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How does one sell a condo anymore? The FNM/FRE rules are horrible for condos. I was thinking of seller financing. Are buyers put off by seller financing or is it actually preferred by buyers. The property has no mortgage so a lot of flexibility is possible.
I would still list with a Real Estate Agent and expect normal commissions, etc. My question is not about sidestepping the agents, but it is about sidestepping the mortgage industry. It would be a fully legitimate mortgage (whatever that means).
So, what do you say, are there any negatives to the buyer with the seller carrying the entire mortgage? What would mitigate the negatives? If there are positives, should they be touted?
How does one sell a condo anymore? The FNM/FRE rules are horrible for condos. I was thinking of seller financing. Are buyers put off by seller financing or is it actually preferred by buyers. The property has no mortgage so a lot of flexibility is possible.
I would still list with a Real Estate Agent and expect normal commissions, etc. My question is not about sidestepping the agents, but it is about sidestepping the mortgage industry. It would be a fully legitimate mortgage (whatever that means).
So, what do you say, are there any negatives to the buyer with the seller carrying the entire mortgage? What would mitigate the negatives? If there are positives, should they be touted?
I do not see it as "sidestepping" anyone. The mortgage industry has to a great degree stepped out of the picture, particularly on nonwarrantable condos. Too much risk.
So, you would then take on the risk of a lender.
So, to control your risk, you would want to be very thorough in qualifying your buyer.
You would have your attorney draw up the note and you would record it as the first.
I would love to work with sellers who could offer financing, but I do not see this as a decision to be made cavalierly.
Glad to hear you'll be going through a third party (realtor) for your own sanity. There are a lot of showings to be done, marketing to be done but I'm sure that's nothing you don't already know. I'm no agent but I had to chime in.
Even with seller financing you can stipulate that you need to approve the potential buyers credit, I do believe.
Now the important thing in my humble opinion is to get enough money down on the property so the buyer doesn't just feel like they can bail with no consequences. Even with a good chunk down if they did bail on you, you might not be at a loss and can then resell the property. You may end up with legal fees to pay.
I just did a low dollar fsbo with my own financing and buyer decided they can't afford it before the first payment is due. Next time I ever am in the position, which may be with this property, I'm going to stipulate more money down.
I was thinking my risk was minimal, basically just lost income for a few months. Wow, buyer bailed before first payment...So, I guess there are closing costs too that went down the drain.
So, qualify buyer (FICO > 720? 650?) and more money down, 5% enough? 10% better?
There are two properties I am considering, one in the $400k range and one in the $100k range. The $400k one probably not right away, maybe never. I like that property, but always checking options.
Is there any value to lease-to-own? At least a payment history can be established. I'm not crazy about that because in this highly flux market, I take on the downside risk and do not get the upside reward.
On top of great suggestions already posted here I would suggest going with escrow company or someone else as a middle person in collecting monthly payments that way you can protect yourself from he said she said.
Also you may want to check local laws in regards to seller finance for example how long does a buyer have to be late before you can start foreclosure process.
You are smart not to sidestep your agent. I would also get a qualified lender to work up a sheet of
available loan programs for your property and have that as a handout next to the agent fliers onsite. Any good agent will have a competent, forward thinking lender to do this.
One thing I have seen work well is to offer to pay 6-12 months HOA dues for the buyer. But make sure the lender says you can contribute that much to a buyer.
Whatever you do,
1) have good pix and plenty of them
2) price the condo competitively. Outdo other comps in your building or 'hood.
3) make at place shine
4) leave all the appliances
5) put the condo on a Supra lockbox and combo lox box so ALL agents can get in easily. If I have to make an appointment to see a vacant property, I put it at the bottom of the pile.
As for seller financing, I might not do it unless you are accustomed to dealing with people in that way. But I may just be a chicken.
On top of great suggestions already posted here I would suggest going with escrow company or someone else as a middle person in collecting monthly payments that way you can protect yourself from he said she said.
Also you may want to check local laws in regards to seller finance for example how long does a buyer have to be late before you can start foreclosure process.
Thank you, good suggestions
Quote:
Originally Posted by stuffavail
You are smart not to sidestep your agent. I would also get a qualified lender to work up a sheet of
available loan programs for your property and have that as a handout next to the agent fliers onsite. Any good agent will have a competent, forward thinking lender to do this.
One thing I have seen work well is to offer to pay 6-12 months HOA dues for the buyer. But make sure the lender says you can contribute that much to a buyer.
Whatever you do,
1) have good pix and plenty of them
2) price the condo competitively. Outdo other comps in your building or 'hood.
3) make at place shine
4) leave all the appliances
5) put the condo on a Supra lockbox and combo lox box so ALL agents can get in easily. If I have to make an appointment to see a vacant property, I put it at the bottom of the pile.
As for seller financing, I might not do it unless you are accustomed to dealing with people in that way. But I may just be a chicken.
Good luck!
They would be vacant and completely cleared of furniture (all appliances stay)
Thanks, all good ideas and I appreciate the suggestions.
Seller financing can be very attractive to a buyer and your agent will want to promote the fact that seller financing is available.
You will want to speak with your CPA or tax advisor before you list the property. Your taxes will be impacted. The intrest your charge the buyer will be taxable. The payments may effect how your capitol gains are effected. It is vital that you find out how this will effect your overall tax liability before you move forward.
If it's a good there are some things to be aware of (most good)
You will be in a position to charge a higher interest rate than a buyer could find in the open market. You should discuss with your accountant what terms would be to your advantage. Again, because the each payment will be a combo of interest and principal - there will be different tax rates.
The other terms that you might accept should be discussed with the account. The down payment may need to cover your closing costs, commissions and other expenses of the sale unless you have other funds.
Also, speak with your attorney or at least study up on what would be involved in a foreclosure. We like to expect the best - but you should be aware of the worst.
Offering seller financing can be a wonderful marketing point for your realtor. It can offer you a profit beyond the sale. But it's important you do your homework!!
Best wishes.
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