If you’ve ever had a deal fall apart three weeks in because the borrower couldn’t qualify, you know what a pain that is. Today I want to talk about how to avoid that entirely — by attracting the right buyers from the start.
Working Backwards From Underwriting
Here’s what a typical owner-finance timeline looks like once you’re under contract: it takes the borrower a few days to gather their loan application, credit authorization, and income documents. Then we need a business day or two to underwrite the loan. That’s already a week or more into the deal before you even know if the borrower can qualify.
Now if borrower doesn’t have the income or they’ve got credit issues or both you’re back to square one — finding a new buyer, restarting the clock, and dealing with the headache of a deal gone sideways while you’re already under contract. (or grit your teeth and lend to a bad borrower, which I never recommend but investors often do)
The first line of defense is pre-screening the borrower, which I’ve covered before. (If you haven’t seen it, there’s a full breakdown at https://calltheunderwriter.com/prescreen/.) But today I want to go a step further — because if we can attract the right buyers from the beginning before you even pre-screen, the entire process gets dramatically smoother. Think of it like knocking over the lead domino. Start by looking in the right places and saying the right things to attract the right people, and everything downstream goes easier.
Where to Find Seller-Finance Buyers
Seller-finance buyers don’t always shop for properties the traditional way. Here are some of the best channels:
Facebook Marketplace is one of the best spots right now. A huge number of seller-finance buyers are browsing there, and the barrier to entry for posting a listing is basically zero.
Craigslist — yes, it’s old school, but there’s still a surprising amount of activity, especially from buyers who are actively looking for creative financing opportunities.
You can also list with an agent, but the key is finding the right one. You need someone who understands creative finance. Ask around your network first. If you can’t find a recommendation, look for an agent who specializes in REOs — these folks typically get seller financing. The easiest way to find one: call an agent and ask if they specialize in REOs. Most won’t, but then ask them if they know anyone who does. You’ll lock onto the right person pretty quickly.
What to Say in Your Listing
Once you know where to post, what you say matters just as much as where you say it. Include your loan terms in the listing. But more importantly, include language like: “Seller financing available to deserving borrowers with a large down payment.” There are a few reasons for this. First, LTV is one of the key parameters that determines the value of your loan — borrowers with a larger down payment tend to be more creditworthy. Second, it filters out the tire kickers. You’ll spend less time doing pre-screens and more time talking to serious buyers who are ready to move. Plus borrowers with a larger down payment tend to be more creditworthy.
My Recent Case Study
I’ll buy non-performing loans and sometimes sell using owner finance after a foreclosure. I recently sold an REO property on owner finance in Redford Michigan, where I have a great agent. He brought me five seller-finance offers and one cash offer to choose from. He pre-screened the borrower for me. The borrower was excited and got their application and documents in quickly and the file sailed through underwriting.
I ended up with a sale price above market value, 18% down payment, and a borrower who had a 41% DTI and a 677 credit score and a quick closing. A clean deal from start to finish — because we got the lead domino right.