Buyer's market (also known as creative financing or seller financing) is commonly influenced by owner financing as a property buyer deals directly with a person selling the property (house, land, vehicle etc.) for financing matter. Owner financing occurs mainly in two conditions, either the buyer is not capable to get mortgage loan or if he or she is not willing to pay the existing market interest rates. Owner financing usually takes place when the sellers find it complicated to sell their property.

When the deal to buy or sell the property is confirmed between the parties, then down payments of 20% or more is usually provided. The legal document of the property is not transferred to the buyer until full payment is not proceed, however the buyer is partial owner of the property.

Working mechanism of owner financing:

In owner financing, the owner or the seller acts as a lender. The owner expands sufficient credit to the buyer for the purchase of property instead of providing hand cash to the buyer, given that, any down payment will be deducted. The buyer and seller sign an agreement paper along with recording of mortgage with the help of local public records authority. The buyer then pays back the loan with interest on the basis of agreement made.

Advantages of owner financing for buyers and sellers:

Sometimes it can benefit either buyer or seller, but most of the time the transaction is beneficial for both parties. Here are some benefits listed:

Benefits for seller:

• It is not uncommon that a seller can persist and receive peak price while providing flexible owner-financing terms. Most of the time, the sellers are benefited with more than the fair market values of the property with these flexible terms.
• Processing sale through owner financing helps seller to get their property sold very fast as compared to bank or mortgage company loan.
• Seller doesn't have to pay full tax amount of the property sold, but on the amount paid annually.
•  As a seller takes a risk of financing, he or she will get asking price or closing to asking price in general.

Benefits for buyer:

• Owner financing is hassle free transaction for buyer as it doesn't require any transactions and credit information of the buyer. It requires just an agreement between the parties and nothing more.
• A buyer can get a chance improve his overall credit rating by getting property and paying loan in timely manner.
• Buyer can get a desired property with very little negotiable down payment.
• Buyer can save his thousands of dollars after paying fewer closing costs.
• Fast closing helps buyer move into his property within few days, since there is no any third party involved in the transaction.

Owner financing is not complicated at all if title companies are ready to help the buyers. In order to minimize a risk, you can hire an attorney to check the paper work. However most of the people don't even think of it.