Owner Carry Contracts? I Want Someone To Buy My Home and I'm Willing To Carry Back a Loan for them. How do I Execute this with Minimal Fees? 

9-1-2010 

Owner carry back loans are and will be even more popular in the future when interest rates climb and when people don't have income, assets and or credit to get a conventional loan through a bank. The harder it is to sell a home the more creative the homeowner will need to get and this could be the only option the homeowner will have to sell their home.

"Wait a minute back up, what exactly is an owner carry contract?" An owner who has equity in their home or a home that is paid off (free and clear of any loans) can choose to sell their home to another person and then take that equity they have and collect payments. In a sense the homeowner would act as the bank. He or she would be responsible for collecting a downpayment and collecting money every month until the loan is paid off. It's a very useful tool to sell a home because a homeowner might want to loan money to someone that a bank would not touch if it means they are going to buy their home. This creates a win-win with both the homeowner and the buyer. The risk is limited for the homeowner because if they collect a large downpayment then should the homeowner not pay they can foreclose on them and get their home back and the seller keeps the downpayment funds. 

There are many things you need to do to protect yourself when trying to pull off a seller carry back loan transaction. If you've negotiated the sale with someone verbally and just need someone to put what you've verbalized into a real estate contract and protect both parties moving forward than you've come to the right place. There are many many things that you could do wrong so paying someone a small fee to make sure that you never have to deal with hundreds of thousands of dollars of real estate or debt is well worth it. You should be able to hire someone for $1500 up to 2% of purchase price to make sure that all parties are completely satisfied. If you're able to find the buyer it's a lot cheaper to pay 2% total to close a home than 5-8% using real estate agent to sell your home. The hard part is finding the buyer. The real estate agent will be able to expose your home to thousands of people and that's why they are so valuable. 

1. The person you hire will be able to execute a real estate purchase and sale agreement.

2. The person you hire will be able to put the terms of the loan and form the note for the transaction. Items like interest rate, late payments, amortization schedules, insurance, escrow, collections and much much more.

3. The person you hire will be able to produce all the state approved legal forms that are necessary when it comes to selling a piece of real estate. 

4. The person you hire will be able to make sure both parties are protected by securing a title insurance policy. 

5. The person you hire will be an advocate to make sure that all the taxes and interest are prorated

6. The person you hire will make sure the home is recorded on the date and time that it needs to be recorded.

7. The person you hire will make sure that downpayment funds are deposited into a non-biased third party licensed by the state.

8. The person you hire will be able to assist you and complete the transaction from start to finish.

I've read enough I'd like Pohl Real Estate to put this transaction together. 

Back to Portland Real Estate News Archive

Add This Page To Your Reading List: