If your property isn’t attracting prospective buyers you have an option of extending credit to the buyer to enable them to acquire the property.
It’s referred to as owner financing.
You take the place of a bank or a financial institution to finance the loan indirectly.
If the buyer has a poor credit score, or they cannot qualify for a loan from the traditional lending institutions, they can acquire property through seller financing. As the seller you will negotiate the down payment, the interest to be charged, and the repayment terms and period.
Since owner financing attracts more risks that bank financing as the seller you must be careful to avoid losing your finances/property. These are tips that will help you to get a better deal.
Work With Professionals
When agreeing with your buyer you can seek the help of a lawyer or a real estate agent to draft the documents and professional advice. To avoid defaults on the monthly payments hire a professional debt collection agent to collect and submit the monthly installments.
Establish The Buyer’s Credit Historyh
As proof the buyer will not default on their payments ask for relevant documents to determine the financial stability of the buyer. You can request for reference letters from their bank, landlord or employer.
To be more secure ask them to pay a substantial down payment. They are less likely to abandon the agreement if they had committed a considerable amount for the property. Besides this make sure that the house guarantees the loan.
Sign The Relevant Document
Owner financing attracts several documents that bind the agreement. A promissory note, contract for deed, land-sale contract are some documents that both parties have to sign. Make sure the interest rates, repayment period and down payments are clear.
Owner financing is a fast way of selling your property. To get the best from the deal seek professional advice. Also determine the creditworthiness of the buyer.