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Mr.P, Other/Just Looking in Arizona

Hello my Mortgage Friends. Seller Financing??? Any Ideas???

Asked by Mr.P, Arizona Sat Aug 11, 2007

Well if you happened to watch Jim Cramer on Mad Money this week. He pulled A Chicken Little. Twice!
If you have not seen the video go to You Tube. I have no respect for people in the public that act like that. That is only my Opinion, I use to be a big fan of his. OK. Enough.
People need to sell their homes ...Buyers do want to buy, but cant qualify. Who has been here before? What did you do to put a deal together in the late eighty's early ninety's? What new twist of Owner financing do see?

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Buydowns are popular now as they lower the note rate for the first year or two. Let's say the note rate is 6% and you have a 2/1 buydown. That would be 4% for the first year, 5% for the second year, and 6% going forward from there.

For a non-conforming loan, cost is typically in the range of 2% to 3% of the loan amount. The seller, builder, or broker can contribute towards the buydown. In many cases, the borrower is able to qualify at the buy-down rate.

It is difficult for me to recommend that sellers finance seconds for their buyers. Here are a couple of issues:

- What is the buyer's 1st lien lender forecloses? Chances are the second lien is going to be wiped out in the process.

- Very little underwriting/review of the buyer's financials takes place. Do you know if the borrower can truly repay you?

- Servicing is a problem. Seller has to collect the payment, apply them, issue payoff demands, etc. Sure, you can outsource/sell the servicing, but that is an added expense.

-Aaron Wheeler, President, Oakville Properties & Oakville Capital
0 votes Thank Flag Link Tue Aug 21, 2007
I'm starting to see more ands more seller financing options.....particularly with residential income. There are folks out there that have enough equity in SFRs to also provide this option to buyers. The media is doing our industry - and the consumers - a disservice. How many positive real estate stories have we seen lately? (And they are out there!) This too shall pass.
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sat Aug 11, 2007
Cindi Hagley,…, Real Estate Pro in San Ramon, CA
MVP'08
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I have sellers that are looking into a lease to purchase option. The seller has to be sure to build in a protection clause against the buyers changing their minds or not being able to perform. I know there are some nightmare stories, but if the buyer defaults the seller gets another chance and the buyer forfeits what he has put into the property. If the buyer has been hard on the home, it can hurt the seller some!
Web Reference: http://carriecrowell.com
0 votes Thank Flag Link Sat Aug 11, 2007
Well back in the 80's we had assumable loans or people took loans subject to. Also, wrap around loans or land contracts were done. Sellers carried loans and some of those loans were structured to be sold to an investor so the generate more cash to the seller. It was always important to be careful the the seller was protected and the buyer had a cash investment in the property. If the seller had a greater investment it could be dangerour in a declining market. Care should also be given when doing a seller carry back as the buyer needed to have a plan when those loans came to. Caution should always be given when looking at creative financing to all parties.
0 votes Thank Flag Link Sat Aug 11, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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