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It is a good idea to be fully equipped with a good knowledge base when you are dealing with transactions regarding real estate, so that you have an “in” on all the beneficial options. One such deal is known as the Owner Finance method. Not a lot of people know what this deal type means or how they can find one.

Owner Finance, what does it mean? Basically, this is a property transaction that foregoes dealing with the banks or lending companies. Instead, the seller finances the transaction, with all the buyer’s repayments going to the seller directly. The seller will take on the purchase price, including the mortgage and all other loans that the property demands - meaning they front the money. The typical scenario is that the owner or seller is able to finalize their mortgage at the closing of the property sale.

However, using Owner Finance in a real estate transaction means that the owner will not receive the full purchase price until the end of the term. The owner takes on the role of the loan institution or bank. An Owner Financing deal is actually quite popular with clear and free real estate property.

Once it has been decided that an Owner Finance arrangement will be entered into, both parties will then agree upon the terms of the seller financing loan, the monthly payment plan as well as the interest rate to be paid. There is less risk to either party being ripped off, since all agreements made are legalized by documenting them into the contract.

Even though Owner Finance may sound too good to be true, especially for the buyer, there are actually fringe benefits for both parties. Buyers no longer need to deal with financial institutions and all the application, processing and services fees that they entail. There is also no need to deal with pre-qualifying for bank requirements. Lastly, the buyer can obtain the property much quicker using Owner Finance compared to purchasing real estate traditionally.

As for benefits to the seller, they will be able to receive the full purchase price they are looking for. Sometimes, sellers offering Owner Finance terms can even ask a higher sales price because of the flexible terms being offered in the sale. The installment plan calls for the seller to receive a stable income each month of the installment contract. The seller can also, if he so chooses, charge a higher rate of interest than banks, rewarding himself with extra cash flow from offering the flexible terms of sale. The property will not be listed for long. Another benefit that the seller can take advantage of is to command a higher interest rate be paid than what he is paying, as a reward for the flexible terms of sale being offered. Owner financed properties do not last long on the market - they tend to sell like hotcakes. Even in todays economy, people are looking for these home ownership opportunities.