you offer owner financing?
Offering to carry a loan for a buyer can be a good deal.
It can allow you to
defer paying taxes on any capital gain you make when you sell the
property. It can also help a marginal buyer afford your house.
who offer financing normally carry second loans on the property.
They're called "seconds" since they are subordinate to the primary
or first loans they buyers plan to get from a lender. Second
loans are riskier than first loans--if the buyer defaults on the
first loan and the lender forecloses, all subordinate loans are
There are some disadvantages to doing this:
If the borrower
defaults, you'd need to buy out the holder of the first
loan at the foreclosure auction to protect your interest.
If you try to
sell your second loan to a third party, you probably won't get
much for it.
A nasty borrower
can sometimes delay a foreclosure on a owner-financed second
with various legal maneuvers. For example, the borrower
could claim that you made misrepresentations about the property.
Until these legal tricks are exhausted, you'd essentially be
providing the borrower with free rent.
These problems become
less serious if the borrower is making a large down payment and if
you trust the borrower.
If you decide to
offer owner financing, you'll want to tell prospective buyers about it
or in your
flyers and ads. Say something like "owner will carry" or
"owner financing available." Don't specify the terms of the
loan, since that may trigger reporting requirements under the Truth
in Lending Act.
you offer a home warranty?
homes for sale now come with home
warranties, which usually cover much of the cost of repairing or
replacing a home's major appliances and operating systems for a year
after the house sells. A warranty normally costs between $200
and $500, and it's an especially good deal if some of your home's
appliances and systems are likely to fail soon. If you offer a home warranty, tell prospective
buyers about it in your flyers. You can also display "Home
Warranty" sign riders.
general, buyers expect anything that's permanently attached to the
house to stay with it after the sale. If you want to take
things like draperies, light fixtures, or built-in appliances with you, make
a list of these exclusions and make sure prospective
buyers know about them before they have a chance to make
offers. I think it's a good idea to list all exclusions in
Alden, 2008. All rights reserved.