Pros and Cons of Owner Financing

Typically your home is the largest single investment a person ever makes. Many people use some type of lender financing to purchase their property. The cost of lender financing is high, and it usually involves some type of creditworthiness, credit scores, and other underwriting guidelines.

Did you know there are other options? One such option is owner financing, which happens when a home buyer finances the purchase directly through the seller – instead of through a conventional mortgage lender or bank.

Owner financing sometimes referred to as “Seller Financing”  is a financing strategy whereby the seller doesn’t hand over any money to the buyer as a mortgage lender would. Instead, the seller extends credit to the buyer to cover the purchase price of the home, less any down payment, and then the buyer makes regular payments until the amount is paid in full.

Here are the steps to owner financing.

  • buyer signs a promissory note to the seller, which spells out the terms of the loan
  • including the interest rate, repayment schedule and the consequences of default
  • owner keeps title to the house until the buyer pays off the loan
  • Much like when you buy a automobile
  • Terms are usually short-term loans, unlike traditional financing

This type of financing could be good for the SELLER and the BUYER. Why? Let’s examine the PROS and Cons from both the SELLER and BUYER perspective.

Pros for buyers:

  • Faster closing – no waiting for the bank loan officer, underwriter and legal department to process and approve the application
  • Cheaper closing costs – no bank fees or appraisal costs
  • Flexible down payment – no bank or government required minimums
  • Good option for buyers who are not able to secure a mortgage

Pros for sellers:

  • Can sell “as is” – potential to sell without making costly repairs that traditional lenders might require
  • Good investment – potential to earn better rates on the money you raised from selling your home than you would from investing that sum other ways
  • Lump-sum option – the promissory note can be sold to an investor, providing you with a lump-sum payment right away
  • Retain title – if the buyer defaults, you keep the down payment, any money that was paid, plus the house
  • Sell faster – potential to sell and close faster since buyers avoid the mortgage process

Cons Of Owner Financing: Although owner financing can be beneficial to both buyers and sellers, it also has some legal, financial and logistical disadvantages:

Cons for buyers:

  • Higher interest –  interest you pay will likely be higher than what you’d pay to a bank
  • Seller approval – even if a seller is game for owner financing, he might not want to become your lender.
  • Due on Sale clause – if the seller has a mortgage on the property, his bank or lender can demand immediate payment of the debt in full if the house is sold (to you). This is because most mortgages have “Due on Sale” clauses, and if the lender isn’t paid, the bank can foreclose. To avoid this risk, make sure the seller owns the house free and clear, or that the seller’s lender agrees to owner financing.
  • Balloon payments – with many owner financing arrangements, a large balloon payment becomes due after five years. If you can’t secure financing by then, you could lose all the money you’ve paid so far, plus the house.

Cons for sellers:

  • Dodd-Frank Act– new rules apply to owner financing: balloon payments may not be an option, you might have to involve a Mortgage Loan Originator (check state law).
  • Default – the buyer could stop making payments at any time. If this happens and he doesn’t just walk away, you could end up going through the foreclosure process.
  • Repair cost – if you do take back the property for whatever reason, you might end up having to pay for repairs and maintenance, depending on how well the buyer took care of the property.

In  Summary: 

Owner financing can help seller the property faster and help buyers owner homes – even if they would be unable to secure a traditional mortgage. There are advantages and disadvantages that both buyers and sellers should be aware of when considering or engaging in an owner-financing arrangement. A qualified Real Estate Broker and  Real Estate Attorney should be consulted to answer any questions, plus write the sales contract and promissory note.

10 Commandments For An Enthusiastic “Team”

10 Commandments for an Enthusiastic “TEAM”

  • 1  Decide to WIN….its an attitude.
  • 2  Speak positive about each other & organization.
  • 3  Think BIG….
  • 4  Be Excited and OPEN to new ideas….look for reasons they will work.
  • 5  Help others reach their goals and take pride in their victory.
  • 6  Verify & Validate before you SPEAK about 3rd party information.
  • 7  Do EVERYTHING with enthusiasm — its contagious!
  • 8  Whatever you want…Give it Away!
  • 9  Have Fun!
  • 10 Don’t lose faith…never give up!

Leadership is the ability for everyone on the team to roll up their sleeves and get to WORK!                         You don’t win with the best talent – you win with the players who are able to “play well together”.


Moving –What about the Children?

As a Realtor – we get many telephone calls from sellers asking questions–“are houses selling these days? How long will it take to sell my home?” After providing information, the caller comes back this question, “we want to move to a new house in this area with these number of bedrooms and this many baths,for this price, can you help?

Typically these questions and statements are music to my ears. So what do I do? I get busy searching for homes that meet client’s needs—searching by bedrooms, baths, and price. You know — I could really use a new listing and buyer today…This is what we call a double deal.

I began thinking, rarely do we stop and think about how this residential move is going to affect the children. Everyday families with children are effected when the parents make a decision to sell and buy a new house.

Why is the seller moving? Reasons can vary. It can be job relocation, military orders, purchasing a bigger home or just downsizing. Either way when the family decides to make the move, it affects the children. Ever stopped to think–what about the children? What’s the long term effects?

Let’s face it, moving can be traumatic. Some children may be happy, and other children could be sad. What could make the difference in the behavior of the children? I believe it’s two things: information and involvement.

Think about it! If the children was informed and involved about the move, this could make minimize the stress.
• why move – better job, better school, military
• what is going to happen
• when is going to happen
• how will it happen, and even
• where the new house is located—in/out state

Perhaps it would be smart to ask the children their opinion about the move. Children are little people, but they still have feelings and should be considered. You can learn a lot from the children, just ask them. It’s never too early to discuss the moving process, such as, house hunting, location, or neighbors. This could reduce child’s anxiety and fears.

It’s the parent’s responsibility to make the moving transaction is as smooth as possible. Moving can be traumatic. Therefore, parents remember your children need a period of adjustment. Don’t be surprise if the child is anxious with unusual sleep disorders. However, attention to details during this transition period can result in a successful move for the entire family.

Here are TEN helpful tips to consider when making a moving with children.

Tip#1 Let children accompany you when viewing properties. When you find a house that meets the families’ need, let the children “play” pick your bedroom. Make it fun
by allowing children to visually place the furniture in each room. Ask for their opinion.

Tip #2 Draw a picture by saying can’t you see yourself running and playing in the back yard & enjoying the swing set. Engage them – make them feel that they are part of the buying decision. If they cannot be present for the viewings allow them to look at photos while you discuss in a story telling fashion. Best results could be videos.

Tip#3 Remind them that the new family & new children are excited about moving into this house and just as they did several years ago. This should motivate the children to help parents clean and leave house looking nice so the new family can enjoy it.

Tip#4 Let children have a “pizza packing party” and sleep over with their friends. Remind them to talk about how much fun they had with neighbors and their take turns discussing their “best” memories of each other. Parents take lots of pictures and even video the event for children – they’ll want to see when they get sad and lonely.

Tip#5 Drive by the new house (if possible) and identify places in the neighborhood to familiarize them with stores, parks, neighbors, schools, etc. Let them know that the new house will be the best thing for them and they will be happy once they get settled.

Tip#6 Throw a “Welcome to our new house” party for the neighbors. Your children can officially meet and greet
new friends which will make them feel welcome. This helps your children on the first day of school, so they won’t feel “out of place” plus they already know some of students on campus. See parents -it’s the little things that count.

Tip #7 Take them on a tour of the new school to meet the teachers and faculty. This helps them bond with the building so that it doesn’t feel like a “strange” place.
Children can be very adaptive to changes when strategies are put in place for their arrival.

Tip# 8 – Help them write a goodbye letter (include photo) to their old friends and mail it before you actually move out the house. Starts to bring some closure to the children prior to the actual move.

Tip#9 – Remind children that you own a car and they can visit your friends often, if possible. If not possible to drive, let them know you will not forget your former neighbors and will visit them in the near future. Don’t forget to say “you are just a telephone call away.”

Tip #10 – Involve your children in group activities, music, athletics similar to the ones in former neighborhood.
The older your child the more difficult it could be in accepting the change. The sooner you can determine the available school activities the better the child will accept the move—especially if the school has a winning team!

Remember parents, when moving to a new home, you must be patient, because your children are leaving behind a lot–home, school and friends for new unfamiliar territory.
Continue to reinforce the positive aspects of the move, by all means, parents remain calm.

The next time my telephone rings, and the caller says, “I need to sell my house,” the first question will be – are there any children—and do they know you are moving?

If yes, I’ll send a relocation kit’s pack.

I Don’t Like Tuesdays

It’s Tuesday morning, when you arrive at the office early. Everything seems normal. Co-workers in the break room discussing this weekends events, and the management team is huddled in the Operations Manager’s office—looking like they’re reading a football play.

The last thing you expected this morning was an invitation to the management team’s meeting. Everyone was smiling and they offer you a seat. You slowly sit down not knowing what to expect—because it’s Tuesday. No team meeting is ever on Tuesday. Because you generally perform your job above average, you qualify for half day off Fridays due to your dedication and commitment to the team.

Today, Tuesday is going to be different.

The Operations Manager opens up the meeting by stating all the great attributes you have exhibited and how you are team player and how the company is very satisfied with your job performance. He goes on and say, however, some unpopular decisions will have to be made. Management has decided that several positions will be eliminated and other positions will not be filled – which through attrition will help the company with its new goals. So now you hear these words……we have enjoyed working with you – but we are forced to reduce our staff and your job is one that is being eliminated. Now we don’t want you to take it personal, see its just business, it’s the position we are eliminating –not that we are dissatisfied with your performance in any way. Yadi, yadi, you know the rest.

So tell, me what are you thinking? How are you feeling? What will you do? Who will you tell first? Second?
Do you cry? For goodness sake don’t cry. I am sure you
have a hundred questions, but you can’t seem to open
your mouth to ask even one question. You just get up
and say…..ok….and sort of drift out the room. You’re not sure how you got to your desk. You just sit there and look in a daze. Now co-workers begin to come to your desk asking questions. You don’t say a word. Water is welling in your eyes…you blink…..and now there goes the tears….

Understand in 2013 companies are sending employees home by the droves…especially the mature experienced workers.

So what’s the solution? How do you prepare yourself for Tuesday? The day you get invited into the boss’ office– when they let the hammer down gently on your head. What recourse do you have? Can you appeal the decision? You continually say…I’m mad as h*ll. You ask questions like–how could this happen to me.

Or better yet — what did I do?

If you have not been downsized, right sized, job eliminated, or just plain old fired—and don’t know how this feels…let me tell you it is not a good feeling at all. You begin to have feelings of guilt, rejection and feeling unwanted. You get a headache, and you feel nauseated. You just want to die….or so you think.

Believe me based on the world economy, anything is possible. Let’s look at some strategies for preparation if you are asked leave…known as PRO-EXIT strategies.

Strategy #1 –Continue to look for employment—stay in interview mode. Don’t get so comfortable with their job that you actually begin to think it’s yours. Always be looking for employment opportunities. Keep your options open.

Strategy #2 – Learn everything you can about your peer’s job.. I mean everyone’s job; downline, upline and sideline. You never know who is watching you and what skills you can gain that will lead you to the next job assignment.

Strategy #3 – Volunteer for community outreach organizations. Human Resource Directors and corporate leaders are usually heavily involved in community reinvestment activities – networking can improve your opportunities for connections for future employment.

Strategy #4—Listen and pay attention to what is going on within your company. Ask management questions about the future of the company. Don’t assume just because you are given a half day off on Friday, and a good evaluation—all is well. Do some research on the company (google) and see what analyst might be saying. Most times the handwriting is on the wall about the future of your company.

Strategy#5—Have a part-time business (Independent Contractor). You should always have a business on the side, something for yourself, which can help you earn money part-time, as well as help you improve your personal growth and development skills. This could lead to future employment opportunities.

Strategy #6 – continue to educate yourself. You are never too old to learn. Readers are leaders. Attend college or take necessary courses that will help you master your skills. Let the company know you are someone who cares about enriching yourself and others.

Remember no job is promised to anyone. You must become the CEO of your life. Be proactive and do everything necessary to position yourself for success.

I agree with Mamie Brown’s, baby boy, Les Brown when he said you must “Accept responsibility for your life. Know that it is YOU who will get YOU where YOU want to go – no one else.”

Today could be Tuesday.

Are you ready for a change?

Are you doing what you enjoy? Or are you just working somewhere because you get a check on Friday, or every other Friday and it pays the bills?  There’s  nothing more boring than doing the opposite of what God has called you to do.  Are you ready for a change?

“The greatest thing about man is his ability to transcend himself, his ancestry, and his environment, to become what he dreams.”              (Tully C. Knoles)

Think about it.  What would you be doing if money was no problem? How would you spend your time if you could work and have fun at the same time–and of course make unlimited income?  Sounds interesting? Want to hear more?  

As a busines owner, here’s what I have found out…most Americans are “unconsciously comfortable” (UC). Yes that’s right….they are like robots..they just going along to get along….not using the talents that GOD has given them.  What talents are you hiding? 

As I travel, I find consistent trait with Americans over 30– they have stopped dreaming.  Right. Americans do not have the “fire” in them anymore, as if someone has turned out the lights. Almost a sense of hopelessness. America what has happened?  Is it the 2001 economy?  Katrina? Or was it the fall of the 2007 economy? Or the wars? What has happened to us?  Will we ever get back to those days when we were singing “O’Beautiful” or talked excitedly about the American Dream? 

I have a few suggestions for getting Americans back excited again.

Step #1: Believe in yourself–and know that people are genuinely good. Don’t consider what the (bad) news is telling you. Turn off the television. Read books and listen to millionaire motivational speakers–because there are many. Some of my favorites are: The Holy Bible, Lisa Nichols, Les Brown, or George Fraser, Dennis Kimbro, Michael Roberts, Glinda Bridgeforth, Dr. Lois Frankel, Rev. T.D. Jakes, or Dr. Ida Greene, just to name a few.  Feed your mind with positive thoughts & affirmations daily. 

Step #2: Seek new information. The world is ever-changing. Don’t continue to use yesterday’s strategies hoping for tomorrow’s success. Be willing to have an open mind to new ideas and different ways of performing the tasks.  Different doesn’t mean better, but it could increase your profits, the bottom line.  Sometimes change can be good.  Commit to attending seminars, workshops and webinars for updates.  Consider new technologies for receiving information. Because information is moving at the speed of light, therefore, it’s not humanly possible for you to be present at each and every event, so embrace videos, You Tube, and conference call technology. 

Step #3  Make a committment and take Action.  So many books and tapes are sold….but how many people are willing to put into action the game plan?  What are you waiting for? Who are you waiting for?  The world cannot change until you take ACTION.  You be the one who take the first step forward toward your dreams.  What’s needed for you to move?  Like Nike said…”just do it.”  Like Art L. Williams said, “Just do it and do it and do it some more.”  Yes it’s about you. The world is waiting on you. Do you.  Are you ready for a change?

Step #4: Be Yourself.  There is nothing in the world worse than a “fake” person.  Everyone likes the “real thing.”  Don’t emulate others and try to copy them…because you cannot fool us.  Don’t have a “me to” mentality.  You be the Picasso.  Be the best YOU that the world will ever meet.  Be unique.  There is no one with your smile, your hair, your finger prints, your weight/height, no one but you.  Embrace your uniqueness. God made you–focus on finding the hidden jewels within. 

Step #5: Success is OK. It’s ok to feel good about making money and being successful. Daily affirmations can help you with changing your mindset if it’s negative about money and success.  Here’s an example: “I affirm MY money will be used to good purpose. Today I start a new day, a new month, a new year and I am a new me. I accept that I am a success. I am successful in all I do, or will become.  The more you give the more you get.  I expect to receive money for I am worthy of it when I deliver excellent goods and services.  I know prosperity is a state of mind, as you think you become.”  (Dr. Ida Greene)

Thank God we live in a country of free enterprise. The only country in the world that refers to itself as “Land of Opportunity”. 

Yes, we are blessed…..I’m excited!

So, tell me—are YOU ready……for a change?