6 Benefits to Selling with a Bond for Deed
Benefits to Selling with a Bond for Deed
There are many benefits to a seller in a BFD transaction. Here are 6 examples:
1. Advantageous Pricing & No need for appraised value limitations
The seller can sell the property for whatever the buyer is willing to pay.
2. Pricing negotiated solely between buyer and seller
The seller and buyer negotiate the sales price between themselves and do not have to concern themselves with the appraised value. The seller can also add other terms, such as the balloon payment after a specified term.
3. Seller can sell property that is dilapidated or hard to borrow against
A seller can also use a BFD to sell property that is dilapidated or for whatever reason has little value as collateral.
4. Collateral Value can be used for buyer to renovate then refinance
It can be difficult to sell the property where a buyer cannot obtain the necessary financing. The purchaser can repair the property and then acquire the financing to pay off the BFD.
5. In case of default, seller can quickly and relatively inexpensively reclaim property
Another benefit is that if a buyer defaults on their obligations, the seller can quickly and cheaply reclaim their property. Forty-five (45) days after the default letter is sent to the purchaser via registered or certified mail the owner may institute an eviction proceeding.
6.Much faster than foreclosure and less expensive than Sheriff’s sale
This is significantly faster than to foreclose on a credit sale or other form of a mortgage. It is also much cheaper than going to a sheriff’s sale.
Payments may be made directly to the seller if the property is not encumbered by a mortgage. However, if a mortgage exists then all payments must be made to a licensed escrow company, authorized to do business in Louisiana under the control of the Commissioner of Financial Institutions.
The payments shall be distributed by the escrow agent between seller and lien holder in such proportion as the received obligation bears to purchase price in order to ensure the buyer an unencumbered title when all payments have been made as provided in the BFD Contract.
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