Seller Financing

T

tmccar

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Has anyone come across a situation where the house seller carries the financing? (i.e. the buyer would be taking out a mortgage with the seller).
 
cader said:
Has anyone come across a situation where the house seller carries the financing? (i.e. the buyer would be taking out a mortgage with the seller).
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I remember this being mentioned many years ago. The advice to a vendor would be better to get rid of the property at cost before getting into a long term mortgage situation with a complete stranger! These ideas are so far removed from the norm that I question their viability.

I still get the feeling that purchasers ( lets forget about the unrealistic vendors for the moment!) have still not grasped that Banks are not lending. I have a string of optimistic potential purchasers all happily confident that they are different. They're not!

Will it catch on? Possibly - desperate measures for desperate times.

mf
 
I searched for this topic and only found one post from 2008.

I understand this happens in America? Many of the 'make wealth with property' american books recommend it, typically as a strategy to accumulate more borrowing than a back would allow, or in order to buy quickly from distressed sellers.

I guess the problem in ireland is that even if a solicitor wrote up a mortgage contact between buyer and seller. If buyer stops paying the seller will find it hard to get their house or owned money back.
 
Could they not sue in thats scenario, to enforce the contract?

Its a really interesting concept and if done right could be a win win for buyer and seller.
 
I'd never heard of this but it's intriguing.

I guess it would work at the lower end of the market. Seller exchanges the house for a mortgage at a high rate to someone with a poor credit history.

I wouldn't see it working in Ireland given how lengthy and expensive repossession is. There is no way that a private individual should take on this kind of risk.
 
I think one of the methods of owner financing you are referring to is known in some parts of the US as Bond for Deed or Contract for Deed.
I believe these work like Rent to Buy as the title only transfers after the last payment is made.
However, if the 'buyer' misses more than an agreed number of payments they are turfed out with no build-up of equity.

Appeals to bad credit, desperate, types of buyers with little hope of any other way of owning their own home and is hence a magnet for 'sharp operator' type sellers as they can 'sell' the same house many times over in theory.

The benefit for the 'seller' is they may ask for a lump sum as down payment and then get a monthly payment equivalent to rent. I think the lower the down payment, the higher the monthly asked.
They also don't have to pay property taxes or maintenance for the duration as they are not classed as landlords. I think the property tax part is also paid monthly on top of the 'mortgage'.

I first heard about this back in the 1990's so it could be more regulated now. I hope so!
 
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