As Seller; Seller Financing due diligence

[Tejas Kotecha]

Hi,

I am looking to sell a property and I am being inquired about Owner/Seller financing. I am wondering what kind of due diligence to perform on buyer before carrying the note. 

If there is a forum/blog post on the topic please point me to that. 

Thanks in advance. 

[Jeff Rabinowitz]

The best way to protect yourself is with a sizable down payment that will more than cover any legal costs you might incur if foreclosure is necessary. Beside that you should check everything: income, income stability, credit, references, criminal history, other assets....everything. The higher the down payment the less your risk but if anything troubles you about the buyer you should not proceed with the seller finance terms. You will be living with this buyer for the duration of the agreement and they could be much harder to rid yourself of than a tenant.

That said, I have down seller financing deals without checking much of anything. The buyers I did this with were other investors with a long history in my market, who I have done multiple deals with and with whom I had a personal relationship with. The less I know about the buyer, the more I check and the larger the deposit I require.