If you are selling a home or commercial piece of real estate and are having trouble finding a qualified buyer, you may wonder whether the property will move faster if you help finance the transaction yourself. In certain circumstances, seller financing may be just the solution for you.
Seller financing happens when a seller helps to finance a real estate transaction. This form of financing can be used when the buyer has difficulty qualifying for a conventional loan. With a conventional loan, the lender extends cash to the buyer to purchase the home. With a seller-financed loan, the seller simply extends a credit against the purchase price of the home.
Seller financing is a good creative solution to use when the buyer is ready, willing and able to make the purchase, but is having difficulty qualifying for a conventional loan. A seller-financed transaction can be a win-win situation for both parties: It offers tax breaks for the seller, and it provides a way to purchase the property for the buyer. However, there are numerous risks involved and sellers should take several steps before entering into a seller-financed transaction. For example, the seller should examine and investigate the credit risk of the buyer, just as any other lender would do. The seller should also examine whether the property will likely continue to hold enough value over the term of the transaction to allow the loan to be repaid in full. Finally, the seller should ensure that the buyer maintains appropriate insurance on the property at all times.
Our attorneys can help you investigate whether a seller-financed transaction might be right for you, and we can help you draw up the real estate sales contract to ensure your full protection. Contact The Quitmeier Law Firm today.