"Owner Financing" - Posted by Jim

Posted by Ed Copp (OH) on March 09, 2001 at 15:24:13:

Your offering of $235K is inflated by about $35K. Seems like the house is really worth about $200K from what you have posted. The $200K would be a cash price with the buyer bringing all the money to the table (it really does not matter where he borrowed it)

Now if you provide the financing then you are entitled to inflate your price some. In my opinion $35K is a bit of a gouge (and you will probably want higher than market interest also). It is however customary to charge more to the people who have less… I think it is called the American way.

You ask how to make this work, and the answer is that the house is most likely worth $200K cash, anything over that amount is to be considered somewhere between wishful thinking and a daydream.

It is worth noting that the $200K value (comps) would also include a local customary real estate commission, (about $12K) in my area. So the net on the house would really be about $188K. If you earn the real estate commission by all means keep it, however expect a savvy buyer to also want to “keep it”. If I was paying CASH, it is a sure thing that I would not “pay you” a commission for finding me, A “cash buyer”.

So how can you make this work? The answer is take a FAIR and realistic price of between $188K and $200K CASH, or design some kind of owner financing that works for both you and the buyer. Don’t hold your breath on a deal that is inflated by 17-20%, while looking for a super buyer who just happens to have little or no money.

“Owner Financing” - Posted by Jim

Posted by Jim on March 08, 2001 at 18:18:22:

Our house is worth more because of the fact that we are providing owner financing to our buyer. (ala LeGrand) and I believe it as well.

OK…How bout if we have our house advertised in the newspaper as “Owner Financing” or “No Banks Required” or
perhaps, we just have an open house and were talking to potential buyers and we’re approached by a buyer that
wants to go get a new loan tomorrow. They leave us a deposit and head to their lender for their loan.

Now, because we are not in fact providing owner financing, because our buyer elected to obtain financing from their favorite lender, does this mean that we have to take a hit on the actual value of the property because of this?

In other words, recent comps show properties in this neighborhood to be $200,000.00 and our house in question here also has a recent appraisal of $200,000.00 , but because we took the property subject to from our seller and are now selling the house for $235,000.00 because of the owner financing, will our buyers appraisal differ from our asking price, and if so, will the lender loan them the amount needed to buy at our price?

How would we make this work? (Ya never know! It could happen)

Thanks Guys