Everything You Need to Know About Owner Financing & Listing Your Property “FSBO”

Selling Your House with Owner Financing or FSBO Hero Image

If you ask the average joe how one would go about selling their house, the most common answer that you’re likely to get is, “Hire a real estate agent”. And that’s not very surprising. Selling a property with a real estate agent (which is also known as the traditional method) has been the staple of the real estate market throughout the country for decades now. It’s become the normal practice, the go-to method that even regular people with very little real estate experience know as common knowledge. However, this does not mean that it’s the only way that one can go about selling their house in Minneapolis MN.

If you’re interested in selling a property, you should know that there are many ways to skin that proverbial cat, aside from the traditional method. From selling at auction to executing a rent-to-own agreement, homeowners have many other options available to them. Each one has its specific pros and cons; and as such, one is far more likely to work better under certain circumstances than another, so you should make sure you’ve done your research before choosing between these options and determining how you’re going to sell your house.

In this blog, we are going to help you out with this task by taking a deep dive into selling your house with an “FSBO” listing, or via owner financing. So read on to learn everything you need to know when it comes to these two subjects.

Everything You Need to Know About Selling Your House Via “FSBO” listing or Owner Financing

Here is our overview on both selling “FSBO” and selling via Owner Financing in Minneapolis MN

FSBO & Owner financing Home Sale Overview

As we mentioned above, there are quite a few ways to find a buyer and carry out a real estate transaction. However, some of these options are a little bit more similar between them than others. And this is certainly the case when it comes to no only owner financing and listing a property “FSBO”, but selling traditionally as well. All three of these home sale methods have the same general structure. However, they do differ in a few specific ways that make them unique and adapt them for certain situations.

Below, we are going to break down each of these home sale options, quickly define them, then show you which situations either option works better in. But before we can do that, we need to first talk about selling your house traditionally.

Traditional Home Sale

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Selling your house traditionally typically involves hiring a Real Estate Agent who’ll then sell your property on your behalf. This home sale process has its pros and cons that add more to it. However, to sum it up in simple terms, an agent and his/her client will typically have to follow the process of traditional home sale and jump through a million hoops before everything is said and done. They’ll have to make repairs to the property, advertise and find buyers, host open houses and showings, shmooze said buyers for good prices, draw up sale contracts then fill out all the right paperwork to achieve property sale. And this whole process usually takes between 2-3 months, which is quite a long time.

Overview on Owner Financing & “FSBO” Listing

Now that you know a little more about traditional home sale, we’d like to begin this section by saying that this sale method and owner-financing plus listing “FSBO” are all pretty much the sale. They have the same general process and require all the same inputs in terms of sale tasks. However, they do differ on a few fundamental levels, each of which makes his or her associated sale method unique.

For Sale by Owner (FSBO)

Sell My House FSBO Image

This home sale method is probably the one that is most similar to selling traditionally with only one key difference: instead of hiring a real estate agent, you sell your house by yourself.

To sum it all up, this sale method means that you (as the property owner and home seller) have opted to list your property and sell it by yourself.

As such, it comes with one main benefit, which is that:

  • All of your profits from the sales proceeds will remain yours. No Fees! No Commissions!

However, this particular sale option puts the full home sale workload on your shoulders, which can be quite a lot of added responsibility if you already lead an active and busy life.

In addition to this, it will require you to have at least a shred of prior knowledge when it comes to real estate transactions. Using an “FSBO” listing to sell your house without previous experience in the real estate market could result in rookie mistakes, most of which will have detrimental effects on your overall sale (if not land you in a lawsuit and various legal trouble). As such, you should only consider selling your house “FSBO” if you have professional knowledge and experience in real estate transactions within your local area.

Owner Financing

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On the flip side, selling a house via owner financing is a little bit more complicated. While the general sale process is the same when compared to traditional listing (in that you’ll probably still need to hire a real estate agent, fix up your property, advertise it, look for buyers, host showings, fill out a ton of paperwork, and draft contracts), it does come with a few differences that add some nice benefits into the mix.

So here is a little more on owner financing… When a homeowner sells their house the traditional way (through an agent), the buyers they advertise to will typically be regular buyers. Regular buyers are people that buy houses with money they’ve been lent. As such, they will typically apply for a mortgage, then use that loan as their source of funding when they buy your house. Usually, these types of buyers will have good credit; they may also be supporting families, and need to buy a house to live in. However, traditional buyers often come with a slew of issues, the largest one being that deals with them have the potential to fall through. These types of buyers are dependent on their mortgage loans, and whether their bank approves them. As such, if their bank doesn’t approve their loan, a deal with them will automatically fall through.

Owner Financing Basics

But through owner financing, you can avoid all of this. In a nutshell, owner financing is when a buyer skips the bank and buys directly from you. In essence, you’ll become the bank! Just like a bank, you’ll get an up-front deposit and then you’ll get regular payments that pay off the amount owed. In most cases, you’ll also hold onto the title until the house is fully paid off, and then transfer the title to your buyer.

Benefits of Owner Financing:

Here are a few main benefits that this mode of home sale will afford you:

  • It opens up the number of buyers: with owner financing, you’ll be able to find buyers who might not normally have been able to get bank financing.
  • It gives you consistent cash flow: your buyer will need to pay regular payments to you (just as they would need to pay regular mortgage payments to the bank).
  • It protects you: even if the buyer stops paying, you still own the house!
  • There isn’t a lot of property management: unlike rentals, the property will be maintained by your buyer since they will eventually be purchasing it outright.

So there you have it. Here is our breakdown on both owner financing and selling your house via an “FSBO” listing in Minneapolis MN. Got more questions? Maybe you’re wondering, Can I do owner financing if I have a mortgage? If so, reach out to our company today and we’ll be happy to provide you with all the answers you’ll need.

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