The main thing is you need to meet with a Realtor who will take the time to go over all your options; Owner Will Carry - Lease Option - Short Sale - Traditional Sale - Etc. explaining all the pros and cons to each. They also need to be prepared to protect you in every step of the transaction. This is the only way you can make an informed decision. I have briefly outlined these options below.
I offer free consultations not just with me and my team of Realtors but also with a Loan Officer and an Attorney so that you would be completely protected in whatever decision you make. If you would like to set that up give me a call 702-324-9281.
Owner Will Carry means that the seller is willing to make a loan to the buyer to help them buy the home. The seller acts as the bank. The buyer would pay the seller 10% or more down and agree to pay the balance owed in monthly payments to the seller including interest at a agreed up rate. Typically, the buyer agrees to cash the seller out typically after 5 years(although you can set different time frames) or when they sell the property, whichever comes first. During the times the seller is acting as the finance/mortgage company buyer. However, the seller still must make payments on any loans they have on the property. These types of transactions must have contracts that are written very specific to what the both the seller and buyer want. You need an agent who is familiar with this to make sure all details are covered.
You should also consider possibly listing your home as a "Lease Option"; the main difference here is while you are still getting at least your 10% down upfront you can charge a higher amount for the monthly payment with a portion of it going into an escrow account to be used toward the Buyer's down payment at the time of purchase. A Lease Option gives both the buyer and seller an out at the end of the lease period. You can lease with an option to buy for a period of 2 years for example and if the buyer does not exercise there option then you can either renegotiate the lease with them or move on to the next person. In this case the contract needs to be very specific on time frames, responsibilities of each party during the lease, and exit strategy (how much money each side gets if the purchase options does not happen).
If you can qualify for a short sale it is actually the most simplistic way to sell if you are upside down. But it will have an affect on your credit record.
Owner financing and Lease Option buyers are usually people who can't get a bank loan because of credit or other financial issues. If they recently short sold a property or filed a bankruptcy they will not qualify for a new loan for at least 24 months depending on their particular situation. Or they may have other credit issues that they need time to clear up. Your agent should have a team in place; who can run credit and work with your buyer for the period of the owner carry or lease option to correct their credit in the time allotted. You would be taking a somewhat of a risk but the more precise your contract and experienced your agent is the risk will be reduced.
If you have other questions or would like me to set up a consultation with my team please contact me either by phone 702-324-9281; text 702-324-9281; email Michelesellsvegas@yahoo.com. We specialize in "Outside of The Box Transactions".
Realtor/Short Sale & Foreclosure Resource Certified
Keller Williams Realty Las Vegas
Fewer agents are skilled in the non-typical transaction such as the ones listed in the repsonses so you need to do you due diligence when interviewing multiple agents.
RRG, SRES, SRS, RSPS, SFR, STHOM, GREEN
Premier Real Estate
But there are a number of ways to do owner financing short of a "subject to." A real estate lawyer can help you, but different techniques and terms include lease-options, lease-purchases, contract for deed, and wrap mortgages. There's also a technique with land contracts that accomplishes the same thing. (See http://www.landtrust.net )
So doing a subject to is possible, but that should be last on your list of possibilities. Again, check with a lawyer for advice.
Hope that helps.
Again, seek professional help. And don't loan any more than what your are willing to give away!
Valerie Edwards, REALTOR
RRG, SRES, SRS, RSPS, SFR ATHOM, GREEEN
Premier Real Estate
Las Vegas, NV
Owner will carry means that the seller is willing to make a loan to the buyer to help them buy the home. The seller acts as the bank. The buyer would pay the seller 10% or more down and agree to pay the balance owed in monthly payments to the seller including interest at a agreed up rate. Typically, the buyer agrees to cash the seller out after 5 years or when they sell the property, whichever comes first. During the times the seller is getting payments from the buyer the seller still must make payments on any loans they have on the property. In some cases, owner will carry means that the seller is willing to take a small portion of the purchase price in the form of payments and the buyer gets the balance of the purchase price from a bank. This can help the buyer avoid private mortgage insurance on their bank loan which saves them money.
As you can see, these type of transactions are not straight forward. You should consult with an experienced real estate agent. Typically, owner financing is an option buyers are looking for if they can't get a bank loan because of credit or other financial issues. Of course, this means you would be taking risks that a bank isn't willing to. Not a good idea unless you are desparate to sell your home and you can't find any qualified buyers at the price you're asking. In the current Las Vegas market I would expect that owner financing would create problems for you after closing. I would not recommend it. With interest rates on bank loans so low a buyer should cash you out. If you're not getting that type of offer your price is too high. Lower your price rather than mess around with owner financing. If you are upside down in your home owner financing makes no sense at all. Just do a short sale that is financed by a bank.
Basically, it sounds like the buyer is asking to buy your property subject-to your pre-existing mortgage(s). The property title would transfer to the buyer as it would in a "normal" sale (one in which the buyer purchases the property with cash or conventional financing).