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Cabo San Lucas Blog

This blog discusses Los Cabos real estate and other important news and happenings in Cabo.


Advantages of Seller Financing

There are many benefits for doing owner financing, as opposed to conventional bank financingfor both the buyer and seller. Sometimes the advantages inure to the benefit of one or the other, but in most cases the transaction is "win/win" for both parties.

Benefits of owner financing for the seller

Most sellers of real property insist on the highest price and all cash. Sellers want a fast closing with little hassle. Sellers also want to pay as little taxes as possible on the gains incurred. In many cases, the seller can have most of his needs satisfied by an installment sale rather than a traditional cash sale. Let's look at these needs one by one... 

1. Highest Price. There is no doubt that a seller can insist on and receive the highest price when offering flexible owner-financing terms.. People are always willing to pay a premium for non-qualifying financing. 

2. Cash. Nearly every seller says he wants all cash, but few need it. What the typical seller wants is the most net cash from the deal. Often, the seller has to pay closing costs, broker fees, and the balance of any existing financing when applicable. 

Also in many cases, the sale of a property by an installment sale will net the seller more future yield than any source from which the cash proceeds were reinvested. 

3. Fast Closing. Currently, in the Los Cabos (and all of Mexico) there is no lender financing from the United States. Thus, owner financing makes your house unique. Furthermore, an owner-financed transaction can be consummated in a matter of days, since there is no appraisal, underwriting, survey, or trust foreign affair permits involved.

As you can see, owner financing provides many advantages to the seller. Next week we will discuss advantages for the buyer.


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