Seller financing is a type of loan that the seller of property gives to the buyer for covering all or the parts of the sales price. This is one of the most effective techniques that help to bring the sellers and the buyers close to the deal. In the present scenario, the price of real estate properties is increasing at a fast pace. With the increase in the price of the real estate properties, it has become very difficult for the people to manage the finance as well as get their dream property.
So, in this case, the seller financing is the best option which can help to lighten up your burden as well as make the task even easier. From the buyer prospects, it is considered as very beneficial because he/she may not be able to take a loan from the bank. Traditionally the loan is covered by selling the property. In the seller financing, there is no any universal requirements. To protect the buyers and sellers interest, there is a legal bound which is made between the seller and the purchaser to maintain the level of transparency.
The Advantages of the Seller Financing
Every coin has got two sides, with this we have the advantages which can be taken by the seller finance (homes rent to own) while purchasing the property.
- This kind of financing is good for the buyers who are not eligible to apply for the loan.
- The seller will receive a higher return on investment by receiving the equity along with interest.
- The seller can also demand the higher price and assist the clients with all the financial needs.
- The sellers need not get worried about the maintenance and the repair of the property.
- The sellers need to purchase an insurance policy which can help them to claim any damage.
- Sellers do have any idea of the buyer's employment, or they don't know about the background of the seller.
The Disadvantages of the Seller Financing
- The buyer might make a full payment, but in spite of making the full payment, they could not entirely hold the property.
- The buyers have not the protection of the mortgage insurance, home inspection or the appraisal to make sure that he is paying the right amount and not the excess amount for the property.
- There is a possibility that the seller will agree to make a small investment, but later the buyer may turn down the offer because of the small investment that was made for the purchasing of the property.
As a whole, it is good until and unless it addresses the concerns of both buyer and seller. The moment we are making the negotiations it is very important to keep in mind the details of the sale.