Seller financing - A growing trend ?

[SDRenter_IHB]

I recently read an article mentioning the increase of sellers financings in California & other high-priced markets.





It's not surprising because there are buyers out there (albeit a small number) who really want to buy & sellers who want to sell to these buyers. With the tightening of the lending standards & the fact that sellers are getting desperate, seller financing is a natural alternative.





My initial thought is :





- When a lender rejects a loan application or requires the buyer to come up with a larger down payment, the lender has good reasons (i.e. income not high enough, ...). If the seller steps in to finance the purchase, the seller essentially becomes the fool. There is a good chance that the seller will end up being a "bag holder".





- Since both the buyer & seller have to be very motivated to do this, the number of transactions will be small. Thus, the small impact on prices.





Any thoughts ?

 

[effenheimer_IHB]

<p>I'm wondering why we're not hearing anything about assumable mortgages.</p>

<p>Could it be because all the mortgages are well into their toxic phase? </p>

 

[EvaLSeraphim_IHB]

This isn't new. It happened quite a bit during the 80's when interest rates were very high. I suspect that a person would qualify for an agency loan on the first, and the seller would take the second for the balance. It's a bit risky, but if you have to sell your current property, it's one possibility.