I read an interesting article today detailing the pros and cons owner financing. While there may be no other option for some properties or situations, sellers and buyers should both know what they’re getting into and the responsibilities required to make it all happen.
The article advises the seller to think like a bank and realize “they’re not a bank.” Banks have a giant portfolio by which to spread their losses over should someone default, miss a payment or otherwise walk away from the mortgage.
Seller financing is a great option, easy to write up, can close the next day in some situations – but it’s not for everyone. In my dealings I’ve seen it most commonly with land transactions. More and more I’m seeing it on flipped properties or large investment portfolios where investment groups are seeing large returns on selling and carrying the note on the property at 8-10% or more.