How to become an owner through seller financing?

Property Management Blog


If you are desirous of becoming a real estate investor without putting in your money, seller financing can be a wonderful method. Imagine owning a rental property without asking for help from a lender and without having excellent credit.

If you go through the traditional route, banks would ask you to put forward nearly 20% of the value of the property as down payment. If you don’t have this much money, you need to work your way to ownership using seller financing. Here are some important tips to keep in mind when planning to own a property through seller financing.

Look for a motivated seller


Not every owner will agree to finance purchase of his property. You need to find a property that the owner is incapable of selling in the routine way. He may be lacking finances to undertake repairs, or he was unable to successfully close the deal by listing his property on the market earlier.

You must make a move


Even if you come to know about a distressed property, you cannot expect the owner to contact you. It is you who must make the first move. You must introduce yourself and suggest seller financing to the owner. If the owner is really motivated, he might agree to your plan.

Give owner reasons to go for seller financing


You can tell the owner this is an easy way of disposing his property. You can also tell him that he can take control of his property if you are not able to make regular repayments. This will certainly make the owner feel more comfortable about the idea of seller financing. Make your offer more alluring by telling the owner that you would take care of the closing costs.

In seller financing, you must remember that you are dealing with real people who are facing real problem of inability to sell their homes. You must show some respect to them and not be seen trying to take advantage of their situation. Make sure you offer a price that is close to the fair market value of the property and may be a little bit higher. Never try to offer a price much lower than the fair market value as it can offend the owner and jeopardize your deal. After all, you are not going to pay the entire amount in one go as you will only be paying the money in easy installments. In fact, you can treat this monthly installment as a monthly rent for living inside the house.

Most of the terms in seller financing are negotiable


Good thing about seller financing is that except for price, all other terms are very much negotiable. You can ask the owner to adjust all his unpaid dues to the authorities in the price of the home. This is because unpaid taxes need to be paid immediately as they attract interest. You can tell the owner that you will arrange the money from private lenders at a high interest rate. You can also ask the owner to lower the asking price on account of condition of the property. You can give him the estimate of the repairs and negotiate with the price of the property. If the owner says he is selling his property in as is condition, you can ask him to start payment after 6 months to compensate for the cost of repairs.

No matter how much time and effort it takes to agree on the terms of sale, seller financing worth making every effort. This is because there is no other way in which you can acquire a property without paying money out of your own pocket.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty. 

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