What if the sellers don’t make their payments? On a Contract for Deed.  If the buyer doesn’t make their payment, you simply give them a 30-Day Pay or Quit notice.  That is only 27 days longer than the 3-Day Pay or Quit notice for a renter.  If they don’t bring the payment current, then you have an attorney give them a second notice that the contract is now canceled and evict them.  Not much different than a rental agreement.  You get to keep their down payment.   And then you can turn around and sell your house again.  And usually for more as home values usually go up.

What about the “Due on Sale Clause?” When you use a Contract for Deed to sell your home with seller financing, the bank will likely never know you sold the house.  It is no different than if I did a long-term lease option.  The seller is still on title. There is nothing that notifies the bank that you have sold the house until the buyer pays the final payment and the title is transferred.  By then your mortgage has been paid off and there is no problem.

Even if the bank called the loan due and payable, they would have to do a foreclosure. However, that is very painful for a bank to do. Why take a mortgage that is performing when payments are being made regularly?  On top of that, they must stop accepting payments.  So, just because the bank can call the loan due and payable, doesn’t mean the bank will call the loan due and payable. 

What if the buyer trashes my house? Tenant-buyers make a much better tenant than renters.  They feel more vested in taking care of the property because it is their home.  And we educate your tenants on the severe consequences of those actions.   

Can I purchase another home if I do a seller finance contract?  Yes!  In that case, we would do a Lease Agreement to Contract for Deed.  You would have the buyer sign a Lease Agreement for one year. After the seller closes on their new loan than the buyer can close on the Contract for Deed.  Our Title Company and our lender knows how to handle all the details for you.  With a signed lease, the underwriter will apply 75% of the lease payment to offset the actual mortgage costs. That is a huge benefit for the seller to qualify for their new house to offset your debt to income.  The interest and the contract payments charged to the buyer will offset the higher interest rate you will be paying and will lower the house payment on your new home.  

What if I want more of my Equity out of the home?  No problem, there are investors who would love to invest in real estate notes and would be happy to get you more cash at closing.  Our Title company knows how to handle those details too.

Keep in mind that seller financing is not for everybody. But if you want to sell your house for more money, and make a good return on the bank’s money, the vast majority of people sellers say, why don’t more people do this?

If you have any other questions, don’t hesitate to contact me.  I look forward to helping you achieve your real estate goals.