What is the process during seller finance?

Question

I understand how seller financing works, but unsure what the next step after you and the seller verbally agree to doing seller financing. What is the next step/steps until closing on the property?

Jay Hinrichs · Answer

in many states the title company/escrow officer is not allowed to prep the note.. they can do the mortgage or deed of trust or deed to secure debt but an attorney has to prep the note.. now sometimes if your a bigger client the title company may do the note for you but for one off type of clients most title/escrow companies will want you to do your own note or have an attorney do it.. Notes are rather simple documents we do our own notes and our own Deeds of trust no issues.  although there can be an issue with title insurance down the track.. as there is a ton of fraud out there .. so its best to have that little stamp on your docs prepped by a title co or a lawyer so you dont run into title insurance issues down the track

Eliott Elias · Answer

In Texas we have a seller financing addendum. Not sure what state you’re in but you may be able to use it

Scott Mac · Answer

Just a little heads up from an internet link: https://compliance.docutech.com/wp-content/uploads/sites/2/2017/04/Document-Preparation-Matrix-Logo-Update.pdf

Good Luck!

Richard W Dyas · Answer

You need a purchase agreement, a deed of trust, and a deed of trust note. The deed of trust must be recorded.

The deed of trust note must set a maturity date ( 30 years, 15 years, 5 years, 1 year).  Most sellers want it to be quick ( they want their money).

The purchase agreement should require some earnest money from you to make it legitimate.

Remember if the house has a current mortgage on it, it will travel with this transaction. It must be paid off first when you resell. ( Or, it may be foreclosed out from under you.)

Seller financing is much cheaper than a bridge loan, but it carries some risks. Be careful.

Richard Dyas, JD

Tyler J. · Answer

Hey Chris,

I’d be aiming for Colorado, at least for now.

Thank you!

Chris Seveney · Answer

@Tyler J.

I recommend you select the title company and find one who will create the docs. But yes that is the steps

What state is it in?

Chris Seveney · Answer

@Tyler J.

This is no different than any other type of real estate closing. The only difference is the lending is not from an institution but from the seller. So the title company should also draft up the note and mortgage/deed of trust.

That’s really the only difference Assuming all the terms or agreed to

Robert Lombardi · Answer

Open escrow with your contracts.

Zachary Inman · Answer

Pay an attorney to draft up a financing agreement. There are more informal ones out there, but when dealing with transactions this big, it's always worth it to get a professional involved.

What is the process during seller finance?

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