It is widely understood that that the housing market is in a recession and the need for cash is great. Individuals, Small Businesses and corporations can’t get loans. There is pressure on prices in the housing market and traditional financing methods aren’t helping the situation. So what do you do? You look for alternative options to get the benefits that you want and you find Owner Financing as the best option.
Recent housing market statistics show the trend of increasing for-sale inventory. An abundant supply of regular homes for sale compete with an increasing inventory of foreclosed or repossessed properties entering the market. Because buyers continue to face the ongoing extraordinarily tight lending environment, they are unable to secure mortgages to work down the inventory. Sellers and buyers are facing a type of inactivity unseen in previous housing markets. Consequently sellers and buyers are looking for alternatives and seller financing offers the best solution, especially when you have a mortgage note for sale.
The trend surfacing out of this market is the oldest form of lending that is know least about and the form of lending that most buyer, sellers & real estate professionals have little or no experience implementing. Listings for homes with seller financing available are becoming more commonplace nationwide. These types of arrangements were rarely seen and not readily available during the years of easy credit that built the housing bubble and ultimately helped usher in the real estate crash. Now banks, gun-shy as ever, are literally keeping motivated homebuyers on the sidelines, motivated sellers are taking financial matters into their own hands and rightfully so.
For those sellers lucky enough to have substantial equity in their home for sale, owner financing is making a strong come back. Although home prices have fallen substantially, enough sellers are either free-and-clear owners or have a small outstanding mortgage balance that it is still possible to use equity to hedge their own private mortgage note for sale to the right buyers. Home sellers previously adverse to dealing directly with the long term financial aspects of their home sale are warming up to the idea of becoming their own private bank.
Many property sellers have stayed away from seller financing because they mistakenly believe that creating a note is not a viable solution for selling their home. After all, if they can’t walk away with enough cash to provide the down payment on another property, they’ll be powerless to replace the property they’re selling. As a consequence of this common misunderstanding, many sellers feel compelled to stick with conventional real estate methods, limiting their options and missing out on the benefits that seller financing could offer them.
Depending on how the owner-financing grows in the future, we may soon see market correction mechanisms mature to remove the barriers of the current inventory vs. funding stalemate. The primary players today (traditional mortgage lenders and conformist property owners, many of which are banks themselves or government entities who’ve repossessed the home) may find themselves on the sidelines as new paths to navigate the distressed housing market are blazed by motivated participants, the American People.
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