Has anyone ever owner financed a house?

[mom-from-missouri]

We have a couple that is interested in us carrying the note for a house we have for sale. They are to contact us back next week with with their terms, while we think over our terms....

I am asking $140000 for the house. I do want a good sized down payment, or else why sell--I could continue to rent and get an income from it every month.

We have sold outright before, but this is new to us. We are just trying to get ideas before we talk to the couple again, and before we get our attorney involved.

Has anyone done this?? Was it a good or bad experience?? Any advice or ideas??

[humandraydel]

You DEFINITELY want a down payment. You also want to MAKE money from this - otherwise, it's really not worth it. All over the country there are banks that now "own" properties that got foreclosed upon. The problem is that prices have fallen and the borrowers have NO skin in the game - in other words, they didn't pay a downpayment so they have no incentive NOT to walk away. My point is that you are taking a risk by providing financing - you need to get paid for that risk. I might also suggest providing only a balloon loan - with repayment in 10 years at the most! Bottom line: if you do this, you DEFINITELY need to get an attorney involved! They sound expensive, but it's a lot cheaper than messing up a legal contract like this and getting burned in the end!

[mom-from-missouri]

We were thinking a 20% down payment?

[Ima saver]

We did it once. At first it looked like a good idea, but then he skipped and quit making payments. We lived in another state and could not find the guy. It took us a year to get the house back. By then, someone had moved in (illegally) and we could not get them out until we got the house back. They trashed the house, so we sold it at auction and lost a lot of money.
I would make sure that they put down a big down payment. When people want you to owner finance, that usually means they have real bad credit.

[simpleyme]

we would never sell that way ,too risky but the thing is you get to keep the interest ,as you are the bank ,that's pretty attractive

[mom-from-missouri]

Actually I think they have no credit--they don't use banks unless they have to. They are a Mennonite family-they own their own vehicles outright. They have no savings or checking accounts. He works for his father in construction and she bakes and sells her products.

[Ima saver]

Maybe his father would co sign with them??

[simpleyme]

well if you are feeling good about them and get a good downpayment you get to collect the interest a lot of money the fisrt few years ;-)

[katwoman]

Actually I think they have no credit--they don't use banks unless they have to. They are a Mennonite family-they own their own vehicles outright. They have no savings or checking accounts. He works for his father in construction and she bakes and sells her products.

This is way too "under the radar" for me. I mean, come on, not even a bank account? How do they get utilities in their name?

If the guys father has a construction business then he's got accounts payables/accounts receivables and that means he's got a banking relationship with a bank. How does he pay his son? Cash or a regular payroll check? See where I'm going? IF there is NO financial record of any kind on this prospective buyer how could you possibly hold him accountable? I guess you can always ask for past tax returns but be wary - I personally know someone who had phony tax docs drawn up to get a regular mortgage and then did it again to refinance! She never got caught but then she always paid her bills on time.

[InDebtInDC]

Please seriously reconsider doing this. The bank has a lot more money to spread around in case a borrower defaults and destroys the house. You shouldn't do this unless you can finance 100s of loans at the same time.

[mom-from-missouri]

The contract we are looking at states that if they default, the house comes back to us after 5 months. Their 20% would more than pay off the little bit that I still owe on the house.
Where this house is located there are many Amish and Mennonite families--this is the norm on how they operate. They do pay taxes-its withdrawn from their paychecks-they either cash the paychecks at the bank (no account required only a state photo id) or cash it at their employeers. Any other taxes such as property & real estate taxes they get a money order for.
Utilites don't require a bank account to provide service. All they would need at this house is electric. (there is a well, they don't use internet, and they have a cell phone).
You often see them paying their bills in cash.
I will also add that this family has lived in the community for at least 4 or 5 generations. The fathers business is well known and respected.
The couple is also looking at another home as well. They have narrowed it down to 2. The other one has more land however, so they may go that direction.
Also, just an interesting note--his father and grandfather are the ones who put the orginal roof on this home when it was built in the late 50's. And, this man and his father reroofed it for me about 7 years ago. All their roofs come with an 11 year guarentee.

[simpleyme]

good luck ;-)

[mom-from-missouri]

Insurance is also a requirement in the contract. DH has done the math.

I guess I am confused why everyone keeps saying the father needs to cosign. Why??? This couple is in there 40's. The father is also mennonite and also avoids banks. I have been in the lumberyard before and witnessed some of these people buying building supplies and pulling out $2000 from their pocket and paying cash. If a family gets in trouble, they tend to help each other out-several years ago one family ad a fire and within 3 weeks the people of the church had rebuilt the home.

If I get the house back, and get to keep what they paid down and paid monthly, then why would I need someone else to co-sign. I guess that is the part I am not understanding.

[simpleyme]

i thought you were talking about younger folk

[mom-from-missouri]

We heard from them about 15 minutes ago. They are looking at putting at least $70,000 down. Thats about half of the asking price.

Why sue? What is there to sue for? Even if they did default, I'd get the property back, keep their money and could resell it again .

As a Christian, I don't believe i suing people over an issue such as this.