Anyone ever sell or buy a house with owner financing?

[McMark]

The short story is; I have this house that I've been working on as a downsize to what we have now. The neighbor stopped over to tell me that one of his co-workers was interested in purchasing and would we consider selling. He was shown the house yesterday and he wants his parents to check it out before going to the bank. I don't need to have the money right away so I was considering owner financing. Have any of you done this before? What were the issues thatyou had in being the owner/financier or buyer?

Thanks,
Mark

 

[Slfmde]

Not the same but I rent one of my homes out. Pain in the ass if they don't pay and renters have all the rights so it takes forever to get them kicked out. Just kicked some renters out and it took about 5 months and was in court 5-6 times.

So just from that perspective I assume you will be dealing with that if they don't pay.

 

[scokill]

Personally I would never do this. The main issue is when they don't pay. The foreclosure process for non-payment could be difficult to very difficult based on your state's laws....when I say difficult I mean for an individual. You can't just turn it over to your legal department. It could take months and months if not a year or more.

If it is because someone doesn't have the credit to get a mortgage would you really want them in the house? Also it's a very low interest rate and not sure I would swap a bird in the hand....cash that is.

 

[BigAbe75]

My folks used to sell homes contract-for-deed. Eviction process was similar to that of a rental lease. Eventually, they shifted to just doing rentals though. Theirs was more of an investment business and people kept paying off the houses so they'd buy another and start over.

This was also when interest rates were more like 8%. They'd charge almost twice that to folks that couldn't quite get a bank deal. As rates came down and banks started to relax a bit the market changed and wouldn't really support that model.

Anyway, it can be done. Up to you whether you can negotiate a satisfactory interest rate to make it pay for you as well as provide an opportunity for a new home buyer.

 

[McMark]

I think they guy will be fine securing a loan. I was thinking why not pad the price by collecting the interest. I would have it written up that there would be a balloon payment in say 5 or 10 years. I'm not financing him for 30 years.

 

[McMark]

All good information so far. Thanks for taking the time to respond!