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 Bucks, Montgomery, and Philadelphia County …
There are many ways to sell your house. You could list it on the market and see what buyers will pay. You could work with a real estate buying company (like what we do here at We Just Buy Houses) and get a cash offer, or you can consider owner financing and “be the bank” to sell your house to a buyer and collect payments over time. This is probably the most advanced way to sell your property, but it could also be the most lucrative.
Owner financing is a valuable but under-used strategy to sell your house. It’s where you offer terms to the buyer to pay you regular payments (just like a mortgage). Here are 6 owner financing tips for sellers in Bucks, Montgomery, and Philadelphia County …
Owner Financing Tip #1: Don’t Focus Only On Price
Price is just one component. Of course, you’ll want to find a price that is fair for both of you but there are other considerations as well (which could benefit you more than the asking price). Get a good idea of the prices in your area. If you live in Abington, make sure you use comparables in Abington. If you use a comparable that is in Cheltenham it won’t be accurate. In addition, if you live in a large town like Levittown try to get specific within Levittown. Find comparables in Frosty Hallow if that’s where you live, not Blue Ridge.
Owner Financing Tip #2: Timeline
Think about the timeline you want to be paid in. Banks might offer 5, 10, 15, 20, and 25-year mortgages. Find a time period that works for you? Are you a senior citizen? If so, a 25 year payoff wouldn’t be wise. 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!
Owner Financing Tip #3: Terms
The most overlooked portion of Owner Financing are the terms. The keys items of the deal are the interest rate, down payment, late payment penalty amounts, and if there is a prepayment penalty.
Owner Financing Tip #4: Protect Yourself
Even if you enter into an agreement with someone who is completely trustworthy, things could still go wrong – so make sure you protect yourself. For example, make sure you have insurance 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. Bucks County and Montgomery County both have plenty of quality real estate lawyers. So if you want to go that route to protect yourself, it may not be a bad idea.