Wednesday, October 18, 2006

Owner Will Carry A Second Mortgage

OK, I've held my peace for too long in this crazy real estate world. Now, I must assert the true financing options available to buyers and sellers when owner will carry a second mortgage note. Strange you say? Perhaps and perhaps not in terms of real estate. The problem is the supply and demand curve for housing has real estate demand too low and this can be cured withs eller financed second mortgages.

Let's begin with owner financing basics. A seller sells to a buyer and the buyer can do one of three options:

1) Pay in cash

2) Obtain a traditional purchase money mortgage and pay the remained in cash

3) Obtain a first mortgage and have the seller hold a second mortgage

Let's think about the above three options for a moment. If we were in a seller's market (we aren't) then would a seller be willing to accept option #3. The anser is no, option #3 (seller held second mortgage) is not an option in a seller's market.

This means that buyers who could benefit from a seller held second mortgage, also called seller financing, seller seconds, owner will carry, owner financing and the like, are excluded from the real estate scene in a seller's market. Now, consider that we are in a buyers market. What do you suppose would happen to the demand for real estate if a seller was willing to entertain Option#3 (seller financing or seller second) for a buyer? I think the answer is simple: buyers would return to the real estate because of the seller held second mortgage.

So the way that I see this real estate showdown is in this way. Offer to finance a portion of the selling price as a seller held second mortgage and you will benefit from a happy buyer and a happy seller and this is what owner financing is all about.

For more information about owner carrying a second mortgage then please feel free to visit owner financed or


Blogger Money Pays The Rent said...

Listen, it's bloggers that write as pathetically as you that make me want to quit reading these real estate blogs. At least show your readers the decency of telling them where they can find seller financing or owner financed real estate. Put up or shut up pal!

5:18 PM  

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