Selling a house and offering 'owner financing'?

[jaideeguy]

My house in CM has been on and off the market for 2+ years now and it seems like a buyer's market with so much other inventory on the market. It was suggested to me to try offering owner financing, which is a common practice in the US. I've done well with owner financing in receiving 10% interest on one house sale, but I have never heard of selling a house that way here in LOS.

Is it done here??

If so, then what % down payment and what % interest is normal for a residential house sale??

And how to do a credit check as my house would appeal to a foreigner??

Would assume that a knowledgeable local attorney would be needed to draw up a contract.

Any input, experiences and/or suggestions appreciated

[beachproperty]

1. Yes, Owner financing is done here in Thailand.

2. Normal down payment? This is a negotiable aspect wherein the buyer wants to put as little down as possible and seller wants as much down as possible....with that being said normal down is usually at least 20%.

3. Interest rate?...Check the bank rates....but have found that for mortgages Thai banks tie the term of the loan with the age of the person (older you are the shorter the loan)....Average Thai though cannot qualify for a mortgage loan so many go to loan sharks (much higher rate!). Also many banks require as a condition to getting a loan that you also buy life insurance (and sometimes medical) thru them which adds to the cost of getting a loan!

4. Credit check? Why are you thinking credit check on a foreigner when he can't buy land (or is this a condo?)

5. Yes you would be wise to have the advice of a local attorney who could also draw up the contract.

Word of caution. !!!!! Two things.....

1. If you sell the house with owner financing and the buyers default on the payments you have to forclose and having heard stories about how long lawsuits drag on (could be years) ...they will be basicly living there FREE. (other than whatever down payment you got)

2. Again if you finance the sale and the new buyers are upset by some failing in the the house not disclosed by you (leaking roof, bad plumbing, flooding etc) and they decide to sue you....Again ....lawsuit takes years, payments on loan suspended, and they may win the lawsuit.

Hey ...good luck though ...easy to buy property in Thailand ....NOT so easy to sell

[jaideeguy]

Hey Beach...................good straight forward advise. Wish others on this forum would reply like you.

True what you mention about cautions and I will carefully consider that.

I'm selling to return to the US and don't want to have to return to LOS to deal with the courts, so maybe I'll give my idea of 'creative financing' a miss for now.

Thanks for your input............

[Noi657]

Can't you for example... The buyer get a survey done on the property, once passed etc can't you get a lawyer to write a contract where it basically states that if any payments are missed for whatever reason then you have the right to reposess?? Granted I don't know the Thai law on this, but if I were to ever offer a financial package it would have to be on these terms!

[worgeordie]

Just a thought,why not try offering a lower price to see if you can

offload your property,if you are leaving Thailand the owner financing

option could prove a big headache if the buyer defaults,like someone

else said if you have to foreclose,it could prove expensive and take so

long in the Thai courts,and it would involve lawyers and you want the least

contact with those as possible.

regards Worgeordie

[wwest5829]

Wife and I need to sell our properties and then we will buy home together. If your property had been in our price range, I would have talked seriously to you. I say this only to tell you that there may well be someone interested in your financing idea. Wish you well in finding a buyer. I think you are right about the current glut of properties on the maket here in Chiang Mai.

[julemanden]

I sold my house and company to a Farang over 4 years. He pays off once a year and in Eur. I keep the title deeds until all is paid and stays as a manager of the company... Pretty simple this way, Banks do it the same way by keeping the title deeds.

For 3 years everything have gone smoothly. If he fails to pay, the house is still mine/company's. I didn't charge him any interest though! Yes of course we made a contract through a lawyer!

Good luck!

[ggt]

I would not do owner financing in Thailand...asking for trouble...headaches...legal fees...hassles galore possible..

[slipperylobster]

How did you come to own the house ..?

Perhaps in you wife's name...or was it one of those corporations? If in you wife's name, I suppose she could finance a buyer...but not you.

[slipperylobster]

Just had a chat with a friend from Holland. He bought his wife a home here in Thailand, but they live in Holland. They could not sell it, nor even rent it. The relatives would not take care of it or live in it (and perform upkeep) unless he paid them. He decided just to tear it down and his wife keeps the title to the property, rather than have squatters stay.

With things as volatile as they are.....I would always recommend renting, or perhaps rent to own (but would you want to put down that much money for that deal?) Most wives will only allow their husbands to purchase property near their family..for obvious reasons.

I know...I am not helping much with what the OP is looking for.....I am just dumbfounded that people buy and buy and have no chance to sell.

Edited May 24, 2014 by slipperylobster

[BKK Tep]

I'm not sure if this would work here or not but perhaps a "lease with option to buy" maybe an easier transaction for you as a seller to take back the property if the buyer defaults or chooses not to excersize their "option" at the agreed upon date?

[belg]

somebody with high connections, you know, the one's married to hi-so chinese, could maybe ask their wife, if they could do a good word to the army, to get farangs the right to own 1 rai of land in his name ????

[crazykopite]

Sell it for a realistic price and you should find a buyer I have the attitude that if I can sell it for what it cost me then I have done okay if you have lived in it for example 4 years and it would have cost you 30,000 a month to rent then 48 x30 = 1,440 million that you have saved in rent with that in mind if you can settle on a figure which includes your agents charges as long as it covers your initial outlay for the purchase of the property ,another option could be try before you buy ask the intended purchaser for a years rent up front which in turn would be taken off the asking price should they decide to purchase. I for one am not keen on free finance especially if your not residing in the same country whatever you do good luck but at the moment it is a buyers market !

[CharlesHH]

I have a buyer for my little cheap condo, American owned offered to Thai. I consider monthly payments like rent or rent-to-own. If payments stop, MY new lock goes on the door. Simple. If default, I keep the condo and the payments to date. Again seems simple. Cash only. Tell me problems with this idea, please.

Hey Beach...................good straight forward advise. Wish others on this forum would reply like you.

True what you mention about cautions and I will carefully consider that.

I'm selling to return to the US and don't want to have to return to LOS to deal with the courts, so maybe I'll give my idea of 'creative financing' a miss for now.

Thanks for your input............

[Strangebrew]

Or another opition is get loan on house close to your asking price take the money lease out your place to cover loan if worse default on loan bank takes over your headache.

[Farma]

I sold my house and company to a Farang over 4 years. He pays off once a year and in Eur. I keep the title deeds until all is paid and stays as a manager of the company... Pretty simple this way, Banks do it the same way by keeping the title deeds.

For 3 years everything have gone smoothly. If he fails to pay, the house is still mine/company's. I didn't charge him any interest though! Yes of course we made a contract through a lawyer!

Good luck!

My wife and her friends have bought and sold property between Thais this way more than a few times now. A lawyer draws up a contract. The seller keeps the title until final payment. No interest is charged.

The transactions I've seen are usually a large initial deposit followed by 3 or more 6 monthly payments until the purchase price is paid off.

[kingstonkid]

If you look at a North American RENT TO OWN Lease to own contract it advises

deposit min 10%

title stays in the owners hands

tenant responsible for keep

if tenant defaults then they must leave in 30 days

Tenant responsible to get a complete survey of the house

All of this would be in the contract so there would be no issues.

[beachproperty]

Hate to be the bearer of bad news or a downer in anyway.....But in America "rent to own" deals are scams by owners who charge large deposits, and higher rents than normal (with the supposed amount over normal rent prices going towards a future "downpayment" when such right to purchase is exercised. Good deal for the Landlord/ seller....except when tenant/buyer decides to sue for fraud (Then not so good a deal the Landlord/seller).

Remember one thing ....there are two sides to every coin! Cliche ...I know. But always best to know the possible downsides of any deal so always prepared for it.

Granted ....sometimes some of these deals work out and everybody happy....BUT not always....

Best thing to do in my mind is to reduce the price and Sell it. If necessary take a loss ....best to just get rid of it and be done with the matter....Move on.

Edited May 24, 2014 by beachproperty

[khunPer]

»Any input, experiences and/or suggestions appreciated«

Legal maximum interest rate in Thailand for private loans is 15 percent p.a. – however you may charge a lower interest on a mortgage kind of loan. Before I’ve heard of 9 percent for up to 50 percent of the total value (advertised and been offered interested mortgage investors), but presume it’s negotiable. Might be higher interest of value beyond the 50 percent limit.

You shall have a lawyer to draw the Agreement/Contract (Thai + English) and check with the lawyer, if the land deed stays in your name or shall be transferred to buyers name. Best is to do it same way as the Thai banks does it. You shall however always keep the land deed until full payment has been performed. At the Land Office they can make a note of the loan on the back of the deed, works like a servitude/mortgage, so the land cannot be sold or transferred before full payment has been made – especially important if you transfer the land into buyer’s name (tax + transfer fee paid; if done later maybe value for tax and fees may have gone up, if Land Office use a value rather than agreed price, which seems to be little different from province to province). A qualified lawyer shall be able to give you advice of the correct way to do it in you area/CM.

Presume down payment is negotiable, but do check with a lawyer if there are any minimum requirements.

Credit check (of a foreigner) may be similar to when applying for a credit card. You will need bank information and permission to check with the bank, and then probably have your bank have to contact the buyer’s bank; there might be some fees involved.

Wish you good luck.

[joshstiles]

Or another opition is get loan on house close to your asking price take the money lease out your place to cover loan if worse default on loan bank takes over your headache.

aaaahhhh.....yeah....it doesn't quite work that way strangemind.

[kingstonkid]

Hate to be the bearer of bad news or a downer in anyway.....But in America "rent to own" deals are scams by owners who charge large deposits, and higher rents than normal (with the supposed amount over normal rent prices going towards a future "downpayment" when such right to purchase is exercised. Good deal for the Landlord/ seller....except when tenant/buyer decides to sue for fraud (Then not so good a deal the Landlord/seller).

Remember one thing ....there are two sides to every coin! Cliche ...I know. But always best to know the possible downsides of any deal so always prepared for it.

Granted ....sometimes some of these deals work out and everybody happy....BUT not always....

Best thing to do in my mind is to reduce the price and Sell it. If necessary take a loss ....best to just get rid of it and be done with the matter....Move on.

Besides reading the rag stories you know this how.

yes there are scam artists but there are also a good many of us that have done it and made peoples lives very happy. There are many people in the US and Canada that would have lost their houses or never qualified at the banks.

A true person has everything done through lawyers and we all recommend that a prospective owner have their own lawyer look at the documents.

It is the people that think they can do it on their own or get a deal that is too good to be true that get i trouble.

[beachproperty]

Hate to be the bearer of bad news or a downer in anyway.....But in America "rent to own" deals are scams by owners who charge large deposits, and higher rents than normal (with the supposed amount over normal rent prices going towards a future "downpayment" when such right to purchase is exercised. Good deal for the Landlord/ seller....except when tenant/buyer decides to sue for fraud (Then not so good a deal the Landlord/seller).

Remember one thing ....there are two sides to every coin! Cliche ...I know. But always best to know the possible downsides of any deal so always prepared for it.

Granted ....sometimes some of these deals work out and everybody happy....BUT not always....

Best thing to do in my mind is to reduce the price and Sell it. If necessary take a loss ....best to just get rid of it and be done with the matter....Move on.

Besides reading the rag stories you know this how.

yes there are scam artists but there are also a good many of us that have done it and made peoples lives very happy. There are many people in the US and Canada that would have lost their houses or never qualified at the banks.

A true person has everything done through lawyers and we all recommend that a prospective owner have their own lawyer look at the documents.

It is the people that think they can do it on their own or get a deal that is too good to be true that get i trouble.

I know this from personal experience being a real estate trial lawyer.

The problem is unless you get a "real estate" attorney (like I was) you end up with something close to good as a contract but NOT the whole package. Starts with the contract ....which should actually be two contracts one for the option to buy (or "rent to own" as you might put it) and a Real Estate purchase agreement in the event the option is exercised (spells out ALL the details ) The lack of details in most options to buy is the cause of MANY lawsuits as I personally know.

AND yes....I agree not ALL people are scam artists.....but problems do arise and when it costs someone money they usually file a lawsuit.

Miss the old days when " your handshake was your bond"

[vogie]

Just to flip the coin, what would happen if lets say after the last payment on the house the original owner refuses to give the new owner the title deeds? I only ask as I may be interested going down this road.

[beachproperty]

Just to flip the coin, what would happen if lets say after the last payment on the house the original owner refuses to give the new owner the title deeds? I only ask as I may be interested going down this road.

One would hope you have a good contract on which you would have to sue (time and money) for them to transfer to property to you.

BUT it is a very valid point you bring up and not unusual for it to happen ....especially in times of rising prices of homes.

[CMCMANGOMAN]

I bought my first house when I was still in college with a lease option deal. It worked out perfect and I made about 250,000 dollars profit 7 years after I exercised my option to purchase the home. I got lucky and sold at the height of the market in southern California. 10,000 dollars down payment and $1000 lease payment per month with $300 of that credited toward the set purchase price. I bought the house after 2 years. How I managed the financing was to find a grey market loan broker and for a "fee" he fixed all the paperwork for me. I was self employed right out of college so I had no way to qualify with a regular bank. Anyway, I paid a higher interest rate for a few years until I had established myself in my first engineering job and then i simply refinanced at a much better rate.

I ended up selling the house to another NASA engineer that worked for JPL (Jet Propulsion Lab) in Pasadena. So these types of deals do have some success behind them. A friend of mine even did a deal like this for his house down in Phuket. It worked perfect. Cheers, don't give up!

[beachproperty]

I bought my first house when I was still in college with a lease option deal. It worked out perfect and I made about 250,000 dollars profit 7 years after I exercised my option to purchase the home. I got lucky and sold at the height of the market in southern California. 10,000 dollars down payment and $1000 lease payment per month with $300 of that credited toward the set purchase price. I bought the house after 2 years. How I managed the financing was to find a grey market loan broker and for a "fee" he fixed all the paperwork for me. I was self employed right out of college so I had no way to qualify with a regular bank. Anyway, I paid a higher interest rate for a few years until I had established myself in my first engineering job and then i simply refinanced at a much better rate.

I ended up selling the house to another NASA engineer that worked for JPL (Jet Propulsion Lab) in Pasadena. So these types of deals do have some success behind them. A friend of mine even did a deal like this for his house down in Phuket. It worked perfect. Cheers, don't give up!

Never said the deals couldn't be done ....40 years ago I myself bought a few properties with NO money down, owner finance.

But I'll bet you this ....you couldn't do your deal today in America .....WhY? because you had no "hard" money as a down payment and the banking regulations were changed specifically to prevent "fixing all the paperwork for you".

But hey ...good on you...".been there done it"

[ableguy]

Hate to be the bearer of bad news or a downer in anyway.....But in America "rent to own" deals are scams by owners who charge large deposits, and higher rents than normal (with the supposed amount over normal rent prices going towards a future "downpayment" when such right to purchase is exercised. Good deal for the Landlord/ seller....except when tenant/buyer decides to sue for fraud (Then not so good a deal the Landlord/seller).

Remember one thing ....there are two sides to every coin! Cliche ...I know. But always best to know the possible downsides of any deal so always prepared for it.

Granted ....sometimes some of these deals work out and everybody happy....BUT not always....

Best thing to do in my mind is to reduce the price and Sell it. If necessary take a loss ....best to just get rid of it and be done with the matter....Move on.

Besides reading the rag stories you know this how.

yes there are scam artists but there are also a good many of us that have done it and made peoples lives very happy. There are many people in the US and Canada that would have lost their houses or never qualified at the banks.

A true person has everything done through lawyers and we all recommend that a prospective owner have their own lawyer look at the documents.

It is the people that think they can do it on their own or get a deal that is too good to be true that get i trouble.

USA lawyers are a different breed to Thai lawyers.

[migrant]

Back to the OP

I have bought, and sold, owner carried property and businesses. AS a CPA (Chartered accountant for you on the other side of the pond) I've also seen a lot of clients that have done so.

My advice is to get enough of a downpayment that, if you do need to foreclose, you can cover your costs, hassles, and even repairs.

For me, I've never had to foreclose, but have had to call monthly to get the people to pay. If you do move back to the states I would try to find a law firm that would do collections for you.

Good Luck!