One of the emerging markets in today’s real estate environment is special financing. We are seeing more and more people looking for homes for sale with rent-to-own, lease options, land contracts, or another type of owner financing due to the tight restrictions banks have placed on borrowers lately.
Here are my observations of these sellers in this market. Most of these sellers are investors, they usually have a network or do their own marketing to find their own buyer instead of using a Realtor. They usually buy the property for much less than they are asking and offer owner financing to start getting income right away and are protected to get the property back if the payments aren’t made. If they are not an investor, it might mean they have tried to sell their home, but owe too much so they’re hoping to find someone willing to pay more for the convenience of owner financing. These non-investor sellers are more likely to list with a Realtor. As of the writing of this post (11/1/19) there are 107 listings out of tens of thousands in NE Ohio and parts of WV that offer some sort of seller financing. Their average time on the market is about 150 days which mean there are a lot that have been trying to sell them overpriced. The average days on market for the rest of the market is less than half of that at about 60 days. Many times seller financing listings are going to require more money down than a lender would require for security deposit and commissions. If you are a buyer, seller financing may not be the market you want to go after for a few reasons. They are very difficult to find and there’s a chance they are overpriced. This is not the rule, just an observation.
With the right information, lender financing is not difficult to accomplish. There are loan programs for low credit or low or even no down payment. Many times the seller may be willing to pay for your closing costs. There are grants from the state of Ohio to give you significant funds towards your down payments and closing costs. A good Realtor can help you find the right loan for you or find you the right lender that will help you work towards getting approved for a loan.
If you are a Northeast Ohio resident looking to buy real estate in this fashion, you can make a request below to get a list of all the owner financing listings that are working with a Realtor to sell their home and have a no-obligation consultation about this market. The rest of these sellers are going to be able to be found through investor networks, online classifieds, and just asking around. Be careful though, because this market is a target for scammers, be sure to meet the seller in person at the property and verify they own the property before giving them any money.
If you are a seller that wants to sell by owner financing, talk to a Realtor about what goals you accomplish by that method and determine the right path for you. Being that there is very little competition in the MLS and these properties are difficult to find, you will have plenty of buyers as long as your terms are competitive.