Seller Financing - Drawbacks

Drawbacks

• The buyer could pay the loan in full but still not receive title due to other encumbrances not divulged by, or unknown to the seller.
• The buyer could make payments faithfully, but the seller might not make payments on any senior financing that may be in place, thus subjecting the property to foreclosure.
• The buyer might not have the protection of a home inspection, mortgage insurance, or an appraisal to ensure that he/she is not paying too much for the property.
• The seller might not get the buyer’s full credit or employment picture, which could make foreclosure more likely.
• Depending upon the security instrument that was used, foreclosure could take up to a year.
• The seller could agree to a small down payment from the buyer to assist in the sale, only to have the buyer abandon the property because of the minimal investment that was at stake.