Is it a good idea to finance someone buying property from you?

Question

they want to put 10% down

Thanks for your help. I wasn't sure, now it's a definite no!

Answer 1

well- not really unless you have had experience. If they are family or a friend - then you may feel bad for them when they are haveing a rough time, etc... and you are losing out on your money. If you don't know them... well that can be worse! I guess if they have a SIGNIFICANT down payment. and a WRITTEN< SIGNED AND NOTARIZED agreement, also aloowing interest and loss of down payment in case of any default. and if you feel ok about it- then go ahead. BUT if you owe on this property and have to make a payment and they don't pay you- you can be bumming. think hard about this. It can make you or break you!

Answer 2

It's not necessarily a good idea but it's totally up to you. 10% down is a pretty good down payment. If you don't need the full amount up front then this might work for you. You can make more interest financing for them then you would if you had the money in the bank. Everything should be fine unless they stop making payments. Then you'll have to try to collect or evict or foreclose. Are you doing owner financing or a land contract? They are different. With owner financing you are acting like a bank. They get title at closing and you have a lien on the property. If they stop paying then you have to go through foreclosure procedure just like a bank would. With a land contract you hold title until the property is paid in full. I think it's supposed to be easier to evict them if they don't pay. I would suggest you call a real estate lawyer and ask which would be in your best interest.

Answer 3

you left out many details ... such as where this is, where you are or will move to, what the buyer's relationship to you is, what sort of property this is, etc.

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the general answer is NO !!

In much of America, the 'typical' sale property is a house or condo. Atm, both are going down in value in much of America, not up.

The far too likely risk, then, is that they'll not make their payments and then you'll have to take legal action to foreclose, have them evicted, and resume ownership -- of a house that someone else has been living in and maybe trashed.

Professional property speculators will rarely pay more than 60% of estimated good condition sale value for a foreclosured house -- they KNOW that there will be damage that they'll have to repair out of their pocket, what they don't know is what damage. AND they don't pay the foreclosure attorney's bill, or the overdue interest.

People who can't get a home mortgage at any reasonable terms usually can't get one for a darn good reason. Or reasons. Late pay, chargeoff, foreclosure, bankruptcy, garnishment, past due alimony or child support, etc, etc.

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Even though we bought our first home in exactly this way [direct from the seller], DON'T do it. Our seller was a small time developer/builder -- he had lots of experience with buyers and carrying paper in his state. Further, we had 20% cash down payment, a stable government job only two blocks
away from the home, and excellent credit [he checked, too]. And my wife was from the community -- she'd lived there or nearby for almost 15 years.

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does this help?

Answer 4

Unless you want to be a 'landlord" you should make them get financed and take your money elsewhere. If the buyer can't get legitimate financing then why should you take the risk that a professional lender wouldn't?

Learn more at www.hermanisms.com

Answer 5

If the market in your area is down "a buyers market", you may want to consider it. 10% Down is reasonable. Be sure to prepare the proper documents and record them in public record. It would be a good idea to work with a title company and obtain a "lenders policy".

Answer 6

C'mon, you get 7% on your money secured by real estate!!
Think about it

Answer 7

I guess that depends on if you trust that person.

Answer 8

No but if you do please check their credit rating first.