Wholesaling Seller-Financed Deals in Virginia

The short answer

Can you wholesale a seller-financed deal in Virginia?

Frequently, when the contract lays out the financing and you tell the seller an assignment is possible, but repeated paid assignments may trigger broker-license questions. Let a Virginia attorney or settlement agent draft the note and security documents.

Here the seller stands in for the lender. A promissory note plus a security instrument, commonly a deed of trust in Virginia, is signed by the buyer, who then repays in installments. Your purchase contract spells out price, down payment, interest rate and length. See the contract guide for how these parts connect.

Installment land sales contracts fall under the state disclosure act alongside ordinary sales of one to four dwelling units, and another statute on residential executory contracts could apply to certain setups. Each may shape your drafting, so read the current text. Many deals include a balloon payment, which requires the buyer to have a refinance plan.

The opportunity

Why seller financing works in Virginia

Long-time homeowners are everywhere in Virginia, whether retirees around Great Bridge in Chesapeake or farm families near the Great Dismal Swamp. A number of them have paid off their houses. Holding a note against the property may offer steady income and possibly a gentler tax result than one large sale, though a tax professional should confirm. Buyers shut out by bank underwriting will often pay more for flexibility. Walk the seller through a payment schedule so the monthly deposits are easy to picture.

Lead sources

Where to find seller-financed leads in Virginia

• Free-and-clear owners. Land records often show homes with no deed of trust. See our owner search guide.
• Longtime homeowners. Those who purchased decades back frequently have no mortgage and want ongoing income.
• Land and rural sellers. Many land sales already use owner financing. See wholesaling land.
• Tired landlords. Landlords may prefer note income to tenant calls.
• FSBO listings. Some owners say they will carry. Learn to find motivated sellers.

Your exit

Who buys seller-financed deals in Virginia

Typical buyers include landlords hunting for a small down payment and investors turned down by banks. Monthly payment and length matter to them more than sticker price. Spell out who covers property taxes and insurance, which the buyer usually does.

Hire an outside servicer to take in payments and mail statements. Doing so shields the seller and leaves the buyer with a tidy record when it is time to refinance. If the seller later wants to cash out, the note investing guide covers selling notes.

Step by step

How to start wholesaling seller-financed deals in Virginia

1. Ask what the seller needs. Cover monthly income, upfront cash and timing.
2. Negotiate terms. Settle the price, down payment, interest rate, length and any balloon.
3. Check the rules. Review lending and executory-contract rules with an attorney.
4. Run the numbers. Use the ARV calculator and the MAO calculator alongside the payment.
5. Execute the contract. Get it signed and let the seller know an assignment is possible. Read assignment basics.
6. Draft paperwork. Get the note and deed of trust written correctly.
7. Finish at settlement. Choose an investor-friendly title company and arrange the servicer.

Picture a retired shipyard worker in Chesapeake with a paid-off brick ranch near Great Bridge. He wanted income but not tenants, and a conventional sale would have meant one big check and a hefty tax bill.

The price landed at $265,000, with $25,000 paid up front and the remainder financed by the seller at 6.5% and due as a balloon in year 7. A Virginia attorney drafted the note and deed of trust, and your contract noted that it could be assigned.

A nearby landlord took over the deal and paid you $12,500 for the assignment. Today a servicer forwards the seller roughly $1,517 monthly, a figure your seller net sheet showed him before he signed.

Virginia rules to know

Notes, disclosure and lending rules

The Residential Property Disclosure Act in Virginia covers sales, installment land sales contracts and lease-options on residential property with one to four dwelling units, and the owner’s form is a buyer-beware statement. A second law, the Residential Executory Real Estate Contracts Act, might touch certain installment deals, so talk to counsel about deed of trust versus contract for deed. The contract for deed guide lays out the alternative.

When the buyer will live in the home, federal ability-to-repay and loan originator rules may reach the seller, although some exemptions exist and they come with conditions. Separately, Va. Code 54.1-2100 may classify repeat paid assignments as brokerage; confirm the current wording with the Real Estate Board. Our attorney guide helps with finding counsel.

Learn it with a mentor

Structure terms that work

The details make or break these deals. Members of our mentorship group submit term sheets, and we work through the terms with them so every side is covered.

FAQ

Seller-Financed Deals in Virginia: common questions

Keep going

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