My name is Jeremy, I am the owner of Frontier Homebuyers. If this article describes your situation, and you are looking for some more information based on our experience, please don’t hesitate to call or text me at 267-459-3025 and I’ll help however I can.
With changes to the economy that we’ve seen in recent years, many homeowners are discovering that there are new ways to sell their home that weren’t available before. You no longer have to sell through an agent – you can sell on your own or you can even accept seller financing. Not all homeowners are in need of an immediate cash payment, and would rather receive a higher purchase price, with interest, over time which make seller finance an excellent option. If you’re wondering how to sell a house by owner financing in Pennsylvania , keep reading this blog post and we’ll walk you step-by-step through the process…
Step 1. Is your mortgage completely paid off?
If you have a mortgage on your house, the bank that owns your mortgage will have a primary lien on the property, and any other debt (such as seller financing) would have to be subordinate in priority to the mortgage. This will make seller financing much more difficult. In some states, if you have a mortgage you may not be able to offer owner financing (but you can in other states). If you do have a mortgage in place, there may be other creative options (read more here) beside seller finance that would be more advantageous for your situation. However, if you own the home free and clear, with no mortgage, seller finance could be a great option for you.
Step 2. Talk to a real estate attorney for help in crafting an agreement
With seller financing, you are essentially acting like a bank. The buyer will pay you a down payment and then pay you regular monthly payments until the house is paid off, and then it becomes their house. So make sure you talk to a real estate attorney to ensure that you are protected and obeying all federal, local, and state laws while also protecting yourself! (If you need the name of a good real estate attorney, get in touch with us and we can make an introduction.)
Step 3. Market your house online and offline
Once your paperwork is in place, you are ready to advertise that you have a house for sale. Be sure to let people know that you offer seller financing. There is no limit to how much marketing you should do – the more you can do, the better. You could choose to pay a flat rate fee to an agent to have them post the property on the MLS, Zillow, Redfin, and Realtor.com for you, or do a google search and you will find plenty of self-service options to get your house marketed correctly online.
Step 4. Work with potential buyers
As your marketing captures the attention of potential buyers, work with them to show them through your house. When someone makes an offer on your house, negotiate the price and terms with them and find the middle ground that will ensure a win/win situation. The beautiful thing about seller finance and other forms of creative financing is there really are no rules. You as the seller may have a certain monthly payment, loan term, interest rate, or selling price as your most important metric. The buyer may have a completely different priority! For example, a buyer may have a certain monthly payment in mind, say $1500. The seller may want the highest possible selling price and interest rate, so the term of the loan could be extended to keep the buyers payment low, and the purchase price and interest rate higher so everyone gets what they want. Feel free to call us for help structuring the best option if needed. When you come to terms, have the lawyer draft a final version and sign the paperwork.
Step 5. Collect the down payment and hand over the keys
Once you agree on a price and have signed the papers, collect the down payment and hand over the keys. In most situations, you will continue to own the house and collect payments until the house is paid off, then ownership transfers to the buyer. Selling by owner finance is much more prevalent than you may have thought. Don’t be afraid to explore this option before just listing with a traditional agent.