I currently have a 3 year lease option on a property. I have made improvements and want to sell the property. I am familiar with sandwich lease/options but have a buyer interested in owner financing instead of a lease/option.
My question is: Can I offer owner financing with a contract for deed if I don’t yet hold title? How? Obviously, the financing would have to include a balloon payment prior to my 3 year option expiring. Any suggestions or previous experiences would be appreciated.
StuartD?
How’s your relationship with the seller?
What are the numbers?
Hopefully your option price is the mortgage balance, or at the worst, a small amount above that?
If this is the case, find out the numbers the buyer has, monthly, amount down, and screen them of course.
At the same time, see if the seller will convert, and sell the house to you now.
Exercice your option, and buy the place subject to the existing financing.
If your price is the mortgage balance, this is simply paperwork.
If it’s a small amount of cash above, perhaps your buyers down will cover that, and you can still buy subject to, and pay the seller cash.
or
You can buy/exercise now, subject to, and secure whatever you owe the seller, against the property.
Your buyers position with you, naturally would be behind that.
Essentially, you’d be wrapping your buyers financing, with either a deed of trust, mortgage, or land contract type of agreement. (I suggest the latter), around the underlying financing, and keeping any spread.
If the seller will wait for their profit, if they are getting any, just make it a lein, with no payments, and payable upon refi or resale. (when your buyers balloon comes due, the seller gets paid. Perhaps offer them straight up interest on it, or something, all payable later.)
Barring that, I don’t really see how you could seller finance, unless you hold title, or have an installment contract yourself. Even then, some places that may not work.
Naturally, when owner financing your buyer, have your attorney draft up docs that comply with local laws etc.
HTH,
Jim FL
You are not the owner to sell on owner financing.