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Seller Financing – Win Win For Buyers and Sellers!

Seller Financing - Win Win For Buyers and Sellers!

Hi everyone! Todd Wheatley with Candor Realty here. In this video, I’m going to talk about what seller financing it is and how it can benefit both buyers and sellers, especially if you have a team that knows exactly how to use this. This is a tool that I’ve personally used with homeowners to purchase properties from them and provide a source of income to them for many years. So, again, this can be a win-win scenario for both buyers and sellers of homes. So, how does this work? So, if a homeowner owns their house outright and doesn’t have a bank mortgage on the property, and they’re interested in selling the property, they have a couple of options. They can sell the property outright to a buyer, and that buyer can go to a bank and get a loan for 80 or 90 percent of the property’s value. So, that’s one way.

And the seller in that case would get the whole amount of the purchase price. Some of it would come from the bank and the down payment would come from the buyer. The seller then takes their money and they’re done with the property, and that works well for many people. But for many folks who have spent many, many years, tens of years paying off their mortgage, now owning this property that they own free and clear, don’t necessarily want that single payday because they have to go do something with that. They have to pay taxes on it. They then may have to reinvest it. And for many people, that’s not a good solution for them.

And so, what seller financing offers is they can hold the mortgage on the properties. So, the buyer would give them a down payment, that’s cash in their pocket, and they can hold the mortgage for whatever the agreed upon amount is, that is it’s secured with a first position lean. So, just like a bank does. So, if the buyer doesn’t pay their mortgage payment, the seller can go through the foreclosure process to take the home back. So, there’s collateral and safety in that. But the most important things it does is it can provide a source of income for the prior homeowner. They can sell the home to the new buyer and have a monthly payment coming in every single month in the form of a mortgage payment. And that can be very, very beneficial to many homeowners, just looking to maybe downsize or relocate to a different state, et cetera.

The second benefit is it can potentially lower the tax liability for the seller. Because they’re not taking all of the proceeds of the sale at one time and they’re only receiving the down payment at the time of sale, and then the payment is actually structured over potentially many years, it can change the tax liability in a favorable way for the seller. It’s different for every situation. You’ll want to talk to your tax preparer about that. But I do know in the projects that I’ve worked on and the deals that I have used seller financing on, that has been a major benefit to the seller is that reduced tax liability at the time of sale.

Again, this is very relationship based. It’s important that you know the team and the buyer that you’re working with, as well as the seller to make sure that there won’t be any hiccups in the future. But this can be a really powerful way to keep your costs down and to keep a source of income for the seller going even after the time that they sell their home. So, hopefully, you find this video valuable. If you want to discuss seller financing in more detail, whether you’re a buyer or a seller, reach out at the number below. I’m always happy to talk about it. And I can share my experience with the projects that I’ve used this on. Have a great day and I’ll talk to you soon.

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