Technology TransactionsRealty Viewpoint: Get Creative With Seller Financing
Who says banks should say who gets to buy a home? Right now, banks are turning away good borrowers, choking home sales. What"s the answer? Seller financing. There"s just one little problem. Real estate agents need to tell sellers that it"s an option.
And according to Greensboro, North Carolina, agent Jennifer Nelson, some agents out there are losing deals because they"re still relying on banks.
"Like most folks, I’m fed up with giving the banking industry all the power," Nelson says. "I feel everything is negotiable between buyers and sellers."
Nelson lost two deals because banks are going out of their way to kill deals.
The first was for an investor putting $50,000 down on a $72,000 investment property. Denied by three lenders for not showing enough financial information. When the angry seller called Nelson to vent, Nelson offered to hammer out a deal using seller financing, an idea that was never mentioned to the seller as an option by his own agent.
The second deal was for a AAA credit client who wanted to buy a second property. Deal was killed after weeks of delays by lender after using HOA financials as an excuse. Nelson went to the listing agent and offered seller financing as an option.
Nelson has an advantage that other agents don"t have - she was in the banking industry for years before becoming a Realtor, so she knows how to structure a loan.
But that shouldn"t discourage any agent from trying.
All it takes is a willing seller and buyer and a good real estate attorney to structure the terms and do the contract.
Here are a few things to consider:
Immediate cash upfront from buyer to seller (negotiate 3%, 10%, 20%, 30%, 50% ... )
Negotiate terms that will benefit both seller and buyer goals
Tiered interest rate options
Negotiate monthly, quarterly, yearly payments
Negotiate interim (additional) payments to seller quarterly, if long term
Obtain buyer asset(s) to sweeten the deal
Explain seller default options
"Buyers get to eliminate the huge closing costs associated with working with a lender and all the multiple, questionable, and unexplained fees," says Nelson.
Seller financing isn"t risk free, but there are options even in default situations, like the seller takes back the house.
That"s a deal you can take to the bank.