If you’re looking to finance your own buyer or become a banker, owner financing might be the type of sale for you. Owner financiers usually have similar terms to banks in order for a buyer to qualify. They expect a down payment and interest on top of the loan, and they reserve the right to foreclose if payments are not made.
This is also an advantageous way for buyers with weaker financial backgrounds to buy homes since owners aren’t as meticulous when reviewing qualifications. Here are four tips on selling your house through owner financing in Naples.
Tip #1: Check Buyer Qualifications
If you’re willing to provide owner financing, then expect some quick offers — but traditional bank financing must be taken into consideration. You have to do your research on potential buyers when they fill out a loan application, and you need to look into their employment references as well as do a credit report and background check.
This can be a meticulous process, but you have to ensure that you take the proper steps to see if they are qualified for owner financing. In other words, do everything that a regular bank would do.
Tip #2: Prepare Legal Documents
When it comes to real estate, papers are everything. The legal system will help you avoid any complications in the future, and it gives you a tangible record to refer to when the need arises.
The loan terms, down payment, interest rate, and payment schedule should all be agreed upon by both parties and put into a legal contract. A promissory note also needs to be recorded in the county records where the property is located. This proves that you are the mortgagee and gives you permission to foreclose if they default on payments. Every word in these documents must be chosen deliberately because even one small mistake could have large consequences later on.
Remember to keep your papers somewhere safe and secure, or scan and upload them to your computer onto an online database. Those papers will be important in the long run should you run into trouble with whomever.
Tip #3: Owner Perks
Owner financing appears to benefit the buyer, who may not qualify for traditional bank financing, but what’s in it for the owner? The answer is interest payments! More often than not, an owner will make more money through selling with owner financing than if they took a lump sum purchase price.
If you’re interested in collecting more interest, try lengthening the loan period. Also, if you decide later on that you don’t want to hold onto the loan, investors will be waiting to take over your note. But this depends entirely on whether or not the buyer has been making timely payments, not to mention their overall creditworthiness.
Adjusting your interest isn’t just something you can do to increase your income however, as it is a proper computation that is fair for the buyer as well. Asking a professional about an allowed percentage increase could help work something out.
Tip #4: Collect Every Important Document
Bookkeeping, or what some might call “servicing” your loan, is a critical piece to financing your sale. You must keep track of all payments and when they were made, as well as real estate taxes, insurance rates, any homeowners association fees, and other miscellaneous note items.
Missing a valuable document — even a single missing page — may have severe consequences in the future, so be sure that you keep everything in a neat folder after receiving them or having them signed. Hiring an outside professional to handle these responsibilities will save you time down the road and could prevent any costly errors. The professional will be able to keep things on track while also keeping you informed.
If you use this method, you might also be able to take multiple forms of payment, which makes it more likely that your buyer will pay on time and avoid defaulting on the loan.Having a professional note servicer handle everything can also free up your time so that you can focus on things you enjoy.
Just want to sell your Naples home fast already? We got you covered!
Owner financing may have its advantages, but one small mistake can have your buyer questioning your credibility in an instant. As a cash home buyer in Naples, Florida, we at Alpha Properties know how hard it is to just get your property sold while needing to worry about all the nitty gritty details.
We take care of it all for you by offering 100% fair cash offers and a completely closed deal in just two weeks for homes regardless of the condition they’re in. Contact us today and we can set a meeting to discuss the sale of your home!
