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 Baton Rouge…
We talk about two ways to sell your house very often. One, is list it. another option is sell to a house buying company like BuyHousesBR. There is a third option that we don’t talk about to often. That is being the bank and “seller financing”, collecting payments over time without the headache of being a landlord.
Owner financing is a valuable but under-used strategy to sell your house. There are a few benefits, such as a higher asking price and the ability to foreclose on them if they don’t make their payments, so you have little risk. How it works is you offer terms to the buyer to pay you regular payments (just like a mortgage). Here are 6 owner financing tips for sellers in Baton Rouge…
Owner Financing Tip #1: Don’t Focus Only On Price
Price is one component to an owner financing deal, but it isn’t the only one. Of course you need to agree on a price, but most people will pay a bit extra to get owner financing, plus you have other negotiating levers which we will talk about in the terms section. You can get more flexibility by being the bank then working with a bank.
Owner Financing Tip #2: Timeline
Do you have a high income and need to pay a lot of tax this year? Maybe you don’t need a big chunk of money, but could use a steady stream over a set number of years. With seller financing you choose your payback timeline and spread out your repayment, with interest! Do you want to accept payments over that period of time? Your buyer will want to find a timeline that works for them, too: they might not want to be paying you 25 years down the road, but need help for 5-10 years then will be able to get financing to pay you the remaining balance.
Owner Financing Tip #3: Terms
The terms of the deal are one of the most important yet most overlooked parts of the deal. You set the down payment, if there is an early repayment penalty, or even a late payment penalty. You can even set the interest payments!
Owner Financing Tip #4: Protect Yourself
Whenever you deal with valuable things, whether it is your grandmas wedding ring or your house, you need to protect your expensive things. Even if you enter into an agreement with someone who is completely trustworthy, things could still go wrong – so make sure you protect yourself. To protect yourself, make sure you have insurance, but not only that, make sure you are a named insured for their and the other person does as well for the various situations that could occur. And consider including a clause that retains the ownership of the house in your name until the house is fully paid.
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
No matter how you ultimately structure your owner financing deal, make sure you work closely with an attorney who can help you. A poorly worded agreement could end up hurting you; an attorney can help.