If you’re thinking of selling your home with buyer financing, read on to discover our 6 tips for homeowners who want to finance their buyer in Montreal…
There are many ways to sell a house. You could advertise yours for sale on the traditional real estate market to find out how much buyers will be willing to offer you. You could also work with a property-buying company like Vendre Maison Vite to receive a fair, cash offer. Finally, you could consider selling by financing your buyer yourself and playing the role of a bank in order to sell your home and collect long-term payments.
Self-financing a buyer is an underestimated, yet very useful strategy when it comes to selling a home. Financing your home yourself means imposing your conditions on the buyer, who will make regular payments to you (just as a bank offers mortgages). Without further ado, here are 6 tips for homeowners looking to finance their buyer in Montreal.
Tip for the engaged homeowner #1: Don’t just think price
In a real estate sale, price is only one component. Obviously, you’ll want to set a price that’s fair to both you and your buyer, but there are also many other things to consider (which could earn you far more than a higher asking price).
Tip for the trusting owner #2: Duration
Ask yourself how quickly you want to be paid. Banks offer mortgages with terms of 5, 10, 15, 20 and even 25 years. Would you like to receive payments over such a period of time? Your buyer will be looking for a term that works for him, and he may not want to still be making a payment to you in 25 years!
Tip for the trusting owner #3: Terms
Establishing the terms of a sale is the most important thing, but it’s a step that’s all too often overlooked. Terms include, for example, the amount of the down payment, whether there is a penalty for early or late payment and, most importantly, what interest rate you charge.
Tip for the engaged homeowner #4: Protect yourself
Even if you make a commitment to someone you trust, things could turn sour. Protect yourself now to avoid problems later. For example, it’s a good idea to have insurance, and to make sure that your buyer has it too, to cover all kinds of events that might occur. Also, you should be sure to include a clause in the contract stating that the property will be yours until paid for in full.
Tip for the engaged owner #5: Be prepared for any eventuality
Most owner-financing plans are constructed as ideal plans, i.e. they’re based on what will happen if everything goes according to plan, without a hitch. However, sometimes things happen that are beyond our control. To be able to make the right decision when this happens, it’s important to be prepared for every eventuality. For example, what happens if the buyer no longer wants to buy the house, can no longer make the payments, wants to pay in advance or wants to use the property for an unforeseen purpose? And what happens if your situation changes and you no longer want to sell, or you want to sell faster? Discuss all eventualities with your buyer beforehand to ensure that everything runs smoothly.
Advice for the trusting landlord #6: Consult a lawyer
Whichever way you decide to construct your agreement, you need to consult a lawyer who is knowledgeable about real estate sales. A poorly phrased contract could end up costing you a lot of money; a lawyer can save you a lot of trouble.
