owner financing - Posted by tigre2

Posted by B.L.Renfrow on November 10, 2000 at 20:09:02:

It really depends upon the needs of the seller. If he’s not particularly motivated, there may not be a lot you can say to change his mind. And without knowing the numbers, it’s impossible to say whether you’re wasting your time or not.

The current market in your location is a factor also. If you’re in an area where houses sell immediately for asking price or higher, it will be hard to convince him he’d benefit from holding paper for you.

On the other hand, if there are lots of houses and few buyers, you could point out to the seller how he will continue to have holding costs, then there’s the broker’s commission to pay upon selling, both of which could be avoided by selling to you now.

You need to find out what the property is worth by checking comparable sales. Then, figure out a number that works for you and if the seller is interested, find out what he needs and make him an offer.

If the seller wants some cash now, and you don’t have any, you could always structure a seller-held note which could be sold for cash at closing. Even if you have bad credit, the note will have some value…though the discount might be significant, depending upon factors like your credit score, the LTV, your cash in the deal, etc.

If you want more details on this option, post your question, along with the numbers, over on the note forum.

Brian (NY)

owner financing - Posted by tigre2

Posted by tigre2 on November 10, 2000 at 17:15:44:

I hope this is the right place to ask this question. My neighbor recently bought a new home. His old place he owned outright and I was talking to him about selling it to me and him carrying the note. He was also considering renting it out, but I don’t think he really wants to deal with a rental property. Well, his brother advised him that if he were to sell the old place and receive the full proceeds then he could pay off the mortgage on his current home. Well that cuts me out of the picture because I don’t have good enough credit to get my own mortgage. Is there any way that it would be advantageous for him to finance me and keep his existing mortgage? He hasn’t put it on the market yet, but I think he may soon because his brother has convinced him that this would be his best option. I have no idea what the tax advantages or disadvantages are to buying and selling homes but this seems like the kind of thing that might convince him to sell to me and carry the note and continue with his current mortgage. Somewhere I read that a ballon type of note might be an option. My plans for the house were to fix it up and rent it out and this would cover my payment to him each month and put a few dollars in my pocket each month. The home is in an area where unimproved homes cost about 30% less than homes that have been given modest updating. I planned on doing the remodeling myself so my out of pocket expenses would only be for materials. I rent the place where I’m living now and could either stay here or eventually move to my neighbors place ( if he sells it to me! ) Am I wasting my time or is this something I should really pursue? Any help would be appreciated.