How to represent yourself in some seller financing situations
Generally, when offering seller financing on a loan I do not represent myself as the owner. This may not work in every situation, but when I have to take a property back, whether through foreclosure or deed-in-lieu, and then I sell the property with seller financing and create another note, I represent myself as the loan officer of my company instead of the owner of the asset.
Why?
Great question.
Don’t Get Too Attached & Protect Yourself
I had a mentor who once told me when managing rental properties you want to either use a property manager or represent yourself as the property manager, but never the owner.
- From her experience, when she represented herself as the property manager, her renters didn’t take advantage of her as easily. For example, renters who asked for expensive upgrades, or had a sob story for not paying rent, or those who tried to take advantage, would go through the property manager to settle the issue. Since she was acting as a property manager, she would simply say, I will ask the owner. Then she had no issue telling them that the owner did not approve it.
It allowed her to separate herself from the renter, providing a bit more leverage to say “no” when outrageous requests were made or legal action had to be taken. - Secondly, not representing yourself as the owner provides a level of anonymity so people do not know who you are or can look up your personal information. Even if they look you up, there should be no connection between you and the asset.
- Lastly, it makes it easier to pass the borrower off to the servicer and not be directly connected to you –the owner– after the transaction is complete and the loan is boarded. I will usually send an email closing out the relationship (loan officer to borrower), and introducing them to the servicer and letting them know that they can communicate with the servicer moving forward.
What If I’m Using a Realtor?
Another great question! If you are using a realtor then you don’t have to represent yourself as the loan officer; however, the realtor can represent your company instead of you as the individual. That still provides a sense of anonymity. Even though your name may be on the documents when it comes time to sign, you should be listed as the managing member or you could have power of attorney, etc…Whatever the case, the buyer does not know anything other than you are a representative of the company.
Conclusion
Whenever you are offering seller financing, do your best to represent yourself as a loan officer instead of the owner of the asset. It places a buffer between you and the buyer, provides anonymity, and shows a level of professionalism.
