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Understanding Seller Financing in the Tampa Real Estate Marketplace

Nov 1, 2007
As you go about looking to purchase a home, you may have encountered situations in which an option for seller financing presents itself. You may not really understand everything that is involved in seller financing. Because you really do not necessarily understand the ins and outs of seller financing, you may not be able to ascertain whether or not seller financing is the right choice for you.

Generally speaking there are two types of seller financing that are utilized in the real estate marketplace today. Again, in some instances, seller financing may prove to be a good option for you when it comes to the purchase of real estate today.

However, with that said, you will need to closely examine the details of any agreement that you enter into when it comes to a seller financing situation. You need to examine up close the liabilities you are assuming in a seller financing scheme. You need to pay particular attention to what will happen if you default under the terms of the seller financing agreement that you might enter into.

The first type of seller financing that is available in some instances involves instances in which the seller effectively functions as a bank. Rather than the seller being paid in full at the time of closing through the application of proceeds from a home mortgage loan that you otherwise would have to obtain, the seller effectively loans the balance due and owing on the real estate to you.

You will agree with the seller to make monthly payments directly to the seller until the balance due and owing on the real estate is paid off in full. The seller carries the loan.

You need to keep in mind that in many of these situations there can be serious and immediate consequences if you ever default on these payments to the seller. You can end up facing a nearly immediate loss of possession of the real estate and you can forfeit any money that you may have paid towards the real estate.

The second type of seller related financing is a situation in which the buyer assumes the obligation on the home mortgage loan that the seller already has in place. Once again, you need to pay attention to the details of any agreement that you have with a seller in a loan assumption situation. You need to keep in mind the dire consequences that can result if you do not make payments under the agreement in a timely manner. Because you are not the holder of the mortgage loan itself, you likely will not have any of the protections afforded to an individual who defaults on a home mortgage loan. In other words, if you default, it is likely that the seller will be able to repossess the real estate in short speed. You would lose any payments that you had made in such a set of circumstances.

It is always advisable to consult with a real estate attorney before entering into any such agreements. If you need the name of a good attorney or have any questions about the Tampa real estate market please don't hesitate to give me a call.
About the Author
Lance Mohr is your Tampa real estate expert, with over 10 years of experience and 15 years of investing. Please visit our Tampa Real Estate website and add our Tampa real estate blog to your favorites section of your browser.
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