The concept of seller financing has caught on quite fast and is very beneficial to those who are planning to buy their first Dallas investment property. It also helps those people who are unable to get a loan from the normal or traditional route. One does not have to deal with financial institutions and since the interest rates are low, you would find that it facilitates investment property purchase. It is possible to even refinance and sell as well as build credit while refinancing for lower payment. Sellers are able to take the 30 year rate and put a spread on it. Given the current real estate market sellers have made seller financing widespread and regular so the process has become quite standardized too.
When it comes to selling property, sellers are interested in a few objectives that they want to fulfill. For one, they want to sell as quickly as possible as they want to avoid a situation where the property sits on the market for years on end. They are also desirous of paying as little taxes as possible. When the real estate market is sluggish, one of the ways to push out a Dallas investment property and make a sale is to offer seller financing. In some cases 100% owner financing is offered while in others, sellers are open to partnering with the right buyer.
In the past, some sellers were of the opinion that financing is the buyer’s lookout and not theirs. But the trend and the understanding on the matter is changing as sellers have started to realize that by using seller financing they can get an advantage against competition in terms of overcoming an important hurdle in selling, namely financing for this fairly large buy. First time home owners or even seasoned investors can purchase a home with hardly any down payment and sellers can often contribute as much as 6% of the price towards closing costs.
Seller financing presents very little, if any, problems. The seller doesn’t have to pass the rigors of a lending institution, nor does the buyer. Sellers will typically finance 50 to 60 percent – or more – of the selling price, with an interest rate below current bank rates and with a far longer amortization. The terms will usually have scheduled payments similar to conventional loans. Sellers must know when they list their property for sale that the master association for their property must also qualify in order for a buyer to be able to get a loan. The Rules and Regulations, By-Laws, budgets, insurance policies, everything, are subject to review by lending underwriters, so be aware of conditions while exploring investment property.
In seller financing, the property is vested in the name of the seller till such time as the buyer makes good the payments and has the grant bargain, sale deed or such device transferred into his/her name. In other words, in some cases of seller financing, the buyer assumes the seller’s mortgage while the loan is assumed by the buyer. Most sellers would like to pay as little taxes on their capital gains and set up the interest on a balloon payment. They would not like to wait for 30 years or more to set a return on their Dallas investment property. This is one of the reasons why sellers are often interested in installment sales rather than a cash sale which is more traditional.
Roy Owens is an investor who uses Dallas real estate to make a living. He also helps individuals with tips on investing.
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