First Seller Financing

[Collin Wilson]

I am hoping I can get some advice from people with experience in seller financing. My info:

I sparked up a conversation with the next door owner of one of our rentals (townhouse). He mentioned he was interested in selling the property but had received a lot of “low ball offers.” We discussed options for a few months and agreed on a sales price that we were both satisfied with. I mentioned seller financing to him and he was very interested and we actually agreed (verbally) to terms that day. The terms are as follows :

Sales Price - $136,500

Down Payment - $20,000

Seller Financed - $116,500

Term - 15 years with no prepayment penalty (won’t be exercised anyways)

Rate - Fixed at 3% for the term

Insurance and Taxes will be handled by me separate from the financing.

I assume the buyer will hold "First Trust"? There is an option on the VA sales contract for "seller held trust"…thoughts ?

Now the part that is new. I spoke with the title company we use and they said it would be $310 and they would send off the documents to an attorney to create the note / deed of trust. I assume all they will need is a ratified contract with the seller financing addendum and the terms of the financing. Are there any additional steps you would take or any cautions I should be aware of? I’m working through it but I’m sure there are plenty of things I’m forgetting to think about.