We are considering purchasing a house that can be owner finaced. We are wondering ,however, if this is good for us. Our realtor found the house and the owner had it listed with another realtor so who pays their commision? any thoughts or resources to consult would be appreciated.
2006-11-18 02:58:49 · 3 answers · asked by Krista K 1 in Business & Finance ➔ Renting & Real Estate
If it's a TRUE Owner Carry, then it's OK, but you will have to come up with more cash to close than on an FHA purchase.
A TRUE owner carry means the owner owns the house outright. He has no mortgage lien on it now. Don't settle for a title search. Get a title policy, with no exceptions on it. Same as if you were getting a new loan.
It costs more out of pocket for you because ALL of the closing expenses are paid by the buyer. Even the fees that are "seller paid", have to come out of the buyer's down payment. With an FHA loan, since the seller is getting a lump sum from the lender, he can pay a part of your closing costs, plus all of his own. The buyer can get in for 3% of the sale price - less if you get a gift from family or a non-profit. If you're getting married, open something called a "bridal registry" with FHA and people can give cash for your closing expenses. You can get in with ZERO!!!
If the owner has a current mortgage, then don't do this deal. The Realtors are having the seller violate his due on sale clause. Besides the bank having the right to call the note due in full, there are other risks involved. Don't ever buy or sell a house like this.
2006-11-18 03:48:31 · answer #1 · answered by teran_realtor 7 · 1⤊ 0⤋
Depends upon the alternatives. If you can get a better rate and terms from a lender, the lender is the way to go. But many folks expect you to overpay for the house to get financing like that. How great is 6% owner financing on $500,000 when the house is only really worth $350,000?
Look at at least ten houses so you have an idea of where the market value really is. Buying an overpriced home so that you can get slightly better financing is crazy. I'd dump your agent if they didn't explain this to you.
Everywhere I'm familiar with, the seller pays the buyer's agent's commission.
2006-11-18 13:36:17 · answer #2 · answered by Searchlight Crusade 5 · 0⤊ 1⤋
Normally the seller pays commission unless you have elected to pay your agent a fee for working with you.
Owner financing is a win for both the buyer and the seller in the sale. You will get into the property with less up front expense and the seller will gain as they will recieve the interest income. Do look over all sellers disclosures and have the property inspected by licsened inspector from top to bottom. Also have the title run and do look it over from end to end and if there is anything in the process that you don't understand have it explained 1st prior to closing.
Also if you have little or no credit history this is a good way to start. Or if the seller has a hard to sell property is good for him as well...
2006-11-18 11:05:09 · answer #3 · answered by Scott 6 · 0⤊ 1⤋