Seller Carry Back (loans, real estate, foreclosure, rate)

[poptartsforme]

Has anyone done a seller carry back before? How did it turn out?

[SmartMoney]

I think it's a win-win. The seller gets the property back if the buyer defaults and the buyer gets an oppotunity to buy when they normally may not have been able to without the take-back. If you have to foreclose on them, you'll need an attorney......which if you are the seller, I would have the document drawn up by an attorney (REAL ESTATE ATTORNEY).

The inspections should not be bypassed and the buyer should get their own independent appraisal. If you are the buyer, you don't want to depend on the seller's info. If you are the seller, you don't want to be accused of offering an inducement to buy an overpriced or problem property. (We have gone way off the page on litigious actions.....cya is called for).

Most seller financed loans are amortized over 30 years with a slightly higher than market rate, but have a balloon payment at the end of 5 years.

Not sure if that even touched on what you were looking for....

[SouthernBelleInUtah]

I carried the mortgage on a house I sold in a small university town. Second family but he was a prof starting at the uni. Seemed like a good bet. I offered them the going rate and had my attorney draw up the contract and amortization schedule. They had to carry homeowner's in the amount of the house payable to me. After 5 yrs they sold it and I got almost the entire purchase price as the mortgage was front-end loaded with interest. I made out like a bandit!

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[pghquest]

Originally Posted by poptartsforme

Has anyone done a seller carry back before? How did it turn out?

Been on both sides of the transaction. As a seller, I prefer a lease with option agreement because if they dont pay, you can simply evict them with a landlord tenant dispute, rather than foreclosure process. Its easier, quicker, more cost effective. As a buyer, I usually insist on a mortgage and deed transaction if I cant get 20% equity into the property fast, either though a down payment, or paydown. If I can get the 20%, I'll do a land contract because once you get 20% equity, there are special laws in place in most of the nation to protect your equity.

I've learned all of this the hard way, of course. Currently in the process of doing a seller carry back on our hotel which has been in the family for decades. We structured the deal as a lease with option because a buyer paying cash, (i.e. or using a mortgage), would have subjected us to unacceptable capital gains liability. With the carry back we can go to the bank and do a refi to cash out our equity. Its very similar to a leverage buy out which was popular 20 years ago.