Dumb Questions - FSBO/Owner Financing

[Nathan Emmert]

*sighs* I'm going to apologize in advance because I'm going to sound very stupid with these questions... but I need the answers and haven't seen it discussed in the forums I follow.

I am looking at a property which I found out is FSBO. And he's willing to Owner Finance the deal. How do I go about buying this thing?

I have bought 4 homes (1 investment property) in the past, but all have been through a realtor so the process is easy. I give him a number, eventually a different number gets settled on, I show up a few weeks later and sign some papers, and eventually someone hands me some keys. I'm just guessing there's some work that happens in the background there!

So first off, without a realtor, I am assuming I need my own sales contract? Is there any real reason for this to be terribly complicated and state specific or can it be generic? Any idea where I would get one?

Second, what sort of contract do you create for the funding, the mortgage? Can it be as simple as an amortization table which defines loan length, rate, and any late payment penalties and balloons or does it need to be terribly complicated? Again, any ideas where I would get one?

Last, what all happens in the background of a typical transaction? I'm guessing there's a title search to make sure there are no liens on the property? I would pay a title company to do that in this case directly I'm guessing? Who files what with the county to record the transaction? What else is there?

The couple selling give off a good vibe (think Grandma and Grandpa) so I trust them, but I'm not going to be completely foolish in the transaction! Can someone help me out? :oops:

[Steve Babiak]

Originally posted by Michael Quarles:

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1) Does the note have a Due of Sale clause.
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In Seller Financing (where you are the buyer), you don't really want a "Due on sale" clause, but you might want to have a "substitution of collateral" clause in case you sell but really like those loan terms ...