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Old 09-24-2007, 09:38 AM
 
109 posts, read 344,544 times
Reputation: 32

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It has always been around and I always advise potential buyers
to inquire about it. Now seems like a good time to get creative
with the tightening of the mortgage market.
Any experiences lately or thoughts on the subject?
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Old 09-24-2007, 10:16 AM
 
131 posts, read 138,036 times
Reputation: 18
We are getting ready to offer owner financing--zero down on several of our properties.
I'll respond further as it plays out.

Last edited by doni; 09-24-2007 at 10:16 AM.. Reason: can't spell
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Old 09-24-2007, 10:29 AM
 
Location: New Mexico
631 posts, read 2,104,535 times
Reputation: 325
I find it a good selling tool with willing sellers. But it's a pain in the butt on my end to write them up trying to mitigate future possible problems that can come with it. It seems like a good idea at the time until I hear horror stories from people who have done it.
I've inquired to the escrow company that handles them if they write them up and they don't. I don't like the liability of it all, but have done them. Some of our properties are so cheap a lender won't lend that low, or it's a cabin that don't meet the critiera so it does help get them sold.

I had one lady wanting to buy like that and a willing seller. Then he asked for her credit report which she gladly and promptly got for me. Holy cow! It was a book of bad credit reporting about her. I was astonished she would actually provide that! He was going to go for it regardless with more money down.
She had an emergency and asked me to go to her house and get her daughter. I promptly went there to pick her up and OMG! It was criminal the filth in that house! I mean, not messy, but Filth! Disgusting, smelly, dog poop on the floor at every turn, make your eyes water filth! Somehow I had to squash that sale w/o disclosing the pig sty living conditions at her place, as if she defaulted on his cabin, she would have had it ruined for sure. The house she was renting she was only in for 3 months!
I suggested he hold out for a cash buyer and not sign the offer, he did, and we found one at full price.
People ask for owner financing with us usually becuase they have bad credit or they just want a quicky get into the place w/o lender hassle and more $$ output for the fees. OR they're mortgaged to the hilt already and won't qualify, or again we sell some stuff lenders won't loan on.
I think it's risky, I don't like doing them, but people do it.
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Old 09-24-2007, 11:30 AM
 
109 posts, read 344,544 times
Reputation: 32
Default Seller financing problems

I have witnessed similar scenes of filth and destruction. It is really sad
when you know that children are living there.
Here is one of my best real estate stories:
I had a contract (for myself) at the Outer Banks of NC for a cottage
on the sound side with a new dock and recently remodeled.
Everything was in place. We got down to the Friday before the Monday
closing and a $ 30,000 federal tax lien was discovered on the property.
It turns out that the seller had sold before to a real scum bag with
seller financing. The buyer had trashed the place, not made payments
and obviously had tax problems.
I tried everything I could to make it work, including paying part of the
lien myself (property was going up in value weekly). A specific performance
lawsuit was iffy, so I finally had to let it go.
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Old 09-24-2007, 11:39 AM
 
Location: Sacramento
13,755 posts, read 23,213,984 times
Reputation: 6087
Quote:
Originally Posted by IggysListing View Post
It has always been around and I always advise potential buyers
to inquire about it. Now seems like a good time to get creative
with the tightening of the mortgage market.
Any experiences lately or thoughts on the subject?
My experience with it was from a loooonnnnnggg time ago, 1980. If you recall, interest rates were running about 15-17% at that time, and I just had a job transfer to Northern Virginia (Wash DC area). We used a seller second mortgage to bridge from the remaining balance on their assumable VA loan of 8%, from our down payment. The purchase price was $90K, the assumable VA loan balance was $45K, our down payment was $20K, and the seller provided a second mortgage of $25K for a 5 year period at 10%. Without that second loan from the seller, we never would have been able to buy their home.

Might not have been the type of example you were seeking, but that was my experience.
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Old 09-24-2007, 12:29 PM
 
4,542 posts, read 11,542,319 times
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I wouldn't do it as a buyer or a seller myself.
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Old 09-24-2007, 01:42 PM
 
109 posts, read 344,544 times
Reputation: 32
Default Perfect example

Quote:
Originally Posted by NewToCA View Post
My experience with it was from a loooonnnnnggg time ago, 1980. If you recall, interest rates were running about 15-17% at that time, and I just had a job transfer to Northern Virginia (Wash DC area). We used a seller second mortgage to bridge from the remaining balance on their assumable VA loan of 8%, from our down payment. The purchase price was $90K, the assumable VA loan balance was $45K, our down payment was $20K, and the seller provided a second mortgage of $25K for a 5 year period at 10%. Without that second loan from the seller, we never would have been able to buy their home.

Might not have been the type of example you were seeking, but that was my experience.
That was a perfect example. Thanks.
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Old 09-24-2007, 10:56 PM
 
Location: New Mexico
631 posts, read 2,104,535 times
Reputation: 325
My personal last 3 purchases were on a real estate contract.

I was the buyer and personally knew I was good for it.

Paid off the first one in 3 years of a 10 year note.

The second purchase I wanted to go conventional but the seller insisted on a REC. For expediency I went for it, a year later I took out a HELoc to pay it off, but then a deal came thru my door so I spent it on deal #3 so I paid 75% cash with that, then REC on the rest of the mortgage.

I don't mind it if I'm the buyer. I hate it if someone wants me to write it for them!
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Old 09-24-2007, 11:02 PM
 
Location: Somewhere over the rainbow!
430 posts, read 1,131,075 times
Reputation: 305
We generally sell with us carrying the mortgage for the buyers. It's an income for us and let's people actually get into a home that might not otherwise been able to afford it. Closing costs are kept to a minimum, we ask for 20% down and have the Title company hold the title. The buyer makes the payments directly to the Title company along with the taxes and insurance. If they are late with a payment the Title company handles writing to them etc. The T. Company makes the payment each month on the mortgage and mails us the remainder. It has worked for 30 years.....we have only gotten back one piece of property in all this time.

This is a great selling feature now that loans have tightened up too...

O.Nana
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Old 09-25-2007, 06:18 AM
 
109 posts, read 344,544 times
Reputation: 32
Default Seller financing - this is a must read

Great example!
Real estate agents and the public need to hear stories like yours.
I was told by experts years ago that it is a great tool. Take for
example, older sellers that own their home and need to sell it,
especially in a "buyer's market". Many times they can make more
money from the financing than they otherwise could. It does not
have to be for the whole amount. And it can get the house sold!
This can be a win win win situation (seller, buyer, agent).
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