To sell a house by owner financing in Texas, The following terms require mutual agreement between the seller and the buyer:
- Purchase price
- Down payment
- Interest rate
- Term length
- Payment schedule.
With changes to the economy that we’ve seen in recent years, many homeowners are discovering new ways to sell their homes that weren’t available before. You no longer have to sell through an agent – you can sell on your own or you can even accept seller financing. If you’re wondering how to sell a house by owner financing in Texas or how to sell land by owner in Texas keep reading this blog post and we’ll walk you step-by-step through the process…
Selling a house by owner financing is a complex process that requires careful planning and execution. Here’s a step-by-step guide on how to sell a house by owner financing in Texas:
Step 1. Determine whether you own the house outright or still have a mortgage
In some states, if you have a mortgage you may not be able to offer owner financing (but you can in other states). So the first step is to determine whether you have a mortgage or not.
Step 2. Talk to a real estate attorney for help in crafting an agreement
With seller financing, you are essentially acting like a bank. The buyer will pay you a down payment and then pay you regular monthly payments until the house is paid off, and then it becomes their house. So make sure you talk to a real estate attorney to ensure that you are protected and obeying all federal, local, and state laws while also protecting yourself! (If you need the name of a good real estate attorney, get in touch with us and we can make an introduction.)
Step 3. Market your house online and offline
Once your paperwork is in place, you can advertise that you have a house for sale. Be sure to let people know that you offer seller financing. There is no limit to how much marketing you should do – the more you can do, the better.
Step 4. Work with potential buyers
As your marketing captures the attention of potential buyers, work with them to show them through your house. When someone makes an offer on your home, negotiate the price and terms with them and find the middle ground that will ensure a win/win situation. Sign the papers when you and the buyer reach an agreement.
Step 5. Collect the down payment and hand over the keys
Once you agree on a price and have signed the papers, collect the down payment and hand over the keys. In most situations, you will continue to own the house and collect payments until the house is paid off, then ownership transfers to the buyer.
Who holds the deed in owner financing in Texas?
In owner financing, the seller retains the deed until the buyer completes the loan payment. The deed is officially registered in the county where the property is situated. The seller holds the primary lien position on the property.
The seller conveys the property to the buyer, and in return, the buyer commits to making payments for the property while providing the seller with a lien to guarantee this commitment.
Upon the completion of the final payment, the seller then transfers the deed to the buyer, officially making the buyer the new property owner.
Is the owner financing a house legally permitted in Texas?
Indeed, owner financing is permissible in Texas and is governed by various laws, such as:
- The Texas Property Code
- The Texas Finance Code
- The Dodd-Frank Wall Street Reform and Consumer Protection Act
It’s important to note that sellers conducting more than five owner-finance transactions within a 12-month timeframe may be subject to specific regulations and requirements.
A More Practical Owner Financing Scenario
A More Practical Owner Financing Scenario
Let’s explore a more realistic owner-financing arrangement with a 12% down payment, a 20-year amortization period, and a balloon payment due after 10 years.
A More Practical Seller Financing Example
Listing Price $120,000
Down Payment (12%) $14,400
Amount Financed $105,600
Interest Rate 6%
Amortization 20-year repayment schedule
Balloon After 10 years
Monthly Payment (principal and interest) $726.77
Remaining Balance at the Balloon $73,874.22
Total of All Payments to the Seller (down payment + monthly payments for 10 years + balloon payment) $157,904
Remember that when the balloon payment is due, you’ll need to come up with $73,874.22 in cash to clear the balance or explore options like refinancing with a bank to settle with the seller.
How To Sell A Land By Owner Financing In Texas?
If you’re looking to sell your land in Texas through owner financing, you need to prepare all the legal documents for the sale of your land, ensure that the property is properly and legally transferred to the buyer, collect the buyer’s money on your behalf, and ensure that you get the proceeds from the sale of your Texas land. This process can be daunting, especially if you’ve never done it before. Fortunately, selling unwanted land is straightforward once you break it down into a few manageable steps.
You can start by marketing your land through local outreach and online marketing. Utilize tools like a For Sale sign and neighbor letter campaign to attract potential buyers. Online platforms such as Craigslist, Facebook Marketplace, Zillow, MLS, and Lands of Texas can also be valuable for advertising your property.
Moreover, consider the option of selling your land for cash if you wish to expedite the sale process. This approach can help you achieve a faster transaction while still giving you control over the financing terms. Regardless of the method you choose, it’s essential to consult with legal and real estate professionals to ensure your land sale aligns with Texas state laws and regulations.