Home Sellers Are Discovering That Creative Financing Options Can Help Sell Their Property

Home Sellers Are Discovering That Creative Financing Options Can Help Sell Their PropertyThe economic downturn has created a huge problem in the real estate market. Sellers have built up inventory of houses to sell but cannot find buyers since buyers are not able to get the required financing to buy those houses.

The only alternative for such sellers is to widen the base of customers to whom they will be able to sell their property and this means that they must also consider selling their property to even those who cannot qualify for a mortgage. That can be done by making it easier for the buyer in terms of some creative financing options that make it more convenient for him to take the plunge and say yes to the seller.

There are some options that can be explored like mentioned below:

1. If you can talk to your lender and the prospective buyer to consider making payments of the existing mortgage which could be at a much lower interest rate, then you will be able to sell your property. The buyer thus gets hold of a property where the closing costs are much lesser than what he would have had to pay if he went for a new property at the existing interest rate terms. Though most mortgages are nonassumable, the current tough situation may make some of the lenders consider this option favorably and oblige both parties.

The only factor to consider is the prepayment penalty that might be levied depending on the size of the transaction. The seller must also take a written commitment from the buyer that he will be making the monthly mortgage payments on time.

2. Go for a lease-to-purchase option wherein the buyer is a like a tenant for the agreed tenure and this rent that he pays is salted away in a separate account to be used as a down payment for the property. If he does not make the purchase, the accumulated amount is forfeited. The seller needs to sew up the legal aspects of the deal in a manner that is not unfavorable to him should the buyer decide to walk away from the deal. From the buyer’s perspective, he gets a roof over his head and a property that he likes. The fact that he is ultimately going to purchase the same property down the road should be enough motivation to maintain the property and to ensure that the rents are paid on time, since they are anyways going to be adjusted against the purchase price. Another advantage is the purchase price getting fixed with no possibility of any change later on.

3. In case you have the money, then you can offer mortgage terms to the potential buyer. The amount of down payment is something you can decide and this arrangement will typically be that of a trust deed or promissory note type. Once the contract is fulfilled by the buyer, the deed is passed on to the buyer and this kind of an arrangement works well for those who have not been able to dispose off their old home or are in a divorce proceeding where the house cannot be sold till the case is settled. You can offer either full financing or part financing depending on your capacity.