Seller Financing – 8 Types of Seller Financing

August 17, 2016

Seller costs is acutely able because the client and the agent accept ascendancy over all the agreement of the transaction. That agency that there are around absolute applications for agent financing. However, all of the options for agent costs abatement into just a 2 above categories: costs afterwards the closing and costs afore the closing.

The afterward 4 types of costs action afterwards the closing:

1. Chargeless and Clear Financing – When a agent owns a acreage “free and clear” there are no liens or encumbrances on the property. In this bearings the agent and the client are chargeless to accomplish any agreement they wish to in adjustment to accomplish a accord successful.

2. Disinterestedness Alone Financing – This blazon of costs agency that the agent alone affairs their disinterestedness in a property. The client is amenable for accepting new costs to bribery all of the seller’s encumbrances and liens. The agent is again chargeless to accounts the disinterestedness in the property.

3.Wrap Costs - This is aswell accepted as “subject to” or “blanket” financing. In this bearings the client takes the acreage “subject to” the absolute mortgage. The client is amenable for authoritative mortgage payments to the agent and the agent is amenable for authoritative mortgage payments to the aboriginal lender.

4.Combo Agent Costs - This blazon of costs is a aggregate of the costs options #2 & #3. The client can “wrap” the basal mortgage and accounts the seller’s equity.

The next 4 types of agent costs action afore the closing:

5.Purchase Option – Any time the client gives money to the agent (option payment) for the appropriate to acquirement the acreage at a accustomed amount (option price) and aural a accustomed timeframe (option period) the client has a “purchase option”. This is a anatomy of agent costs because the agent still is amenable for the acreage and any payments until the client purchases the acreage (exercises their advantage to purchase) or the advantage expires.

6.Extended Closing – An continued closing is agnate to a acquirement advantage except that the continued closing is done with a Absolute Acreage Acquirement Contract (REPC). In the continued abutting the closing borderline is continued or put into the approaching decidedly added than a archetypal absolute acreage purchase.

7.Open-ended Closing -The advancing abutting is aswell done with the REPC except the closing borderline is angry to a approaching accident (such as the achievement of an accession or remodel). The closing alone occurs afterwards the approaching accident has occurred or has been completed.

8.Seller Partnerships - In this bearings the agent may advertise the acreage or may absorb ownership. In either case, the agent contributes the acreage (and possibly some capital) as their contribution. The client would accord the plan and ability (and possibly some capital) to actualize or enhance the acreage value. The acreage would again be refinanced by the client or awash to a third party. The agent would get his disinterestedness and basic addition added an agreed affiliation breach of the added profits on the transaction.

The abundant affair about these 8 types of agent costs is that every advantage can be acclimated to account both the client and the seller. Using these agent costs options a agent can in fact get a client to appear in and advance their property, do all the fix-up and adjustment plan at the buyer’s expense, and the client is aflame about accomplishing the work! I’ll explain how this can be in my next article…