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5 Benefits of Owner-Financing in Albuquerque for the Seller:

We often hear that owner-financing was designed to help one party or the other, which simply isn’t true. The terms of owner-financing are agreed upon by the parties entering into the agreement and therefore rely on each situation differently. If the terms are unfair to one party, or the other, then the deal is not made, or the negotiations should continue. It’s as simple as that. It was created to benefit both parties, but for our purposes here we are going to look at the 5 Benefits of Owner-Financing for the Seller:

Better Returns.

If you don’t need the money from the purchase to buy a new home, then you might think of selling using owner-financing. Negotiate terms for long term gain. You can often receive higher interest rates from owner-financing than from parking it in the bank. Not to mention, sometimes buyers who can’t qualify for traditional loans, or don’t want to hassle with the process will pay more for a property just for the convenience of owner financing.

You Negotiate the Terms.

Everything is negotiable. Get creative. Make the terms as beneficial as possible. Practice those negotiation skills. And most importantly, know what you want and stand firm on the terms that matter to you.

There is a Larger Pool of Buyers.

There is a huge list of untapped buyers who can’t (or don’t want to) qualify for a bank loan. See our latest post on 5 Buyers Looking for Owner Financing.

Easier Default Process.

The default process is much easier, and quicker, than judicial foreclosure. A property can get tied up in the judicial foreclosure process for months, or even years, which can cost the seller time and money. Again, everything is negotiable, but the typical default period is 30-days. Contact an attorney to explain the details.

You Can Sell the Contract Later.

There is a secondary market waiting to buy your interest in the real estate contact. You can take your active real estate contract and sell it for cash. If you would like more information on how this secondary market works look for us on Youtube.com under Sunwest Escrow. We have an extensive list of videos for both buyers and sellers.

If you’re interested in offering owner-financing in Albuquerque on your next property contact us at 505-237-2225 to get all the information.

5 Buyers that are Looking for Owner-Financing Homes Albuquerque

“To some, the inability to qualify for a loan may raise a red flag. There are many reasons why a borrower may not qualify for conventional financing. It is noted that being unable to qualify does not necessarily equate to a bad credit risk or a ‘deadbeat’.“

-from Just Another Tool… Real Estate Contracts by CEO Terry White

The Self-Employed

These are great buyers. They are often hard-working individuals that can’t qualify for a loan because verifying their income to the banks can be a challenge. The banks usually require a minimum of 3 months of paystubs to prove you can pay back the loan from a steady income. If you are not able to provide 3 months of paystubs, they typically require 2-3 years of income tax returns to prove income. A new self-employed individual may be unable to show any income for years. Do you see where the convenience of owner-financing home comes in? Cutting out the bank and all their red tape makes it easier for these individuals to purchase a home.

Investors

Investors are always looking for quick, low-entry investments that they can fix and flip fast. Which means paying the remaining balance off as soon as the property has been remodeled, or updated, and sold. Dealing with banks slows the process and kills deals for investors. It’s better for them to work directly with the owner and close quickly.

People with Little, or No Credit

Banks place a lot of value in credit scores and don’t typically lend to people with little, or no credit. Credit scores do not take an individual’s income, cash, or assets into consideration. The use of credit, and a high credit score, is not the only measure of a person’s ability to pay back debt.

And, let’s not forget the young up-and-comers who are building their credit, but may not be up to the banks standards just yet.

People with Little, or No Down Payment

Conventional loans often ask for 10%-20% down, and are not flexible. But creating a sale using owner-financing can be creative; trading assets of like kind, multiple balloon payments, increase the interest rate, or increase the monthly payment. There are more solutions than I can include in this paragraph.

People Looking to Buy Unconventional Properties

Banks tend to protect their loans by using the property as collateral, knowing they can take it back and resale it for the amount of the outstanding loan, or more. They don’t typically lend money on land or properties that do not meet their standards, and processes. This does not mean the property does not have value. It simply means it’s more risk than the bank is willing to take. But to many people risky real estate purchase is often highly rewarding.

Owner-financing homes in Albuquerque is not for everyone, or every situation, but the great thing about owner-financing is that it can be flexible where conventional financing is not.

What is a Real Estate Contract?

A Real Estate Contract is a legally enforceable agreement whereby an owner of real property agrees to sell the property to a purchaser on a deferred payment schedule. Transfer of legal title is delayed until all the deferred payments are made. When the purchaser fulfills his/her obligation under the agreement, the proper deed is released by the Escrow company and can be recorded, giving the Purchaser legal title to the property. If the Purchaser fails to meet the obligation as outlined in the Real Estate Contract, the Seller may, at his/her option, forfeit the Purchaser’s interest in the property without court action, or declare the entire unpaid balance due and payable and file suit to collect.

With Real Estate Contacts, the Purchaser does not have legal title to the subject property until the deed held in escrow is released. Instead the Purchaser has what is called “equitable title”.

Why use a Real Estate Contract?

• Terms of sale can be tailored to meet the needs of both the Purchaser, and the Seller.
• Little, or no credit of the Purchaser can keep him/her from buying with a conventional, FHA, or VA mortgage.
• Little, or no down payment may reduce the availability of a mortgage.
• A Contract can provide a monthly income for the Seller, usually at an interest rate higher than would be available at the bank.
• Usually a sale can close much faster with a Contract than with a new mortgage.
• A contract can be used to finance vacant land that could not otherwise be financed.

Why should I use an escrow company?

Your escrow company will serve several very useful purposes. The escrow company will keep deeds and documents secure. Upon payoff in full by the Purchaser, the deed held in escrow will be release for recording. Should the Purchaser fail to meet his/her obligations, a deed is safely in escrow transferring interest back to the Seller.

Secondly, the escrow company will serve as “bookkeeper” for your particular transaction. It will monitor principal, interest, and the balance of the account. It will report to the IRS on the Purchaser’s behalf as to the amount of interest paid each year. It will provide interest statements to both the Purchaser and the Seller. Upon request, it can deposit funds directly into the Seller’s bank account. Your escrow company insures that proper credit is given for each payment it receives.

Using an escrow company will eliminate many of the disputes which can arise between Purchaser and Seller. Acting as a neutral third party, the escrow company is ready to assist both parties toward an amicable relationship.

Call us at 505-237-2225 for additional information.|

If you have a piece of property on the market as For Sale by Owner Albuquerque, then you really should consider offering owner financing. Owner financing opens the doors for so many more opportunities and new buyers.
In recent years, the Real Estate Contract (the most common form of owner financing in NM) has earned a bad reputation among the uninformed. Unfortunately, I’ve heard many real estate brokers tell me they would never advise their client to sell using owner financing because it favors either the buyer (or the seller), which is flat WRONG.
Owner financing is one way of selling real estate. A Real Estate Contract is just a piece of paper that states the terms and conditions of buying/selling a piece of real estate. There is nothing evil, or scary about either of those definitions. What matters is how the terms and conditions are negotiated. Every aspect of the process is negotiable between the potential buyer and the potential seller. If a bad deal was negotiated, then a bad deal was negotiated. Know what you want and don’t settle if you don’t have to.
The truth of the matter is that owner financing can be a great tool, but only if it fits for your situation. I’ll be blunt: Owner financing isn’t for everyone, or every situation. But if it is right for your situation the possibilities explode!
There is a huge pool of buyers who have money that are scrambling to find owner financing for a multitude of reasons:
Entrepreneurs who can’t get a traditional mortgage because of a new startup.
Investors who have reached the limit on active mortgages.
Investors looking for low investment for a quick flip.
Family members who need a leg up.
Investment groups with too many moving parts to qualify for a mortgage
To understand more about owner financing, real estate contracts, and the entire process check out our video library. And, best of luck with your for sale by owner Albuquerque listing.

When you open an escrow account in Albuquerque, New Mexico you are securing your interest in the investment—usually real estate.  An escrow account with Sunwest Escrow can provide peace of mind through securing documents on site and a trusted third-party payment history.

Consider this. You are a buyer of a new home. You’re using your lifesavings as the down payment on a home you love, using owner financing.  You’ve just met the buyer through the process of buying the home, but he says he’s done this process a million times and there is nothing to be worried about.  You and the seller decide to forego using an escrow company because he says their unnecessary.

So, who is going to hold the deeds? How do you know the deed will transfer ownership after all your payments have been made? How do you know who paid what? And when?

Consider the other side. You’re a seller. You’ve used owner financing to sell property a thousand times. You’re building your portfolio so you can retire soon. You like to travel and you’re very rarely in town.

Again, who is going to hold the deeds? Where are you going to accept payments? Who is keeping track? How do you get that money into your bank account so you can spend it? What if you decide to sell the contract? Do you have a trusted payment history to show potential buyers?

People travel. People change their mind. People get busy. People forget. People disagree. An escrow account with Sunwest Escrow helps alleviate these problems. Sunwest acts as a trusted third-party, or middle-man to the transaction by securely holding documents, receiving payments, holding funds in impounds for taxes and insurance, remitting funds to the buyer, and keeping a detailed history of each transaction.

Real estate is a large investment with many potential pitfalls. But many, if not all, problems can be solved with competent help. You should find competent advice from real estate brokers, title companies, attorneys, and tax professionals. And, by using an escrow account in Albuquerque, New Mexico you are adding an extra protective layer around the purchase, or sale of your real estate.

A real estate purchase agreement in Albuquerque, New Mexico is usually the first document in a string of documents needed to purchase real estate.  Whether you’re utilizing owner financing or not, the first document in the stack of documents will be the purchase agreement.  The purchase agreement is submitted by the potential buyer with the initial terms they are willing to offer to purchase the real estate.  If the seller agrees to those terms he will sign and return the purchase agreement, if he doesn’t agree to any one of the terms the buyer will reject the purchase agreement and, typically, return a counter-offer to the purchase agreement. Then, it’s the buyers turn to either accept the counter-offer or reject the counter-offer and counter the counter-offer. This can continue until an agreement is met, or both parties decide to reject the terms and walk away from the deal and pursue other opportunities.

There are a few items that must be included in a purchase agreement:

1. Names of the buyers and sellers involved.
2. A legal description.
3. Purchase amount and terms.
4. Offer expiration date.
5. Signatures of everyone involved.

This document is also where you can create unique terms to the agreement:

1. Earnest money
2. Property terms and conditions
3. Allowances, restrictions, and boot (like-kind assets)

The purchase agreement is used to create the remaining documents so complete and correct information is very important. Be sure to read through the entire purchase agreement and have a lawyer review before signing. This is an important step in the buying and selling of real estate and should not be over looked. If you have any questions about the terms of the real estate purchase agreement you should have an attorney, or tax professional, in Albuquerque, New Mexico to review your options with you.