Q & A Saturday – What are the Different Types of Seller Financing?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “What are the Different Types of Seller Financing?

Guy Confused about Seller Financing - Massachusetts and New Hampshire Real Estate

In this video Shaun gives a high level overview of all the various types of seller financing.

 

Some of the main points covered in this video are:

1)      What is Seller Financing

2)      The two main questions to define what type of financing is appropriate

3)      Types when Seller holds the Deed

4)      Types when Deed transfers immediately

5)      Types when there is existing financing on the property

6)      More detail  we have discussed in previous articles/videos

 

Seller Financing, or selling on terms, is a very extensive topic.  However it can be broken down to a couple of basic questions with pretty much everything else being an offshoot of one of these basic situations.  The first big question is will the seller transfer the deed at the time of the agreement?  If not you are talking about some kind of Lease Option or Installment Sale (As it is usually called in MA, different places have other names like Contract For Deed or Land Contracts).  If the deed does transfer with an immediate sale the 2nd question is if there is existing financing on the property.  If not then that is the best situation as it will just be a situation where the two parties can decide on any terms that work out best for both sides without having to consider any 3rd party claims to the property.  If there is financing that does not make it impossible to do Seller Financing but it adds another level of consideration that has to be worked with.  The simplest situation is a Subject Too financed deal where the buyer agrees to by the house for the same amount that is still owed on the property and just takes over the payments on the mortgage.  In the scenario where the seller has additional equity that they will finance the property can be bought Subject Too then the seller can take a 2nd mortgage for their equity or a new note can be created for a Wrap Mortgage or similar instrument.  There are advantages and disadvantages to each scenario.  Once you establish the basic path to follow there is pretty much infinite ways to setup the deal so it works out best for both the buyer and the seller.  Please see the resources below for much more detail on most of these topics.

 

Do you want to sell a house with Seller Financing?  Do you need to sell a house in Massachusetts or New Hampshire?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Resources mentioned in the video and some other useful resources and good articles:

–          Our Video on Selling a House with Seller Financing

–          Our Video on Selling a House with Subject Too Financing

–          Our Video on The Due On Sale Clause

–          Our Video on Selling a House with a Wrap Mortgage

–          Our Video on Selling a House with a Lease Option

–          Guest post on 3 Reason to Sell with a Lease Option

–          All our articles/videos on Financing and Lease Options

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

(Image Credit: Confused Guy via cliparts.co)

 

3 Reasons To Sell A House On A Lease Option

 

Today I’m pleased to have Mike Otranto join us to do a guest post. 

Mike Otranto is an active real estate investor in North Carolina and has extensive experience working with people with all forms of seller financing.  Today Mike will be discussing a few of the advantages of selling a house with a Lease Option.  For more information on what exactly a lease option is check out our last Q & A Saturday Video where we discussed what they are.

3 Reasons To Sell A House On A Lease Option

There many reasons why a home may sit on the market unsold.  Sometimes when you need to sell a house fast you need to explore other options if things don’t go as planned;  Below are some common situations where selling a home on a lease option is a great way to sell faster and for more money.

 Lease Agreement for Lease Option - MA and NH Real Estate

Little or No equity

When a home has a high mortgage balance relative to its market value it can be very difficult to sell.  As an investor, I always assume at least 10% of the gross sales price as the cost-of-sale.  These costs include agent fees, attorney fees, buyers closing costs, recording fees etc.  So, let’s say you own a home that has a fair market value of $350,000 and your mortgage balance is $335,000.  This would mean that you may have to pay up to $35,000 in closing costs.  Are you prepared to come to the closing table with a check?  By selling your home on a lease option you can have a tenant buyer in place paying your mortgage and reducing your principle balance every month.

Moving Away

Many times a job transfer, divorce, illness in the family, or loss of income can make an owner have to relocate abruptly.  Sometimes this relocation occurs to another state.  Many times this leads to a vacant house which can have serious consequences.  Increased insurance costs, having 2 house payments, theft and vandalism, landscaping and other maintenance costs can wear away at a person’s income and savings.  It is much easier to have a high quality tenant buyer in place to take care of the homes and help pay your mortgage every month. 

Too Much Repair

Often times when a property falls into disrepair it becomes unmarketable to the general public.  Buyers have difficulty seeing past the outdated kitchen, worn and stained carpeting, scuffed walls, old bathroom fixtures, etc.  If you can offer the home for sale on good terms you can get a high quality tenant in place that will upgrade the home for you. 

These are just some of the ways that a lease option can help sell your home fast.  Remember that the worst thing to do if you are in a tough situation is to do nothing.  Contact a trusted real estate company in your local area like Mass Home Sale.  Empower yourself with knowledge and then take action!

 

 

Mike Otranto has been an active real estate investor in the Raleigh N.C. area since 2005. He began with 2 – 6 unit multi-family properties in downtown Raleigh and has since moved is focus toward single family residential properties.  Always up for a challenge he shuns the long term mortgages offered by commercial banks in favor of creative financing strategies such as subject-to transactions, owner financing with purchase money mortgages, long term leases with option to buy, equity options and more. He also holds a NC Brokers License. Visit Mike’s webpage at http://MikeOtranto.com or catch Mike on YouTube.

 

 

(Image credit: Lease Agreement via rentpost.com)

 

 

Q & A Saturday – What is a Lease Option?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, landlording questions and many others things are all fair game.  

Today’s question is “What is a Lease Option?

 Lease Option Sign - MA and NH Real Estate

In this video Shaun gives a quick overview on what a Lease Option is:

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Here is the “3 Reasons to Sell with a Lease Option” post mentioned in the video.

 

 

 

(Image Credit: Adaptation of “sign-on-a-post_blank“)