As the housing market continues to “evolve” with tight credit, increasing foreclosures and downward pressure on prices, sellers are turning to owner financing in order to get their price and close escrow. And with things far from resolved, I am getting more and more sellers asking how they can carry paper safely.
“This is worse than the S&L crisis,” said Jim Rogers in an interview with Bloomberg recently. “This is the worst credit bubble we’ve ever had in American history. Never in American history have people been able to buy a house with no money down — never.
“That’s never happened anytime in the world. So we have the worst credit bubble. It’s going to take a long time to work its way out. You don’t cure a bubble in five or six months… It takes five or six years.”
So it might take a while for the market to normalize. What can we do in the meantime? Sellers can hang on for the next 10 years, or they can continue to become more flexible. They can offer the financing that a lot of buyers can’t, or won’t get right now.
The more sellers become aware of seller financing, the more they will use it, whether they want monthly income, or want to sell the note and walk away with cash at closing. Of course, this technique works best when the seller has a substantial amount of equity.
I am getting more and more questions about seller financing. People are getting wind of the idea, but they’re really not sure where to start. Most people need some direction, so that’s why I’ve developed a menu of services to help people through the process.
The first step is to email me, or some other real estate note professional. I help sellers evaluate their individual situations and develop a plan of action. When you need an attorney, an accountant or some other professional service, I’ll let you know.
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