Infotube.net: Homes for Sale - For Sale By Owner (FSBO) - Real Estate Listings

Seller or owner financing increases the pool of potential or qualified buyers for most real estate, but it has its own considerations.   If you are interested in exploring owner financing, ask yourself the following questions:

1. Will you need the cash you are loaning to the buyer to purchase your next home?  If so, bank rolling the sale is probably a bad idea.
2. Are you willing to assess the creditworthiness of the borrower?  Banks are experts at loan underwriting and analyzing the sources for loan repayment.  If you aren’t willing to do the work, it’s probably a bad idea.
3. Do you need monthly income?   If so, and you are in a low income tax bracket, you will probably do OK, but remember mortgage interest is taxable income.  If you are in a high tax bracket, you would probably do better investing in tax free muni’s.
4. If the buyer/borrower defaults, can you afford to lose the money?   If the buyer stops making payments and you can not the monthly expenses, it’s probably not a good idea?
5. If the borrower defaults on your loan, are you in the postition to foreclose?  Foreclosure can be a lengthy and costly process.   Do your homework to decide if a “worst case” situation is one you are willing to face if necessary.   If you aren’t in the position to foreclose, loaning the money is a bad idea.

If you aren’t willing or can’t do what every smart lender would do, you are better off waiting for a buyer with his own source of funds.    If you can comply with all the conditions, then and only then, should you consider bank rolling your home sale.

If you have decided to learn more about the option of owner or seller financing, our next topic will cover the steps involved in setting a financing transaction in motion. 

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In a difficult housing market, seller or owner financing can broaden your pool of buyers,  attract top dollar sales prices and eliminate the hassles of dealing with mortgage lenders.   Owner or seller financing can also boost your profits with good investment returns on your money and provide possible tax savings.    But, while the benefits of seller financing can be vast, please consider the risks before you jump into the banking business.  

• What is Seller Financing?      Seller financing involves extending credit against the purchase price of a home, either by taking a back second note from the buyer or financing the entire purchase, if the seller owns the property free and clear.   In other words, the seller of the property acts as the banker for all or part of the purchase price.
• What are the Benefits of Owner Financing for Sellers?   People who own their property free and clear can offer attractive financing to qualified buyers to help a home seller faster and provide a better return on their investments.   In addition, owner or seller financed homes sell for a higher price.
• Who Should Offer to Finance All or Part of the Sales Price of Their Home?    Ideal candidates own their homes free and clear, or they have older VA, FHA or otherwise assumable mortgages.   Other ideal situations include vacant properties owned by retiree’s or wealthy sellers; vacant properties that have languished on the market for several months; estate or court ordered sale situations and individuals who desire income in installments for tax purposes.
• What are the Biggest Risks Involved in Seller Financing?  The largest risk is Buyer Default.   If the borrower stops making payments, the seller may be forced to initiate the expensive process of foreclosure.  In the event of a buyer default, the seller could lose even more if housing prices have fallen further since the sale. Other risks include property damage or neglect, which can be costly to repair;  repayment deliquency; lack of cash to purchase something else; theft and property destruction.

Later this week we address the topic “How to Offer Seller Financing and What the Terms Should Be”.

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Home sales always cool in winter, but the winter 2008 is especily frigid for the housing market.    Along with this year’s falling snow and temperatures, come falling home prices, falling moge applications, falling consumer spending, falling interest rates, falling job growth, falling dollar and falling confidence in ouselves and our government leadership. 

As our troubles continue to accumulate, the pile of home foreclosures, heating andl bills and the “cost of war” taxes continue to mount.   While the US economy staggers under this weight, our risk of slipp becoming buried in recession becomes much more real.  Furthermore, it is not likely that a half-point ”too little too late” inest rate cut by the Fed will heat things up or change the course of this ongoing storm.   

As we look for ways to surviough this dark period, our focus should be fixed upon the sunny reality that real estate and housing markets are cyclical. With the unprecedented rise in home prices that we have enjoyed in recent years, comes the envitable fall of housing to a more norma, sustainable level.     

During 2008 and much of 2009, Americans homeowners must be prepared that things will likely gse before they get better.   The smart investor will hunker down and stay focused upon their personal situation to avoid beind alive in an avalanche of ecomonic bad news.

During the month of January, www.infotube.net/blog will deliver decades of experienced, real estate advise to assist homeowners in planning for profit in 2008.   will expose strategies and secrets you can use now to beat the market, whether you need to move the property that is tying you down or buy your next property at the right price, time and terms.

Next InfoTube Blog Topic: 5 Ways to AttracShoppers this Winter.    Winter delivers fewer numbers of home shoppers, but the few it delivers are seriously, highy.    Don’t miss this expert advise on cashing in on winter shoppers.