424,263
Seller risks headaches- has to send 1099, calculate payments, late fees and maybe foreclose. Rate should be a tiny bit lower than hard money but high enough that buyer doesn't wait 30 years to pay the seller. Candice A. Donofrio 2 percent higher than government rate isn't worth the risk for seller and headache. I would say 3-4 over government rates with clauses- 6% for 5 years an remaining term 10% amortized over 30 years. No way of telling what rates will be in 6 years for single family and higher for condo by one percent as condo more risk
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Bob Crane
Stevens Point, WI
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Lyn Sims
Schaumburg, IL
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Anthony Acosta - ALLAT...
Atlanta, GA
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Candice A. Donofrio
Fort Mohave, AZ
1,097,245
No and maybe. I actually wrote a little ditty about this . . . since I've done them dozens of times.
The seller becomes the bank . . . if buyer can't get a loan FROM a bank, or a private lender who will crank up those costs and fees to their advantage, expect the interest rate for a seller carryback with NO lender fees to be a percentage point/2/more above the very best deal with a bank and that is probably no deal or they would be going to one. This also depends on the property type.
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Lyn Sims
Schaumburg, IL
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Anthony Acosta - ALLAT...
Atlanta, GA
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Candice A. Donofrio
Fort Mohave, AZ
5,286,675
Could not answer that as in 25 years have never had seller financed transaction. But I would expect it to be higher than market rates.
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Richard Weeks
Dallas, TX
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Anthony Acosta - ALLAT...
Atlanta, GA
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Ron and Alexandra Seigel
Carpinteria, CA
472,214
Hard money here is charging 11.99% plus 3 points. Most owner financing goes for 6-8%.
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Candice A. Donofrio
Fort Mohave, AZ
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Anthony Acosta - ALLAT...
Atlanta, GA
1,535,114
It needs to be within a certain percentage of the market rate (in other words, you can't give your friend a 1% interest when rates are 4% or some person you hate a 12% rate).
I've only been involved in one of these transactions and that's all I know about it. Escrow and I believe the seller's CPA advised.
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Lyn Sims
Schaumburg, IL
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Anthony Acosta - ALLAT...
Atlanta, GA
5,584,328
I did many seller financed deals when interest rates were at 18%.... actually they hit 21% for a day or two!!! seller financing and 40 year negative amortizations kept us very busy....
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Lyn Sims
Schaumburg, IL
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Anthony Acosta - ALLAT...
Atlanta, GA
2,229,715
I leave that to the licensed mortgage broker to explain.
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Tony and Suzanne Marri...
Scottsdale, AZ
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Anthony Acosta - ALLAT...
Atlanta, GA
921,504
ONLY in "the higher the risk, the more they pay."
Second rule is non-refundable money of sufficient amount to execute an eviction is SMART.
Third rule is ANYONE providing financing for buyer occupied real estate is exposing themselves to great harm. Buyer occupied financing has received much attention in the legislation passed since the Bank of America caused the last collapse.
An attorney will advise unusual structuring to protect the seller. IF they don't a new attorney is needed.
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Candice A. Donofrio
Fort Mohave, AZ
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Anthony Acosta - ALLAT...
Atlanta, GA
1,646,371
It is case by case, depends on the relationships and experience. I've seen from very low to up to 20% with penalties.
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Candice A. Donofrio
Fort Mohave, AZ
231,279
how much cash is being put in? is it a first or a second? how long? does the seller want it back? lots of questions.. iRS has some guidelines.
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Candice A. Donofrio
Fort Mohave, AZ
1,868,958
920,113
No, it's somewhat arbitrary, but definitely higher than what the bank market offers; the risk is higher as well.
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Candice A. Donofrio
Fort Mohave, AZ
8,122,568
No. Much will depend upon the intentions and the needs.
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Anthony Acosta - ALLAT...
Atlanta, GA
2,839,951
1,045,915
Just like the rest of the contract its a matter of negotiation. I have seen deals in certain circumstances that were interest free but had a balloon payment due at a specific date. But as long as its legal and above board anything can be negotiated.
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Anthony Acosta - ALLAT...
Atlanta, GA
4,434,227
5,094,006
What the market (the buyer) will pay.
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Anthony Acosta - ALLAT...
Atlanta, GA
3,074,289
Anthony Acosta - ALLATLANTACONDOS.COM nailed this one!
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Anthony Acosta - ALLAT...
Atlanta, GA
2,310,110
It's always negotiable. So many variables on that. Would love to have some lenders chime in here. I would like to know about the legal minimum to charge without the seller suffering negative tax consequences. From what I've read 2% - 4% above the going rate is common. This would be a good subject for a blog post.
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Anthony Acosta - ALLAT...
Atlanta, GA
4,720,583
I have had only one client ask about seller financing in my career -- there are so many other options available today. PS -- that client eventually purchased(twice). One transaction was conventional and the other was FHA.
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Anthony Acosta - ALLAT...
Atlanta, GA
5,774,095
Probably higher than market rate! That is my guess.
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Anthony Acosta - ALLAT...
Atlanta, GA
577,850
I have never experienced and situation where any interest would ever be charged to the Buyer.
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Anthony Acosta - ALLAT...
Atlanta, GA
1,713,581
4,322,035
321,664
1,466,257
Christine Kankowski North SD and Temecula A couple of points over the Prime Rate.
602,025
No, it's whatever the parties can agree to. Some sellers will want a higher rate. Some are OK with a lower rate.
6,660,354
Whatever the two parties agree on.
The last time that I did one I charged 18%.
1,260,083
3,988,138
Rates are negotiable and should be determined by the riskiness of the borrower and how much upfront money you get. There is no right and wrong other than what is right and wrong for you.
3,986,473
931,198
2,704,237
5,458,037
Not really. It is negotiable! But pay attention to the imputed interest rules!
683,806
All things are "negotiable" in real estate and then have an Attorney write up the agreement.
4,800,282
3,421,060