From Buffalo to New York City and all points north, the Empire State is among the most diverse of all states in terms of culture, geography, and ethnicity. It was admitted to the USA in 1788 as our 11th state. Although New York City is arguably the financial capital of the world, using owner financing to sell real estate can happen almost anywhere in the state.
Owner financing has a history that goes back centuries and is simply an effective way for the people selling and the people buying a property to make a transaction without involving a bank. Each side agrees on a sales price, down payment, terms, and other criteria, and an attorney or title company prepares the documents. The seller of the property becomes the holder of the mortgage note and collects the monthly payments. The note holder can later elect to continue receiving payments or to sell the note to a New York mortgage buyer.
If you are the one selling the property, be sure to:
- Sell to someone with a good credit score – preferably above 650.
- Insist on a down payment of at least 10% on a house that they intend to occupy, and 20% on other property types.
- Have a lawyer or title company prepare the documents to be sure that they are done legally and properly. This act protects you if you decide to hold on to the note, and makes the note more valuable if you decide to sell it.
If you decide to keep the note, be aware that there are risks involved. These risks include:
- Late payments or outright default by the buyer of the property.
- Buyer may let lapse the fire insurance or property taxes, which would require you to get involved.
- The occupants many not maintain the property or even intentionally cause destruction, which reduces the value of your collateral.
Alternatively, if you sell the note, the New York mortgage buyer takes on those risks. If you want to explore the options of selling your note, you may like to know the general process.
- Choose a New York mortgage buyer that you feel good about and that you feel like you can trust. Be sure that they have been in business for at least five years, are licensed in their home state, and have a high rating from the Better Business Bureau.
- Once you and the note buyer have agreed upon a fair price for the note, they will send you an agreement putting the offer in writing and ask you for copies of the real estate documents.
- They will review the documents and order a drive-by appraisal, which generally takes about one week.
- Next, the mortgage buyer will contact a title company to understand whether there are title issues.
- Finally, they will send you documents to you to take assignment of the note, which you will sign and return with your original note and mortgage.
- You should expect to receive your funds within 1-4 four business days following the investor’s receipt of your documents.
Seascape Capital has been in business since 2002 and has been involved with the purchase of many New York mortgage notes. Seascape is fully licensed and has an A+ rating from the Better Business Bureau.