Tips For Selling Property Using Seller Take Back Financing

Using Seller Take Back financing can be an excellent way to sell your property quickly and at a good price. As conventional financing becomes even more costly, more difficult to obtain, and more time-consuming, Seller Financing will become even more popular. (We estimate that approximately 15% to 20% of property sold is now sold with Seller financing.)

If you're thinking about selling some property and taking back financing, here are some things you should know that could be beneficial to you in the future...especially if you should want to sell that mortgage, trust deed or land contract for cash someday. The way a mortgage is planned and written can have a lot to do with its sales value in the future.

The Purchase Price. The purchase price is negotiated between you and the Borrower, but there are some objective standards that can be used as the basis for negotiation.

One method is to have three different realtors do a market analysis on the property, complete with two or three "comparables" each. (Comparables are properties that are comparable to the subject property and can be used to determine its market value.)  An average of these three analyses will usually give you a good idea of what the property should sell for. This service is often free since the realtors will be competing for the right to list your property.  (Be advised, though, that realtors may overestimate the value of your property in order to win the right to list it.)

A second method is to hire an independent appraiser to do a complete appraisal on your property, which would include (as above) at least three comparables. This method is more expensive (from $150 to $600) but is also more authoritative.

The Down Payment.  The down payment should be as large as possible. A larger down payment means the Purchaser has more equity and owes less, both of which make the contract more secure and thus more saleable. A good thing to remember Is that the larger the down payment, the more your loan is worth. Make sure that the down payment is paid out of the Borrower's pocket - not his or her parents' pockets.  Politely but firmly inquire into where the money for the down payment is coming from and make your selling decision accordingly.

Finally, avoid "nothing down" ($0 down payment) Borrowers.  Making no down payment is a shrewd way to purchase property but a poor way to sell it. Making down payments over time ($1,000 today, $1,000 in six months, etc.) is just another version of the $0 down Borrower. Consider carefully: Do you really want to sell your property to a Borrower who is unwilling or unable to financially commit himself or herself to the property you are selling?

The Interest Rate.  The interest rate on your loan should be close to interest rates currently being charged on mortgages by banks and savings and loan associations. There are legal maximums in most states. See your attorney for details.

The Mortgage Note Buyers at RAM Funding are standing by ready to CASH YOU OUT!  Is your real estate note less than stellar, or do you need a lump sum of cash NOW from your cash flow note?  Why hold on to an under performing cash flow note? 


Call the RAM Funding Discounted Cash Flow Specialists Today, 1-800-397-3893.

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