sell for cash, sell with buyers getting financing, sell it with Owner Financing, Trade, Swap, Lease with an Option, Rent, Short Sale, Deed in Lieu, or Foreclosure.
The more choices you have the better you can prepare. Selling with Owner Financing is another option and is gaining momentum. My guess is we will see a huge shift by the end of the year. Why wait? Contact a local property manager. A property management company typically have a large number of clients currently renting that want to own.