How to Use a Buyer's Agent to Negotiate Owner-Financing

by William Pirraglia, Demand Media
    A buyer's agent can negotiate the best owner-financing terms for you.

    A buyer's agent can negotiate the best owner-financing terms for you.

    A buyer's agent works for you, the buyer, not the home seller. By representing you only, a buyer's agent can honestly and ethically try to get you the best deal without compromising the seller's desire for the highest price possible. An experienced buyer's agent might know of unadvertised owner-financing deals for homes on your favorites list. A buyer's agent can negotiate interest rates and terms, along with preparing legal agreements that help you close the deal.

    Owner Financing

    Homeowners sometimes agree to finance the sale of their real estate. They might have trouble selling their home or don't need the cash that would be generated by a buyer's down payment and the buyer mortgage loan profits. In a down real estate market, homeowners who are financially able are more likely to offer financing to help sell their property. Buyers with credit, available cash or mortgage qualification problems can purchase the homes they want, without dealing with a mortgage lender.

    Buyer's Agent Loyalty

    A buyer's agent is loyal to you, the buyer. Listing agents are legally responsible to act on the seller's behalf. When listing agents try to act alone, negotiating for both seller and buyer, ethical and loyalty issues often appear. Negotiating the highest price for the seller, while also trying to get you, the buyer, the lowest price creates conflicts that are difficult to resolve ethically, morally and, sometimes, legally. A buyer's agent works only for the buyer. She can participate in all negotiating and closing phases of a home purchase, including negotiating owner-financing.

    Finding Owner-Financing

    Trying to find owner-financing offers on your own can be challenging. Most sellers willing to offer owner-financing would still rather have a buyer get a bank mortgage loan to pay off outstanding mortgages and deliver the seller the cash they need to complete their next home purchase. Experienced buyer's agents, though, often know about unpublicized owner-financing possibilities for one or more homes for sale. Upon locating owner-financing on a home you want, your buyer's agent can negotiate terms with the seller or seller's agent to arrive at a price and terms that satisfy you and the seller.

    Negotiating Owner-Financing Agreements

    In most U.S. states, verbal real-estate agreements have no legal standing. All real-estate contracts must be written to be legally enforceable. Many owner-financing offers are more open-ended than precise, and the terms are typically flexible and negotiable. Because most sellers are not seasoned financing experts, a veteran buyer's agent can negotiate in good faith to arrive at an acceptable agreement while still protecting your interests as a first priority.

    Successful Negotiating Results

    A buyer's agent's experience, reputation and perception play a major role in negotiating owner-financing terms. You should hire the best buyer's agent you can find and afford. Consider online reviews of the agent, or visit sites such as the Better Business Bureau. If you need owner-financing because of problems getting bank mortgage financing, you must hire a buyer's agent with price and owner-financing negotiations experience. Your agent might need to consider price increase concessions to get you the best owner-financing terms. While neither you nor your agent can control the actions of the seller, an agent with proven experience negotiating owner-financing terms can get you the home you want.

    About the Author

    For 34 years Bill Pirraglia served as a senior executive in the banking industry. Since 2005, he has authored articles, blog entries, tips and advice columns, SEO web copy and two published books. He specializes in personal and business finance topics, along with legal articles for clients large and small.

    Photo Credits

    • Ryan McVay/Photodisc/Getty Images