It is a kind of credit selling in exchange for a promissory note and trust deed in favor of the seller. The seller must scrutinize the creditworthiness of the real estate buyer in Maryland extensively to assure that there are no bad debts later.
If the buyer is genuine and has a good credit background, seller-financing can be of large benefits to the seller. Read on to know the benefits of owner financing in details.
1. Higher Price
When a buyer gets a non-qualifying finance on soft terms, they are ready to pay a premium to the seller. The seller can demand a higher price for his property in exchange for the flexible owner-financing terms.
2. Better future returns
Most investors are interested in net cash earnings from the deals. With interest payable on installments by the buyer, the seller will enjoy more earning, the principal as well as the interest amount.
3. Easy closing
The most time-consuming process in closing a deal is the process of completing formalities of new lender financing. It may take months for a buyer to qualify for loans in Maryland. Moreover, you have to compete in the neighborhood for buyers to buy your property. There are very few sellers who offer owner-financing facility. Thus, owner-financing can attract potential buyers who for some reasons may not be able to arrange easy lender-financing. Furthermore, you can save lot of bucks and time by saving expenses on underwriting, broker's commission, time in appraisal, etc.
4. Tax Savings
With seller financing, your overall tax liability decreases. You need to pay tax only on the amount received in each installment. The tax amount on the total value of the property is much larger than tax on each installment. Hence, tax benefit is another major advantage of financing the sale of your own real estate in Maryland.
