Contigo Realty

Need More Buyers? Consider Owner Financing

published on 2016-02-27

In today’s market, there’s no shortage of potential home buyers, but qualifying a borrower through traditional lender financing is a different story.

Anyone with bed credit or no credit or those who’ve suffered foreclosures or recent short sales probably won’t qualify – even if they can show a solid income. There are also many people with a good credit history that can’t afford the down payment and high fees generally associated with conventional financing.

What’s a Seller to do?

If you own your home outright, it’s time to consider owner carry, also known as owner financing. Owner financing simply means that you, the seller, act as the bank. Instead of utilizing a traditional lender to finance the loan, you are funding the loan. There are several reasons to consider owner financing.

More Potential Buyers

Listing your home with the option of “owner financing” makes it stand out among other listings. You’ll have a higher influx of potential buyers to choose from, which will increase your chances of selling your home faster.

Sell for Higher

With owner financing, you may be able to command a higher price for your home. If you offer affordable monthly payments, you may find that many potential buyers are willing to pay more for a house.

Get a Higher Income

Sellers can also utilize owner financing as a means to generate income from their home. While interest rates remain low, sellers can get a good return on their money without having to go through the hassles of renting out the property for income or investing in other income producing vehicles, like bonds or annuities.

Minimize Your Risks

Many sellers like the idea of owner financing but are concerned that the buyer will default on his payments.  There are a few ways to minimize this risk.

Try to find a buyer that is willing and able to pay a sizable down payment – generally between 10 to 20 percent. In general, the higher the investment the buyer has in the property, the higher his commitment is going to be.

If you can’t find a buyer that has the money to invest up front, consider keeping the buyer’s monthly payments at an affordable rate.

Both options greatly decrease the chances that a buyer will default. If the worst case scenario occurs and the borrower defaults on his payments, owners can pursue a foreclosure process just like a bank would.

It’s also a good idea to utilize a title company and/or an attorney to help draw up the documents and make sure everything is in place to protect your interests.  Getting a good real estate agent that isn't afraid of this process is important as well.  Contact us to see if owner financing might help you sell your home faster.




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Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.

Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.

Last Updated: 2020-08-11 16:13:02