|
SELLER-FINANCING
If you are selling property in which you have a lot of equity, and you don't need that equity to buy a new property, a seller-financing agreement may benefit you and your buyer.
In seller-financing, the seller becomes the "bank" on the property that is being sold. For example, the seller may finance 80% of the sales price to the buyer, secured by a first trust deed on the property. The terms and interest rates on seller carry-backs are negotiated on a case-by-case basis. Today, the interest rate is, typically, 5-6%.
The biggest benefits include:
The seller can defer most of their capital gains tax. Sellers should make sure that the note protects them to the fullest including late charges and a due on sale clause.
Buyers may save money on financing costs and time. B
uyers have no financing costs, such as appraisal fees, points, and other loan fees that a bank would charge.
Use common sense when considering such a loan, and verify the buyers' income, credit history, and job stability before making your final decision.
|
