Here’s one of the options that we provide on our website for buyers and sellers who want to do things a different way. Sure, you can go on the conventional market in the usual way. But there are other possibilities, too. 

Owner financing is different from what happens when you simply go and list a property with a real estate agent on the MLS

You may or may not be working with an agent here, but you may also be working with attorneys or other parties to figure out one of these financing plans. 


What is an Owner Financing Deal? 

In an owner financing property agreement, the seller agrees to leave money in the deal, and receive ongoing payments. In return, the buyer agrees to pay the seller the interest. So in this case, instead of qualifying for a commercial or traditional residential loan the buying party would just simply make their mortgage payments to the owner. That’s the principle behind these deals, and that’s often how it works, although in many cases, things like bridge loans and hard money also apply. 

This owner financing plan has benefits for both parties, but it also has some pitfalls as well. There are things you need to be aware of as you pursue one of these contracts.


Benefits of Owner Financing

As mentioned, the seller in an owner financing transaction gets the interest. So instead of just getting a lump sum of money, that property seller is getting scheduled payments with extra ‘coupon’ value attached, to use bond terminology.

The buyer has obvious benefits, because they don’t need to go to commercial lenders to qualify.

One of the things to look out for is situations where there is a misunderstanding about either payment or scheduling. First of all, the buyer needs to make sure that the seller is willing to move out by the settlement date. It’s not unusual to have problems around this type of scheduling, and in some cases, buyers arrive to find that the seller is not fully moved out, or not even moved out at all!

Anyway, notwithstanding these types of issues, owner financing can definitely be a legitimate and efficient way to sell. It has to do with the seller’s overall plan and financial outlook: whether he or she needs the whole amount in cash at settlement, or whether the seller wants passive income in the future. Talk to us about either kind of real estate in the San Antonio area.