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Selling A Home in Vancouver BC
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The Decision to PurchaseWorking with a Real Estate Licensee Responsibilities
of the Listing Responsibilities of the Seller |
Financing...from a Seller's PerspectiveAn offer to purchase will contain information about how the buyer intends
to finance his or her purchase.
Existing Financing: 1. The buyer wants to pay cash and have no mortgage.This situation will require you to pay out your existing mortgage and there will probably be an interest penalty for doing this. Remember that having to pay an interest penalty effectively reduces the price you will be receiving for your home. 2. The buyer offers to assume, or take over, your remaining mortgage loan.In this situation, before agreeing to allow the buyer to assume your mortgage loan, you should ensure that your mortgage lender will release you from any future obligation to repay the monies owing (if the buyer defaults). Contact the financial institution which holds your mortgage to obtain information about your position in each of the above situations. It is a good idea to do this well in advance of signing a Listing Agreement so you will be able to give your listing agent accurate information. Financing by the Seller:If you have no existing mortgage, an offer to pay all cash is ideal and, of course, would be your preference. But the buyer's offer might state that part of the purchase price is to be paid in cash and part is to be paid in payments over a specified period of time at a specified interest rate. In effect, the buyer would be asking you to become the lender. When you are considering an offer containing a request for "seller financing" (sometimes referred to as a seller take-back mortgage), think about whether or not you want the responsibility of collecting payments over an extended period of time. If you do feel comfortable with such an arrangement, be sure that you verify the buyer's source of income and credit history before making a decision. Ask your listing agent or a financial counselor to fully explain the financial significance and the possible consequences of the terms offered. Seller Beware!If it is possible, as some individuals suggest, for many people to quickly become very wealthy by dealing in real estate, then unfortunately, other people on the opposite side of the same transactions must, just as quickly, lose some of what they invested. Usually, those who stand to lose are vendors who agree to be a party to a buyer's unorthodox financing arrangement in which the seller assumes the risks. Essentially, there is nothing wrong with most innovative or creative financing if all parties are fully aware of the potential risks and fully understand the possible consequences of such risks. However, the fact is that many owners(vendors) are not aware of the potential disasters which may occur. It is strongly recommended that you secure competent advice from a real estate agent or legal counsel before finalizing any real estate contract. This recommendation is much more urgent when the offer you are considering includes terms which could jeopardize you financially. Be wary of offers which require any of the following:
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