California, United States, January 6, 2021, ZEXPRWIRE, With changes to the economy that we have seen in recent years, many homeowners are discovering that there are new ways to sell their home that weren’t available before. If you don’t want to sell your house through an agent, there are other methods to sell your house- you can sell on your own or you can sell with seller financing. If you’re wondering, how to sell a house by owner financing in California and how to get full price, keep reading this article and we’ll walk you step-by-step through the process.
So what is seller financing? In a traditional sale, the buyer goes to a bank to get financing for the house. With seller financing, the seller finances the house for the buyer instead of going to a bank. The seller acts as the bank. The seller gets a down payment and receives monthly income in the form of the monthly mortgage and the buyer gets possession of the house. The buyer will continue to make monthly payments to the seller till the house is paid off, then it becomes the buyer’s house.
Seller financing may be a good idea for people who want to sell their house fast, has equity in their house, wants to get full price for the house, doesn’t need money right away and would rather put their money in a safe and secure investment, going through divorce, needs to relocate, downsize, or move, wants monthly passive income, or is tired of being a landlord and doesn’t want to deal with toilets, tenants, or trash. So what is the process for seller financing? Keep reading to see the step-by-step process in California.
Step 1. Determine whether you own the house outright or still have a mortgage
In some states, if you have a mortgage you may not be able to offer owner financing (but you can in other states). Here in California, you can offer owner financing with a mortgage. So the first step is to determine whether you have a mortgage or not. Once you determine if you have a mortgage, figure out how much equity you have. If you have little to or no equity selling your house with seller financing will not be an option because you owe on the house than you actually own.
Step 2. Talk to a real estate attorney for help in crafting an agreement and a Mortgage Loan Originator (MLO) to ensure state and federal compliance
With seller financing, you are essentially acting like a bank. The buyer will pay you a down payment and then pay you regular monthly payments until the house is paid off, and then it becomes their house. So make sure you talk to a real estate attorney to ensure that you are protected and obeying all federal, local, and state laws while also protecting yourself! (If you need the name of a good real estate attorney, get in touch with us and we can make an introduction.) A mortgage loan originator (MLO) is an institution or an individual who can help to make sure that the buyer meets income and credit qualifications. Also, the mortgage loan originator will ensure that the transaction is also compliant with state and federal financing guidelines.
Step 3. Market your house online and offline
Once your paperwork is in place, you are ready to advertise that you have a house for sale. Be sure to let people know that you offer seller financing. Mention this in your headlines to attract even more people. There is no limit to how much marketing you should do, the more you can do, the better. Advertise on places like your local newspaper, Craigslist, Zillow, Trulia, etc…
Step 4. Work with potential buyers
As your marketing captures the attention of potential buyers, work with them to show them through your house. When someone makes an offer on your house, negotiate the price and terms with them and find the middle ground that will ensure a win/win situation. Often times, you can get full price for your house, you just need to provide a monthly payment and down payment that the buyer can afford. Buyers are willing to pay full price for your house because you allow them to avoid the hassles of dealing with a bank. Once you find a buyer, sign the papers when you and the buyer reach an agreement.
Step 5. Collect the down payment and hand over the keys
Once you agree on a price and have signed the papers, collect the down payment and hand over the keys. In most situations, you will continue to own the house and collect payments until the house is paid off, then ownership transfers to the buyer. (Reminder: keep all documents in a safe place.) It’s that simple! Now you can get monthly passive income while also getting full price for your house. So, what can you do with the extra monthly income? You can use it for paying your monthly expenses, pay off loans, go on more vacations, or even pay for your children or grandchildren’s education.
By: Grant Vita
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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Sahyadri Times journalist was involved in the writing and production of this article.