With changes in the economy and market that we’ve seen in recent years, many homeowners are discovering that there are new ways to sell their Hawaii home that weren’t available to them before or were just not on their radar. You no longer have to sell through an agent – you can sell on your own or you can even accept seller financing (of course, these have always been there for savvy sellers but are becoming more common as sellers get better educated about real estate). If you’re wondering how to sell a house by owner financing in HI, keep reading this article and we’ll walk you step-by-step through the process…it’s not as difficult as you may think.
Step 1. Determine whether you own the house free and clear or still have a mortgage (or lien)
In some states, if you have a mortgage or other type of lien 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 or any other recorded liens, such as back taxes, mechanic’s liens or other recorded interests. The best way is to ask a title officer to order a preliminary title report for you, or you can go down to the courthouse and do a manual search.
Step 2. Talk to a real estate attorney for help in crafting an agreement
With seller financing, you are essentially acting like a bank for your end buyer. The buyer will pay you a down payment (or as else negotiated) and then continue to pay you regular monthly installment payments (as they would to a traditional bank) until the house is paid off, and then it becomes their house (they will own the deed). So be sure to speak with an experienced real estate attorney to ensure that you are protected and obeying all federal, local, and state laws while also protecting your own interests. (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 are ready to market your property for interested buyers. Be sure to let people know that you offer seller financing as that can dramatically increase your potential buyer pool. There is no limit to how much marketing you should do – the more you can do, the better. Craigslist, flyers at the local laundromat and bus stops, social media accounts, a yard sign out front…. you name it. Get creative! You should even consider creating a simple website to advertise your property, like this one.
Step 4. Work with interested buyers
As your marketing efforts begin to pay dividends and capture the attention of interested buyers, schedule times to walk them through your house, highlighting all the positive features. Have flyers or handouts available for them to take home. When someone makes an offer on your house, negotiate the price and terms with them so that everyone is pleased with the final arrangement. Sign the contract and any other required paperwork when you and the buyer reach an agreement, using the expertise of either a real estate attorney and/or a title and escrow company.
Step 5. Collect the down payment and hand over the keys
Once you agree on price and terms and have officially signed the contract and any addenda, collect the down payment and transfer the keys to the new buyer. 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. Be sure to track all payments in case you run into difficulties down the road and upon final payment, again use an attorney or title/escrow officer to properly transfer the deed.