Seller financing can bring in a buyer who otherwise would be looking elsewhere for their next home.

With the new home builders in Santa Clarita such as Lennar and KB Home offering their own financing with interest rate buy-downs as well as funds towards the buyer’s closing costs, how can you as a Santa Clarita home seller compete in this market?

The answer may be in seller financing, where you control the interest rate and terms. And an added bonus to the buyers is that there would be no pricey loan fees to eat up the buyer’s budget.

Consider a typical scenario with builder financing:

Let’s say the builder offers $20,000 in "incentives" towards the buyer’s closing costs, which has become fairly typical for Santa Clarita single-family homes. Where does that money go?

You’ll find that the bulk of that "funny money" goes right back into the builder’s pocket in the form of loan fees, interest rate buy-downs (points) and other fees and costs. Not a bad deal if you’re a buyer really, since you get a much lower than market interest rate and don’t have to pay any out-of-pocket costs for escrow, title and the like. You’d certainly pay a high premium to any lender for the interest rate buy-downs that I’ve been seeing at the Santa Clarita new home sales offices lately.

From a seller’s standpoint, this creates a new opportunity to create a sale without doing further price reductions. If you have plenty of equity in your home, you can offer seller financing at below-market rates and make your money work for you at better earnings than you’d find in CD or most stock investments. The downside is that you won’t have that cash to move forward with into your new home.

In a tight real estate market, it pays to be flexible and somewhat creative when it comes to selling your home in addition to having your home marketed properly by a qualified Realtor. If you’re looking to sell your Santa Clarita home, contact Linda Slocum at 661.670.0349 or email her.

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