Owner financing often produces a winning situation for both the homeowner who is selling the property and for the buyer who is purchasing the property. Owner financing may be defined as the situation when a seller is willing to help finance a real estate transaction by creating a loan for the entire purchase if they own the home outright or by creating a loan for part of the purchase price when there is already an existing loan on the property.

There are several benefits to the seller/buyer when an owner financing is used. For one, the transaction may proceed more quickly and easily than when traditional financing is used because there are fewer companies thus fewer steps involved. For another, the seller is more apt to receive a higher sales price, and the seller will receive payments and interest over a long period of time. There are tax savings realized by selling under this installment plan. Additionally, the buyer will realize savings by avoiding loan fees and lender charges, and the negotiated interest rate will generally be lower than the available interest rates from a commercial lender. Also, for the 20% of prospective homebuyers who cannot qualify for a commercial mortgage loan, owner financing is a wonderful way for them to be able to own the home.

There are a few disadvantages to owner financing to consider. For one, if the buyer defaults on the loan the seller will have to initiate foreclosure proceedings. This can be costly. Of course, after the foreclosure the property can be sold again, an advantage for some owners and a disadvantage for other owners. Also, the interest income generated by the loan will be subject to taxes, which could be a disadvantage to a seller who is in a higher tax bracket. Additionally, the seller does not receive cash for their equity immediately, but rather will receive their equity in installment payments over time. This can be a problem if the seller needed funds to purchase another home.

TIPS: For the seller and the buyer to consider when negotiating an owner financed transaction. The seller should research the buyer’s creditworthiness and ask numerous questions to become confident that the buyer can fulfill their obligation. The buyer should provide a written explanation of any problems that appear on their credit report, as well as give a list or personal references. The buyer should research the local housing market and the condition of the home to become confident that the home is priced fairly and is without major problems. Also, the seller should verify that the new owner is making all insurance and property tax payments. A proof of payment provision should be included in the sales contract. Lastly, the seller should require the buyer to stay ahead on payments, even submitting post dated checks, so that the seller has confidence that foreclosure will not become necessary in the future.

Owner financing home sales can be a winning situation for both sellers and buyers. It is important however, that both parties do their due diligence in order to reduce possible risks. Owner financing is another tool that every real estate investor should have an understanding of.

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The markets move up and down in various formations and patterns. To be good as a trader / investor your job is to identify places to enter trades where price will continue or reverse in the direction you foresee. To help in the assessment of price direction we use various technical analysis indicators.

These tools may include moving averages, volume, overbought and oversold indicators and the like. For a select few, at the very top of the list of indicators is the Fibonacci tool-set. Not a replacement for anything you currently use, but a fantastic confidence builder when looking for low-risk entry.

In this article we will discuss Fibonacci extensions and Fibonacci retracements. The two most popular tools for assessing price direction and potential reversals. Both of these tools are critical if you want to have consistent and more accurate success trading the markets.

Fibonacci retracements refer to a corrective wave, and extension refer to an impulse wave. Meaning with the Fibonacci retracement tool we are measuring where price will retrace to before resuming the previous trend, and with extensions we are measuring where price will make a new high or low beyond its most recent high or low.

When we say retracement we literally mean retracing old territory. As it relates to a bull market a retracement is a measure of where price will fall to before resuming into the prevailing trend, or back into the impulse wave. With a bear market where measuring where price will move up to before resuming the trend.

Remember that the previous high is equal to 100% of the move from the last low to the current high. Now we measure the opposing correective wave and how far it will retrace into that 100% The most common and most consistent Fibonacci levels are as follows:

* 23.6% – This is the shallowest retracement level, very strong markets will only make it to here. * 38.2% – Fairly common retracement level, still a nice level. * 50% – This represents half of the previous move, and this is a critical point. * 61.8% – At this point you should question the strength of the trend. * 100% – This is where the entire move has been negated and the trend is exhausted.

After you take the measurement from the low and high any Fibonacci tool will lay out the retracements automatically. By default you should see your 23.6 through 100%. Once these levels are laid out all you need to is wait on price action.

When price reaches a Fibonacci retracement level and finds support and reverses our next step is to plan our exit. Once price goes beyond the 100% high in resuming the trend we look to the extensions of 161.8 and 261.8%.

In most cases when you lay down your retracements 2 extensions will automatically be laid out. You may have to adjust the screen to see them. Again we look to extensions for reasonable expectations provided we are still in the trend. Look to at least 161.8, and often 261.8 in stronger trends. A move from a 50% retrace to a 161.8 extension is generally a darn good trade.

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