They’re Back! Seller Financing Offers!! I have received three seller financing offers on one of my listings this month.
What are the advantages and disadvantages of a seller carryback? One big advantage is you can defer your capital gain throughout the life of the carryback. If you are selling several properties, or you are just making too much money and do not want to pay Uncle Sam so much in one year, you would be paying the tax on only the amount of money you are paid each year on the payments. Another pro is that you get paid a handsome amount of money over the life of the carryback.
If you are amortizing the loan, it is advantageous to amortize for 30 years with a balloon payment of 5 years or sooner. The cons, you could get your house back. An offer with a small percentage down would most likely not be advantageous. I personally would not consider seller financing unless I had a minimum of 30% down. I have seen offers with very strong down payments, even 50% down or higher recently. You may hope the buyer defaults with that much down.
When I first began my career in Real Estate in 1985, a large percentage of my sales were seller carrybacks. Of course, we all have different financial situations, and you are best to talk with your tax professional and attorney before proceeding with a seller financing offer.
Do you have a question you would like to have answered? Email me at [email protected]. Buying or selling in the area? 602-980-7653, call or text.
