Housing Counsel: Need Creating Financing? Try Installment Sale
by Benny L. Kass
Question: We have had our house on the market for over one moth, with absolutely no nibbles. We lowered the sales price, but to no avail. A friend suggested that we consider taking back financing, but do not know if this legal or how it works. Is this something we should consider?
Answer: You are asking about an installment sale, and yes, it is legal. There are risks, but if structured properly, it may be the carrot to convince potential purchasers to go to settlement on your house.
Here's how it works. Let us assume that you either have no mortgage on your home or that it is relatively low. Your house should sell for $450,000. You enter into a contract with potential purchasers whereby they give you 10 percent down ($45,000) and you take back the balance -- $405,000 -- by way of a first deed of trust (mortgage).
