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Elite Veteran
Posts: 959
  
Location: Texas | I have a piece of property for sale and someone wants me to owner finance it. Can anyone tell me the good, the bad and the ugly about it? I am afraid to do a lease because I have heard the horror stories! I need advice! |
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 The One
Posts: 7997
 
Location: South Georgia | No way Jose! I own a rental property and have researched this a good deal. Opens up too many doors to get screwed over. |
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 A Somebody to Everybody
Posts: 41354
Location: Under The Big Sky Of Texas | Not a good ideal, I'm with Horsegirl, waiting for a screw over..  |
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 Elite Veteran
Posts: 885
| I agree. If they don't have the money to buy it out right, don't do owner financing. Tell them to go to the bank for a loan if they want to buy from you.
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Veteran
Posts: 225
Location: Montgomery TX | MOST (not saying ALL) people want to owner finance because the bank will not loan them the money. If the bank don't trust them, why should you? Me personally, I would not do it.
ETA - my father in law owner financed a 1/4 acre lot - they made one payment in the past 4 months - and they have built stuff on the lot and have trash/metal, old cars etc everywhere.
Edited by bten 2019-02-15 12:33 PM
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 Loves to compete
Posts: 5760
Location: Oakdale, CA | I agree with everyone..............they need to get a loan. If the bank won't loan them money you shouldn't because of the risk of it......... |
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 The Vaccinator
Posts: 3810
Location: Slipping down the slope of old age. Boo hoo. | No - don't do it. It's a huge red flag when someone asks for owner-finance.... do not do it. |
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Elite Veteran
Posts: 695
Location: Windoming | Sure glad the owners that financed us didn't feel the way most of you do. They financed 40 acres with improvements on it. I'm sure we could have gotten a bank loan, but it was a lot less hassle this way. And they got to make some interest on it. Thinking back on it, it was financed at 10 percent interest, which sounds terrible now, but was actually low then! At that same time, we had a "low" interest WCDA loan on our house for 13.5 percent! Back in the eighties.
Edited by Silly Filly 2019-02-15 1:11 PM
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  That's White "Man" to You
Posts: 5515
| I've done it and made good money on the deal. You have the same rights a bank would have to foreclose if they don't pay. Charge above market interest rate and be sure to get a good down payment. |
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 Hummer's Hero
Posts: 3071
Location: Smack Dab in the Middle | I haven't sold one...but I purchased my house on a title for deed. We had excellent payment history and owned our own business, but we had to DRAIN our savings due to buying a truck (semi) who's motor decided to blow about 90 days after we bought it. Took all of our savings for a house and then some to rebuild it--and we had ZERO choice. About a year later, we were looking at having a baby and in a terrible living situation due to a horrible co-tenant and spineless "landlord" and we needed a place!
I was extremely cautious to protect myself AND the seller. We put down as much as we could and set up an escrow. Not only did I want to reassure the seller, but I wanted to protect myself...I wanted to know that my payment was paying things like the mortgage payment and that my house wouldn't get repo'd by his bank. Property taxes so that I wouldn't get stuck with back taxes at closing. I wanted him to know that the insurance was being paid. And that all of it was being done TIMELY. We also paid interest over market value. Our contract stated that we could make whatever improvement or changes that we wanted, but if we renegged, we forfeited everything paid.
We paid our payments, made repairs that were needed and A BUNCH of improvements. Saved our money and we "refinanced" to purchase the house/property deed within our contract period of 5 years. We'd made enough improvements to accumulate nearly 29% in equity in those 5 years, so other than closing costs, we did not have to put additional money down on it.
It can work.
Edited by RockinGR 2019-02-15 4:42 PM
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 Fact Checker
Posts: 16572
Location: Displaced Iowegian | I am not sure what the problem is with your buyer but if it is only the lack of down payment money, this is what we did. Years, ago, we sold a property in Iowa and the buyers were lacking about $8000 for the down payment. We worked with them AND the bank and we took a second lien against the property (Bank had 1st lien). They paid towards our lien with their bank payment and we got our money 5 or 6 years down the road. Had they defaulted on the loan we would have only got the rest of our money IF the sale of the property was over the bank's lien.
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Elite Veteran
Posts: 885
| I forgot but we did owner finance a land sale once. But the buyer was a guy we had known since he was in high school. He cleaned stalls & took care of horses when we went on a 3 day barrel race. So we knew who we were dealing with. It worked out great. In my area there is no way I would. People today are different today then back when we sold that land we had. |
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Veteran
Posts: 229
| I'm a Realtor in Houston and have done many owner-financed sales. What is the sale price? |
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Miracle in the Making
Posts: 4013
| make sure they have money to put down have a lawyer draw it up just like a bank normally i charge 1 % more than bank yes i have gotten taken 2 time
rehak i forecloused on him afyer 8 years and the next i had to evict take to court and i won but lost
i have owner finace several times and done quite well. but u got to make sure the payment has taxes and insurance included so ypu pay it and a late fee and option like bank if the miss even 1 payment you can start foreclosing pricedure but main thing they need to have at least 3% down |
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Elite Veteran
Posts: 959
Location: Texas | Sale price is $225k.. The people who want it can't get financed and the ones who can want a fancier house. Ugh
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Elite Veteran
Posts: 959
Location: Texas | thank you all! Now I'm really confused. Part of me is worried they'd default on the loan and trash the place but then I would make the interest! To me it's a better option than renting it out. At least if they put $$ down they might not default so quickly. |
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Elite Veteran
Posts: 959
Location: Texas | horsegirl - 2019-02-15 11:53 AM
No way Jose! I own a rental property and have researched this a good deal. Opens up too many doors to get screwed over.
I'm afraid to lease it because of all the horror stories I have heard.
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"Heck's Coming With Me"
Posts: 10794
Location: Kansas | We did it and it was working quite well until a divorce entered the equation. Went a little sour then but in the end we didn't get hurt. Our only mistake from the onset was not asking enough in the way of monthly payments. You have to do this with people you entirely trust though. They can trash your property and leave you very angry. |
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 Strong Willed Woman
Posts: 6577
Location: Prosser, WA | We sold a place that way. The house was an older mobile home and not worth much. Their down payment would have covered any cleanup. It went well for us |
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Elite Veteran
Posts: 885
| aqha4mejt - 2019-02-15 9:07 PM
Sale price is $225k.. The people who want it can't get financed and the ones who can want a fancier house. Ugh
I would also do a thorough back ground check, employment history & financial check on anyone. $225,000 is a lot of money to owner finance. JMHO.
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OT has anyone sold a house and done owner finance?