How To Sell A House With Owner Financing in North Carolina
Ever thought about how you can sell a house with owner financing that you own in North Carolina?
Have you been trying a more traditional route with a local buyer, but it’s held up with appraisal contingencies by the bank?
Did you try to sell a house to another local North Carolina investor, but was disappointed or insulted when they offered you nearly 50% of the value of your home?
If you’ve answered yes, I’m going to teach you how you can sell a house with owner financing, make passive income, close quickly & get maximum value for your North Carolina house.
What is Selling on Owner Financing?
It’s really quite simple, selling a house with owner financing is where you (the seller) negotiate the terms and conditions of selling your house to a buyer, without involving a bank. The beauty of selling a house on owner financing is that you have limitless creativity on how you come up with the terms.
A normal sale with a bank usually involves coming up with a 20% down payment, non-negotiable interest rates, non-negotiable length in months/years. They want to fit you into their box.
When you sell a house with owner financing, you can do whatever terms you want. You can do a no or low down payment with higher payments, or a higher down payment with lower payments. You can do delayed down payments, balloon payments, or whatever else you can think of.
The real beauty is that you truly work with the buyer to come up with a true win-win solution.
Why Should I Sell with Owner Financing?
There are many reasons why:
- Passive Income – You (the seller) are acting as the bank and someone is making monthly payments to you.
- Less Tax Burden – When you sell your house, you might have a large capital gains tax bill. As of this writing, you could owe 15-20% or more in capital gains tax on your sale of house in North Carolina. When you sell a house with owner financing, you only pay taxes on the income you’ve collected for that year.
- High Flexibility – As noted before, you can negotiate anything and everything you want through seller financing.
- Quick Close – Because you’re not involving the bank, you don’t need to wait for them to approve and come up with a loan.
- A Word of Caution – I would NOT advice selling to a more traditional homeowner on owner financing. The reason is because you don’t have an ability to vet the buyer to ensure they are capable of making payments to you. I would only advise selling to an investor (like me :)) because we see the house as an opportunity to add value to their business. In other words, we would not agree to terms that would put us in a situation where we couldn’t make payments.
- Higher Price – With seller financing you can get more for your house. The reason is because in a cash sale, the trade off is equity in the home for all the cash now. In seller financing, you don’t have to give up equity for letting go of the home entirely. Also, you can sell your home at a higher price, rather than negotiate an interest rate.
Examples of Seller Financing
Traditional – Own a House worth $100,000, with no mortgage owned on the home
- Option A) Down payment of $5,000, Monthly payments of $264 for 360 months (30 years), 0% interest.
- Option B) Down payment of $0, Monthly payments of $450 for 360 months (30 years), either 3.5% interest for $100,000 sales price or sale price of $162,000
- Option C) Monthly payments of $255 for 360 months, with 2 delayed down payment of $4,000 due after 6 and 12 months of ownership, 0% interest.
Wrap – Own a house worth $100,000, with a loan balance of $50,000 and $50,000 equity. Existing monthly mortgage payments of $350.
A “Wrap” agreement or sale is how you sell a house that has an existing mortgage. There are two main ways of doing this:
- Option A) Buyer takes over the existing mortgage (this is called “subject to” or “contract for deed”) and finances the owners equity using down payments, balloon payments and monthly payments.
- Option B) Buyer pays the seller a monthly payment that is higher than the existing monthly payment. For example, the buyer could make monthly payments of $555 (15 year mortgage) to the seller. The seller makes the payment of $350 and profits the $205 left over. Once the mortgage is paid off, you start profiting $555 month.
What Happens If The Buyer Defaults on Payments?
In the rare chance I default, THIS IS THE BEST THING THAT COULD HAPPEN TO YOU! And here are 3 reasons why:
- You’ll have the property back, but I’ll have paid down the equity and you’ll have earned some cash flow. You get richer!
- I’ll likely have renovated the property, so the property will be worth even more than when you sold it to me. You get richer-er!
- You can turn around and do it again, or sell the property outright, with less debt to pay off, and you profit more. You get richer-er-er!
Do you need or want to sell?
If you’ve been trying to sell your house in North Carolina, but you’ve been getting low-balled by other cash buyers or haven’t been able to get a buyer to perform with bank financing, call me at (910) 302-8659 or fill out a form below and I’ll make you an offer on your home that works for both of us.
We’ll talk about your situation and see what we can work out. Fell out a form and get an offer today!