Pros and Cons of Accepting Installment for Your Perry Home

Is your Perry home on sale, and all the leads you’re getting can only afford to pay in installment? Or perhaps you’ve exhausted all your resources to find and convince a cash buyer to say “yes”, but still, nothing.  That can be both stirring and frustrating, especially when you already need the money.  Getting a great realtor and prepping your home in the best way you can doesn’t always guarantee an overnight sale. Sometimes, the market may not be great, and many people just can’t afford to buy in lump-sump for the time being.

So what else is there to do?

First off, let’s revisit the pros and cons of making an installment sale. If none of these applies or is practical to you, we have another proposal at the end of this article. 

Pros

Installments can be scary, but there are good things that come with accepting this plan.  For some home sellers, installments are even the better option compared to accepting lump-sum payments. This is sometimes the case for home sellers who has trouble letting go of the house sentimentally, have trouble vacating the house and relocating immediately, and has ongoing property repairs. At the end of the day, it all depends on your situation and plans.

Passive Income

Passive income is money that regularly flows in within a certain amount of time, without you working a sweat. This is often heard in non-physical or liquid assets like stocks, mutual funds, and bonds. Passive income is great because you’ll have money coming in even if you lose other sources of income like your full-time job.

In real estate, passive income is typically generated when you turn your property into a rental. Likewise, if you agree that your buyer pays in installments, you can also enjoy the practical benefits of passive income.

You Can Find a Buyer Faster

Installment houses attract many potential buyers simply because it’s less straining on the budget.  Advisably, if you consider accepting installment payments, it would be best to increase your asking price. This is because the market value of a property also increases over time. The longer the installment term is, the higher the price should be.  Then again, this all depends on you. No law requires home sellers to increase their fee if their buyer wants to pay in installments.

Lump-Sum Option

There are three types of installment buyers — ones who pay through third-party financing, then those who get from personal funds, and finally those who are seller-financed. If you are financing the sale of your Perry home, you can include in your promissory note that you are allowed to sell the house if another buyer is willing to pay for it in lump-sum.

pros and cons of owner financing
Source: Investor Wiz

Cons

On the flip side, installments also have their risks. It isn’t recommended for home sellers who need a considerable amount of money as soon as possible — which you might know about already. Other disadvantages include:

No Guarantee

If your buyer is asking to pay in installments and their funds are straight off their pocket,  you’ll have to do some digging up about their financial situation. This is because installments not made through financing programs often don’t have insurance. If your buyer’s source of income encounters a riptide, you might also be affected. You can either file charges against your buyer in court or find another buyer right away to get the money.

If you’re open to accepting an installment buyer, create a plan that ensures your security and put every detail in the contract.

You Need to Monitor Your Buyer Throughout

There’s a reason why earnest money is included in a real estate deal. It is to pay for a seller’s opportunity costs if the buyer fails to pay on time or walks away completely.

After you’ve closed the deal, it’s important to stay in touch with your buyer even if they’re paying on time in the following months. No matter how reliable you think your buyer and your contract is, there’s still that 0.01% chance that your buyer might be forced to stop paying some time in the future. If you don’t notice this the moment it happens, it can be a huge opportunity cost for you.

You Need to Check On Your House Throughout

Ideally, if your buyer hasn’t completed the full payment, you shouldn’t allow them to make drastic changes to your property. If your buyer damages any part of your Perry home and backs out of the deal because of some personal reason, you’ll be left dealing with the damage. You have the option to take legal action against them — yes — but that will can result in stress.

What’s the Alternative?

If you think doing an installment sale isn’t possible for you 100%, you can consider selling your home to us at Spire Property Solutions. We are legitimate cash home buyers in Perry, and we can buy your house in as fast as 7-14 days! Get the full lump-sum for your home quickly without going through the hassle of entertaining a lot of potential buyers. And, no more facing the possible consequences of installment payments!

Contact us today at (678) 318 – 1801 or email us using the form below.

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