There are several things that you can do to get more from the sale of your real estate.

Three of these are noted in my book Selling Your Central Florida Home.   There are more ways and today’s blog will address one of them.

Offer Owner Financing.

If you have the proceeds of the sale are earmarked, then this will not work for you.

Many sellers get a lump sum of cash and then must find a place to put it to earn a good safe return.

Some sellers in the past have offered owner financing to buyers.  Leaving some of the proceeds in the form of a mortgage to the buyer.

For example, if a seller wanted to earn 10% safely.

Lets create a real world example:

Sales price $400,000.   You would have taken $350,000, but by offering owner financing you are able to get $400,000.

Down payment $160,000

Seller holds a $240,000 mortgage on the property.

10% interest

It would generate $2000 a month in income. 

5-year balloon

$24000 a year x 5 years = $120,000

Then you get the $240,000 back.

You sold your property for more money by offered owner financing.  This is only a good idea if you do not have a safe home for the money.

What is the downside of this strategy:

You don’t have the money.  It is tied up in the house.

The buyer may not pay you back.  You would have to foreclose.  This might be a good thing because you could then sell the house again.  You will have received the buyers $160,000 and if the buyer paid for a year, another $24,000 and then sell the house again.  Another $375,000 when you sold it again.  You would have $2500 or so in foreclosure costs, a certain amount of grief and some lost interest income over the months of nonpayment.  And of course, the condition of the house may deteriorate as the new owner loses pride.

There are other variables.  Because the buyer is paying a high interest rate, they are likely to refinance and cash you out early.

Generally, if you own a home for 1 year a refinance is easy.  A buyer today might have a challenge getting new financing to purchase, but in 12 months they may be able to do an easier refinance.

In 12 months, it would look like the buyer bought a home for $400,000.  They owe $240,000.  A lender would likely find that kind of refinance attractive.

You would have received $160,000 up front $24,000 a year in interest and your $240,000 back.   $425,000.   This is for a home that was only worth $350,000.

The logistics are fairly easy, the title company will prepare the documents. Call me to discuss.

Randy

Randal Jenkins Realtor

http://www.409home.com http://www.FloridaRealEstateFamily.com RJ409home@Gmail.com 727-409-4663 (409-home)