- 1). Agree on a purchase price for the property. Buyers and sellers may elect to get an independent appraisal; this approach ensures fairness and proper documentation.
- 2). Agree on deal terms. Buyers and sellers must agree on the down payment, the interest rate, how long the seller-financed period will last, and what percentage of the payment will be applied toward principal. Buyers should be prepared to pay all property taxes and maintenance fees on the home, unless agreed otherwise.
- 3). Hire an attorney to review the deal, collect the down payment and schedule a close. Both sides must hire experienced representation who will check the deal for potential problem areas.
- 4). Attend the close, and transfer the down payment to the seller. Sign all documents, and keep a copy for yourself. If necessary, hire an escrow agent to collect payments, including taxes and property insurance premiums. The escrow agent also will be responsible for issuing year-end tax statements.
- 5). Record the deal in the county or town clerk's office. The deed stays in the seller's name until the loan is paid in full, either in cash or via refinancing at the end of the term.
- 6). Pay the balance due in full at the end of the term, which sometimes lasts as long as 10 years. The deed is then transferred to the buyer.
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