For most people, the prospect of selling their home can be positively daunting. Besides the traditional clean-up, paint-up and fix-up that invariably wind up costing more than you planned, there are always the overriding concerns about how much the market will bear and how much you will eventually wind up selling it for.
For the buyer, any edge that will help the buying and financing process is always more than welcome. This idea may just do the trick!
This Seller Technique Will Sell Your Home Faster
Will you get your asking price, or will you have to drop your price to make the deal? After all, your home is a major investment, no doubt a rather large one, so when it comes to selling it you want to get your highest possible return. Yet in spite of everyone’s desire to get the top dollar for their property, most people are extremely unsure as to how to go about getting it.
Get the Most for Your Home and Sell it Faster
Some savvy sellers have long known a little financial technique that has helped them to get top dollar for their property. In fact, on some rare occasions, they have even sold their properties for more than they were worth using this powerful financing tool. Although that might be the exception rather than the rule, you can certainly use this technique to get the most money possible when selling your property.
A Win-Win for Both Buyer and Seller
Seller carry-back, or take-back financing, has proven to be a surefire technique for closing deals. Even though most people do not think about when it comes to selling a property, they really should consider using it. According to the Federal Reserve, there are currently over 100 Billion dollars of seller carry-back (seller take-back) loans in existence. By any standard, that is a lot of money. But most importantly, it is also a very clear indication that more people are starting to use seller take-back financing techniques because it offers many financial benefits to both sellers and buyers.
Seller Financing and How it Works
Basically, seller take-back financing is a relatively simple concept. A seller-take back loan is created when a property is sold and the seller performs like a lender by assisting in financing all or part of the total transaction. In effect, the seller is actually lending the buyer a portion of money toward the purchase price, while a traditional mortgage company usually funds most of the balance of the funds. A seller take-back loan is secured with the property, just like a regular mortgage.
Advantages For the Buyer
If you will be going for a regular mortgage from an institutional lender, the carry back loan becomes the secondary mortgage behind the first mortgage loan, and both are fully secured by the property. Keep in mind that most lenders require that subordinate liens must be recorded and clearly subordinate to the traditional first mortgage loans. You should ask your mortgage lender or broker about the guidelines for seller carry back mortgages, to make sure the terms are acceptable to the first mortgage lender.
In most seller take-back financing transactions, the buyer repays the seller with interest in accordance to mutually agreed terms over a period of time. Usually, the terms call for the buyer to send the payments, consisting of principal and interest, on a monthly basis.
This is advantageous to the seller, because it creates a steady monthly cash flow for the note holder. And if the note holder decides to cash out, he or she can always sell the note for a lump sum cash payment. It also may help the borrower avoid costly mortgage insurance if they plan on putting down less than twenty percent of the purchase price.
Regardless of market conditions, seller take-back financing makes sound financial sense; it provides both buyer and seller with flexible financing options, makes the property easier to sell at a higher price and shortens the sales cycle. It also has the added advantage of being an excellent investment for the seller that generates a steady cash flow and high return. If they ever need immediate cash, they can always sell the note.
Advantage Seller, Advantage Buyer
If you are planning to sell a property, then consider the many benefits of seller take-back financing. Knowing that this financing is available will attract more buyers. If you are looking to buy a home, consider suggesting this option to any prospective seller. If you have any questions about take back financing, feel free to contact me.