Can someone explain to me how this works? Real estate investor?

I how my home up for sale. I am thinking about doing an owner finance. Private investors offered to buy the note. Can someone explain?Can someone explain to me how this works? Real estate investor?
Consult an attorney. Here's how that works in a general sense. Instead of taking cash for the sale of the property, you carry the debt for the buyer. So you are both the seller and the lender. Here in California we use notes (written promises to pay) backed up by collateral in the form of a Deed of Trust securing the note. There is one important preliminary point. You have to get enough cash from the buyer (either the buyer has it or borrows it elsewhere) to pay your own obligations so that you can convey the property to the new owner. Example: let's say you owe $100,000 to your bank, you are selling the property for $200,000, and your transaction costs (closing costs, commission, transfer taxes etc.) are $10,000. You could structure the deal this way:


Buyer pays you $110,000 and gives you a note secured by a deed of trust for the remaining $90,000. If the note is drafted properly, you could sell that note at a discount to an investor who buys deeds of trust. Watch out. If the buyer is getting that $110,000 from a lender, the lender might demand that your loan be subordinated to theirs. They would hold the first note and you the second. This is the order in which you would get paid if there were to be a foreclosure. Owner financing can be a great way to sell a property, everyone can win, but you have to do it right. Consult your attorney and CPA.





It might also be possible to do an installment sale that could have tax advantages for you, but then your money is tied up in that property for a while. Again, consult the appropriate legal and financial advisers regarding these options.