Benefits of loan assumption for Seller and Buyer
For Seller:
Reduced Costs
Whereas a traditional real estate sale will cost the seller of a property 6% (on average in San Diego – 5% commissions and 1% transaction costs), an assumption through Providwell will generally shift all of these costs to the buyer. This allows the seller to sell when they have minimal equity – without coming out of pocket.
No annoying showings
We do all property related photography, marketing and assessment up front. A potential buyer has all the necessary and relevant info before they ever see the property. The seller will generally only need to show the property to one buyer- after there is an accepted offer.
No appraisal (no valuation concern)
Assumptions do not require an appraisal. The buyer bases the acceptability of the dal on the monthly payment, down payment and total payments overall versus alternative properties on the market.
Property condition not an issue
With no appraisal or home inspection review by underwriting, any property related conditions stay between buyer and seller. These are factors that could scuttle a traditional transaction.
Potentially improve bottom line (premium for including mortgage). Some transactions can yeid a premium for including the underlying financing in the transaction. There is a formula to determine how much extra the seller can get.
Reduced Fall out (terms are that good).
Due Diligence is done before the contract is signed. There won’t be unforeseen condition related items, last minute requests for repairs or renegotiations between buyer and seller. The deal is so significantly superior to traditional market properties that the buyer has additional motivation to perform.
For Buyer:
Lower Monthly payment
Providwell’s assumption deals start with an assessment of the transaction that the buyer can use to compare to other market properties. The monthly savings versus a similarly priced property ate generally 15-20% less.
Less paid overall
With a lower interest rate, the buyer will pay significantly less for the property versus comparable purchases. Additionally, the loan being assumed is already part way through the amortization schedule – so instead of 360 payments remaining, the loam might only have 340. This dramatically reduces the total paid over the life of the loan.
No bidding wars. The transaction terms are set before the deal is presented to buyers. An eligible buyer who enters into contract knows exactly what they are getting. There aren’t bidding wars that pit buyers against each other.
No appraisal
Property valuation is a non issue. No appraisal is required and the value to the buyer is set by the monthly payment and total paid in relation to comparable properties on the market. This means now low appraisals creating problems, no conditions called out which might render the property ineligible.
Property conditions wont render property ineligible
Before the property is presented to a buyer, we collect the prior Seller Property Questionnaire, a current Property Questionnaire and an independent home inspection. The potential buyer knows everything the seller knows as well as an independent assessment of the condition of the home, systems, etc. No additional requests for repairs or renegotiation.
