Owner Financed Homes for Sale

Selling Owner Financed Homes for Sale in Massachusetts

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Understanding how owner financed homes for sale in Massachusetts works is easy: the seller finances the buyer’s purchase and assumes the role of a bank. This topic may be very unfamiliar to many people who plan to sell their property during tough lending conditions and a sluggish real estate market. This option presents an opportunity for buyers and sellers close deals in a way that may not be possible with traditional financing methods. Although more difficult, owner financing could mean the difference between successful deal or failure to close. Here are a few basics to help you make a successful sale.

Examine and Maintain Documents

Although sellers who choose the owner financing option tends to be more flexible, you should nevertheless think like a bank when speaking with potential buyers. It is important to examine documents such as proof of employment, credit history, and tax paperwork in order to determine a buyer’s ability to pay off the loan you are financing. In addition, you will need to get the mortgage recorded with the acknowledgment and specific execution requirements for the state of Massachusetts. You will also have to work with a title insurance company to conduct a title search and then purchase title insurance. Keep these costs in mind as you conduct this type of transaction.

Once you have made a deal, the documentation is all that is required to complete in order to close the transaction. There may be several types of documentation required depending on the type of property you are selling. Most home sellers hire a lawyer or a real estate agent to help with this process. Documentation should be the least of your worries as a seller and it is quite easy to get help from an experienced professional.

Understand the Risk

In most cases when selling a home, sellers prefer to have cash upfront instead of waiting for the buyer to pay them later. Thus, you should consider the risk involved by participating in this type of transaction because the buyer may not pay you in full. There are also situations when the buyer may experience financial distress later on down the road and the payment stream becomes disrupted. As a result, you as the seller absorb the risk of nonpayment and this can be very difficult to recover from. In addition, it is also difficult for sellers choose the best loan term since there may be a higher risk than what is first initially perceived.

Make the Decision Early

Seller financing involves serious risks and you should definitely take the time to do your homework and decide if this is the right option for you. This decision should be made very early on when you begin the process of selling a property especially before you are given any offers. Once again, it is a good idea to consult a professional real estate agent who can help you with financing and financial documents as well as provide advice throughout the owner financing process.