Seller Financing


		You, too, can be a lender. Say you're having a really hard time selling your home. Or say interest rates are high and buyers are having a hard time securing mortgage loans. Either case (or both) might be an incentive to consider seller financing, or lending a buyer the money to purchase your home. Why on earth? The main advantages of seller financing are: • You can make money above and beyond the sale price via the interest you charge • You can attract more buyers in a slow market Playing the role of lender, you'll also have tax issues to consider. Will this be treated as a sale and taxed immediately or taxed over a period of time? Be sure to check with your accountant on the tax implications. A risky endeavor. Just the thought of lending your money to a buyer may make you nervous, and for good reason. First of all, if the buyer could secure a loan through a traditional source, he or she probably would. So before you go through with seller financing, make sure you: • Can afford to wait for your money • Get a large enough down payment—at least 20%—to cover selling expenses, any cash you may need and the possible decreases in property value if you wind up having to foreclose on the buyer • Dive deep into the buyer's financial world to determine whether he or she really has the ability to pay you back—get a credit report • Ask your real estate attorney to prepare a loan agreement that is legally binding and protects your interests—don't try to do this yourself!