Aloha. George Krischke, with Honolulu Hi 5.
Sometimes we get asked about: Is the seller interested in extending seller financing? Maybe, maybe not.
Let’s take a look at what it means.
Seller financing means the seller acts as a bank and extends a loan to you. Sounds pretty good. You don’t have to qualify with a bank, you could just have the seller look at you and say, “You’re good to go. I’ll lend you the money.” The problem is this: the seller can only extend financing to you if he has no underlying mortgage on the property, or maybe a very small balance left. If you try to buy the property, the seller has to pay back whatever loan balance is left with the bank. Most times the numbers don’t work or the seller has too much of a mortgage balance left to extend financing.
The other issue is this: That a lot of seller’s don’t really want to end up with collecting monthly income from you, from the buyer, to collect mortgage payments. Most sellers like to just get the cash and move on; buy something else or whatever plans they have for the money.
Seller financing is not very often an option for a lot of sellers. It also comes with considerable risk to the seller. What if the buyer defaults on the payments, so than the seller has to chase after the buyer and get the property back?
In our experience, seller financing is not a very common issue and most sellers don’t want to do it.
That’s it for today. Thanks for watching. ~Aloha.