by: Marshall Foster
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The concept of seller financing has caught on quite fast and is very beneficial to those who are planning to buy their first Phoenix investment property. It also helps those people who are unable to get a loan from the normal or traditional route. One does not have to deal with financial institutions and since the interest rates are low, you would find that it facilitates investment property purchase. It is possible to even refinance and sell as well as build credit while refinancing for lower payment. Sellers are able to take the 30 year rate and put a spread on it. Given the current real estate market sellers have made seller financing widespread and regular so the process has become quite standardized too.

Sellers want a fast closing with little hassle. Sellers also want to pay as little taxes as possible on the gains incurred. Sellers are anxious to sell; and in a sluggish real estate market, owner-financing is an attractive alternative to losing money while properties sit vacant. Otherwise, homes can remain on the market for years with owners either making mortgage payments out of pocket or renting. Sellers may consider 100% owner financing or partnering with the right buyer of Phoenix investment property for a win/win outcome.

When sellers offer seller financing to buyers, they in effect make it easier for buyers to purchase the property thus enhancing buyer interest. In these times, sellers should be helping buyers buy the property which is in sharp contrast to the opinion expressed by some sellers that financing shouldn't be a seller's concern. There are cases where sellers help in contributing 6% of the sales price which facilitates first time buyers' completion on the sale of their first investment property.

One of the key advantages of seller financing is that sellers and buyers are spared the rigors of dealing with a financial institution and hence there are hardly any problems in facilitating the sale. In the normal course, buyers can get as much as 50-60% financing, with a lower interest rate and a much longer amortization period. But the sellers must be aware of various rules and regulations like by-laws, insurance policies and budgets and also rules and regulations which could be reviewed by lending underwriters. There has to also be a knowledge that the property's master association should allow a sale in the first place, or else the sale cannot occur.

Seller financing is a loan in which the buyer assumes the seller's mortgage while the loan stays in the seller's name. The buyer becomes the owner of the Phoenix investment property when the seller signs the grant bargain, sale deed, or other specific device to transfer the property. Sellers that have built up equity in their home usually don't feel like waiting around 30 years to see a return on their money come out of the investment property. For these situations the interest is often set up on a balloon payment. Sellers also want to pay as little taxes as possible on the gains incurred. In numerous cases, the seller can have most of his needs satisfied by an installment sale rather than a conventional cash sale.

About the Author

Marshall Foster owns several Phoenix investment properties. He also enjoys talking to investors about creative financing for property.

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