For real estate agents, one of the most significant challenges is helping people with poor credit. Clients need a home that suits their budget and needs. For people with credit issues who might be cash poor, owning a house seems to be an impossible dream. Discover how to find owner-financed properties for clients with credit issues and become the go-to agent for this essential niche market.
Basics About Owner Financing
With a myriad of financing and mortgage assistance programs available, there are countless opportunities for credit-challenged clients. Owner financing, also referred to as seller financing or a money mortgage, is a viable option. The seller takes care of the mortgage process, rather than a bank or financial institution. When a financial institution is unwilling to take a risk on a client with questionable credit, owner financing can put homeownership within reach. It’s also an excellent tool for sellers who are having difficulty selling a house. Look for distressed properties and listings with little or no activity for over 30 days. Homes that are for sale by owner are also excellent opportunities.
General Terms of Owner Financing
With owner financing, the sellers usually offer short-term financing arrangements that require the buyers to make a balloon payment at the end. The buyers and sellers sign a promissory note outlining the repayment schedule, interest rate, and default terms. Then the buyers make mortgage payments to the sellers. Agents should provide clients with a list of local accountants and attorneys, so they get the right advice along the way. Encourage reciprocal referrals with these professionals to generate more leads. And owner financing opportunities can be found in estate and matrimonial proceedings. Savvy agents link with these clients by working with other professionals.
Know the Psychology
It’s easier to find owner financing opportunities when an agent knows why sellers are willing to offer this option. Some property owners might have inherited the house or moved out of state and don’t want to pay for insurance, utilities, and other costs. Others may need to relocate or downsize and want to sell the property as quickly as possible. In specific markets, the sellers may wish to get the maximum asking price for the property, and offering to finance the property to potential buyers is the best way to get it. Agents can approach corporate relocators, retirees, and human resources departments to find out about possible owner financing options for clients with credit problems.
Nothing Ventured, Nothing Gained
When it comes to owner financing, nothing ventured means nothing gained. Agents can always inquire if seller financing is an option. If not, an agent can be ready to provide information that supports the benefits of offering this type of finance arrangement. Providing people with the facts helps them make an educated decision and can open more owner-financing opportunities for clients with credit issues. This is also a way for agents to become recognized as an expert within this potentially lucrative niche.
Benefits for Buyers
Even buyers who have good credit might want to consider owner financing because of its unique benefits. Often down payments are lower because the buyer and seller enter into a private and creative financing arrangement. The closing happens faster with fewer parties involved so that the buyers can move in sooner. Plus, buyers can request flexible financing arrangements that fit into their budgets and timelines for repayment. Also, the closing costs are less for owner-financed properties as appraisals, and other paperwork is not required to close the deal.
Market the Properties
Making connections is the groundwork for becoming a successful real estate agent. Marketing properties with owner financing is a smart way to connect sellers with credit-challenged buyers. Post listings in community centers, churches, and other places people look for creative housing and financing options. Research publications and sites that are specifically for a credit-challenged audience and advertise with them. Reach out to local banks and lenders to let them know about owner-financed properties to offer to clients who might not qualify for a mortgage loan with them. Use hashtags for owner financing when posting these listings on websites, blogs, and social media. Better Homes and Gardens® Real Estate affiliated agents can choose from a variety of professional images to ensure these posts grab instant attention to help them sell a house with owner financing quickly. Knowing how to find owner-financed properties for clients with credit issues helps agents sell a house faster. Agents who can help people in this niche are sure to get recognized as useful resources. And with that level of authority, comes more referrals.