Financing in West Palm Beach>Question Details

Bob Brubaker, Real Estate Pro in Lake Worth, FL

With "market " conditions" as they are why don't we see more offers of "seller financing " as much as we did in

Asked by Bob Brubaker, Lake Worth, FL Tue May 10, 2011

other times of
stress! In the past When buyers were slow to buy and/ or appraisal values were
not near a needed sale price . Many sellers would offer their own "Purchase
Money Mortgage " to cmpliment assuptions, mortgage programs with low
loan to value,etc All above board in the contract . I see very little of this now.

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Hi Robert,

In my market, the Florida Keys we have seen an increase in offers of seller financing at least I have with my own listings. In some cases the seller can get a better price for thier property. other issues we have down here are Mobile Homes which financing is not only difficult if you can get it but also very costly for a buyer. Another issue that we have is non conforming downstairs enclosures, these properites are ones that we urge the seller to do financing. I have also noticed that this market has sparked more cash deals.
1 vote Thank Flag Link Wed May 11, 2011

well - it's because of current "mrket" conditons, that's why.

in this market, many sellers can't afford to loan money - they are barely walking away with much of anything in the first place.
In addition - who wants to loan money with the very real possibility that they could wind up taking the house back when it's worth less.

You're in Fl - one of the worst hit states in the country..............certainly you can see the pitfalls of doing what youre suggesting.
1 vote Thank Flag Link Wed May 11, 2011
Well, Robert, what was the spread in interest rates back then? I remember when people had 9%, 10% mortgages, rates were 13-18%, it was easier to carry paper at a higher interest rate.

Today, people are underwater or close to it, they've got mortgages over 5% and the going rate is under that. And buyers are increasingly skinny. Who wants to sell their house to somebody who needs closing costs paid AND at a point or two below the underlying mortgage . . .?
1 vote Thank Flag Link Tue May 10, 2011
My area has not been as hard hit by foreclosures, but I would rarely recommend my clients do owner finance or contract for deed. I have seen too many times where the buyers are not able to put a significant down payment toward the home. Then, when they don't make payments, it is much more difficult to evict them. I know a property owner who had 3 properties he had used as rentals and sold them all contract for deed. Only 1 of the buyers fulfilled their obligations. The other 2 didn't keep up with required maintenance and then stopped making payments.

In many cases, people looking for owner finance can't get a loan because they don't take care of their credit. If the bank won't loan them money, a stressed homeowner can't either.
1 vote Thank Flag Link Tue May 10, 2011
The answer to that is quite simple for the most part .... they cannot, as due to those market conditions the seller is likely either a bank/corporate owner or a short sale already under water and receiving no proceeds. Or if by some miracle a regular seller, their profit level has still fallen greatly, and all of their proceeds are needed for their own use with no ability to lend any portion for any period of time. Plus I don't believe the now overly cautious lenders would allow disclosed seconds as they did in the past????
0 votes Thank Flag Link Wed May 11, 2011

I think you have a few great answers for and against the issue. Many sellers can, do or would consider being the "bank". The problem is that the property owners that have equity usually are not selling. The risks of PMM's is the good possibility of default and potential damage to the property with little security to cover the damage.

When property values were at all time highs- many owners welcomed the PMM concept - with hopes that the buyer would default and then reclaim the property.

A seller with 100% equity and a buyer with substantial investment (down payment ) could be the the right combination to make this situation more popular.
0 votes Thank Flag Link Wed May 11, 2011
Hi Robert. Maybe the sellers don't have the money to make that offer.

Nicole Marks Mason, Realtor
Web Reference:
0 votes Thank Flag Link Tue May 10, 2011
Market conditions are good right now. Broward is actually humming along. I have a link on my site fort lauderdale mortgage banker that talks about this. See attached
0 votes Thank Flag Link Tue May 10, 2011
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