Understanding Your Role (And Limitations)
What OwnerFi Does NOT Do
Let me be clear upfront: OwnerFi does not underwrite, verify, or guarantee anything.- We don’t verify buyer credit or income
- We don’t inspect properties or verify condition
- We don’t verify title or property availability
- We don’t ensure legal compliance
- We don’t verify property information accuracy
Your Role as an Agent
Your responsibility is to:- Guide buyers through due diligence – Help them understand what needs to be verified
- Connect with professionals – Attorneys, inspectors, title companies
- Ensure compliance – Make sure the deal complies with local and state laws
- Facilitate transparent communication – Keep both parties informed and aligned
- Protect your clients – Recommend professional reviews before signing anything
Buyer Underwriting in Owner Financing
Owner financing underwriting is different from bank underwriting. Sellers typically care less about credit scores and more about the buyer’s ability to pay.What Sellers Typically Evaluate
Down Payment (Most Important)- Larger down payment = lower seller risk
- Shows real commitment from buyer
- Typical range: 10–25% of purchase price
- Proof of current employment or income source
- Recent pay stubs or income documentation
- Self-employment income (tax returns, business records)
- Multiple income sources (gig work, rental income, etc.)
- Can buyer afford the monthly payment?
- Evaluate total debt relative to income
- Sellers often more flexible than banks (no strict 43% limit)
- Rental payment history (if renting currently)
- Credit report (if seller checks credit)
- References from past landlords or creditors
- Is buyer rushing or making emotional decisions?
- Does buyer understand the terms?
- Red flags: inconsistent stories, pressure to close quickly
Buyer Verification Checklist (For You to Guide)
Income Documentation:- ☐ Recent pay stubs (last 30 days)
- ☐ W-2s or 1099s (last 2 years)
- ☐ Tax returns (last 2 years if self-employed)
- ☐ Offer letters or employment contracts
- ☐ Proof of additional income (rental, business, etc.)
- ☐ Bank statements (last 2 months showing liquid funds)
- ☐ Down payment proof (savings, gift letter if applicable)
- ☐ Debt documentation (car loans, student loans, credit cards)
- ☐ Credit report (if seller requests)
- ☐ Landlord references (rental history)
- ☐ Employment verification
- ☐ Personal references
- ☐ Buyer understands deal structure (seller finance, subject-to, etc.)
- ☐ Buyer understands balloon payment (if any)
- ☐ Buyer has plan for taxes, insurance, HOA
- ☐ Buyer comfortable with monthly payment
Red Flags in Buyer Underwriting
🚩 Income Red Flags:- Employment ending soon or uncertain
- Income claims don’t match documentation
- Recent job changes without verification
- Income seems inflated or exaggerated
- Down payment borrowed (not true savings)
- Down payment from gift with strings attached
- High existing debt relative to income
- Recent bankruptcy or foreclosure without explanation
- Rushing to close without understanding terms
- Unwilling to provide documentation
- Inconsistent stories or changing information
- Pressure from third parties or “help”
Property Due Diligence
Your buyers need to verify the property independently. Here’s what they must check:1. Title Search & Verification
Why It Matters: Confirms the seller actually owns what they’re selling and no hidden liens exist. What to Do:- Hire a title company to search public records
- Verify seller name matches legal description
- Check for liens, judgments, or claims against property
- Confirm no unpaid property taxes or assessments
- Review any easements, restrictions, or encumbrances
Timeline: 3–5 days
Document to Request:
- Title commitment or title report from title company
- Seller avoids title search
- Multiple liens or claims found
- Property taxes unpaid
- Owner name doesn’t match legal title
2. Home Inspection
Why It Matters: Identifies property condition, needed repairs, and potential safety issues. Gives buyer negotiating power. What to Check:- Roof age and condition
- Foundation and structure
- HVAC system functionality
- Plumbing and electrical systems
- Presence of mold, lead, asbestos
- Water damage or flooding history
- Appliance condition (if included)
Timeline: 1 day for inspection; report within 3–5 days
Document to Request:
- Full written inspection report from licensed inspector
- Seller won’t allow inspection
- Major issues found (foundation cracks, roof damage, structural problems)
- Seller minimizes serious issues
- Property appears to have been vacant or neglected
3. Verify Property Taxes & Insurance Costs
Why It Matters: Owner-financed deals have NO escrow account. Buyer pays taxes and insurance directly. Buyer needs to know exact costs. What to Verify:- Annual property tax amount (call county assessor)
- HOA fees (if applicable)
- Homeowners insurance quotes (call 2–3 companies)
- Any special assessments or liens
- Last year’s property tax bill
- HOA documents and fee schedule
- Recent property assessment
Timeline: 3–5 days Red Flags:
- Property taxes unusually high or low
- Unpaid property taxes discovered
- HOA with serious issues or special assessments
- Inability to obtain homeowners insurance (rare, but possible)
4. Verify Financing Terms & Structure
Why It Matters: Buyer needs to understand exactly what they’re buying. What to Verify:- Deal type: Seller finance, subject-to, contract for deed, lease-to-own?
- Interest rate (get in writing)
- Loan term (how many years?)
- Balloon payment (if any) and when due
- Monthly payment amount
- What happens if payment is late
- Can buyer pay off early? (prepayment penalties?)
- Is deed transferred immediately or later?
- Promissory note (loan document)
- Deed of trust or mortgage (security document)
- Purchase agreement
- Seller financing addendum
- Terms keep changing
- Nothing in writing
- Seller won’t provide documents
- Terms don’t match what was initially discussed
5. Check Zoning & Legal Use
Why It Matters: Confirms buyer can use property as intended (primary residence, rental, business, etc.). What to Verify:- Zoning classification (residential, commercial, mixed)
- Permitted uses in that zone
- Any restrictions on rentals or business use
- Planned area developments or deed restrictions
- Contact local city/county planning department
- Ask for zoning verification letter
- Review property deed for restrictions
Timeline: 3–7 days Red Flags:
- Property zoned differently than buyer expects
- Restrictions on rental use
- HOA forbids certain uses
6. Environmental & Hazard Checks
Why It Matters: Some properties have environmental issues that affect value and insurability. What to Check:- Flood zone status (FEMA flood map)
- Hazardous materials (lead paint, asbestos)
- Underground storage tanks
- Proximity to landfills, industrial sites
- Past environmental violations
- FEMA Flood Map tool (free online)
- EPA environmental databases
- County environmental records
- Home inspector (includes lead/asbestos screening)
Timeline: 3–5 days Red Flags:
- Property in flood zone without disclosure
- Environmental contamination history
- Inability to obtain flood or hazard insurance
7. Verify Property Availability & Seller Willingness
Why It Matters: Just because property is on OwnerFi doesn’t mean it’s still available or seller will finance. What to Confirm:- Property is still listed/available
- Seller is actually willing to finance (not just listed that way)
- No other pending offers
- Seller still owns property (hasn’t sold it)
- Contact seller or agent directly
- Ask for written confirmation of financing availability
- Confirm seller still owns (title check confirms this)
Timeline: 1–2 days Red Flag:
- Seller says property isn’t available
- Seller won’t confirm financing willingness
Due Diligence Checklist for Buyers
Before Making an Offer:- ☐ Viewed property in person or via video walkthrough
- ☐ Property price checked against comparable sales
- ☐ Neighborhood researched (schools, commute, crime, growth)
- ☐ Title search completed; no liens or issues found
- ☐ Home inspection completed; results acceptable
- ☐ Property taxes and HOA fees verified
- ☐ Insurance quotes obtained
- ☐ Financing terms in writing; buyer understands them
- ☐ Zoning verified; property use aligns with buyer’s plans
- ☐ Environmental checks completed (flood zone, etc.)
- ☐ Attorney review completed
- ☐ Final walkthrough 24–48 hours before closing
- ☐ All contingencies satisfied or waived
- ☐ Down payment ready (cashier’s check or wire)
- ☐ Homeowners insurance binder obtained
- ☐ All documents reviewed by attorney
- ☐ Closing disclosure reviewed; numbers match agreement
Typical Due Diligence Timeline (Owner Financing)
| Days | What Happens |
|---|---|
| Day 1 | Offer accepted; due diligence period begins |
| Days 1–3 | Title search ordered and delivered |
| Days 2–4 | Home inspection scheduled and completed |
| Days 3–5 | Property taxes, insurance, zoning verified |
| Days 5–7 | Attorney reviews all documents |
| Days 7–10 | Any issues discovered; renegotiations if needed |
| Days 10–14 | Final walkthrough; closing preparation |
| Day 14 | Closing (sign documents, transfer funds, get deed) |
Documents Buyers Should Receive & Review
From the Seller/Agent:
- Purchase agreement (signed by both parties)
- Promissory note (loan document with all terms)
- Deed of trust or mortgage (security document)
- Title commitment (proof of clear title)
- Disclosure of property condition
- HOA documents (if applicable)
- Property tax records
From Professional Service Providers:
- Title search report (title company)
- Home inspection report (home inspector)
- Insurance quotes (insurance agent)
- Attorney opinion letter (real estate attorney)
At Closing:
- Closing disclosure (final numbers)
- Deed (proof of ownership transfer)
- Recorded deed of trust (security recorded)
- Title insurance policy (buyer’s protection)
- All signed closing documents
Your Role in Guiding Due Diligence
As an agent, help buyers understand: Timeline: Due diligence typically takes 7–14 days (faster than traditional mortgages). Responsibility: Buyer’s obligation to verify independently—you help coordinate, but professionals do the work. Contingencies: Most deals are contingent on satisfactory inspection, title search, and appraisal. Red Flags: If something seems off, pause and investigate rather than rushing to close. Professional Help: Encourage buyers to hire professionals (attorney, inspector, title company) rather than trying to DIY.Compliance & Legal Requirements
Key Legal Standards
Written Documentation: All terms must be in writing (promissory note, deed of trust, purchase agreement). Disclosure Requirements: Seller must disclose known property defects and financing terms clearly. Title Requirements: Buyer should have clear title with title insurance. State Laws: Requirements vary by state (Texas, Florida, Georgia have specific rules). Federal Compliance: Dodd-Frank Act requires verification of buyer’s ability to repay (for some transactions).Your Responsibilities as an Agent
- Know your state’s laws: Texas, Florida, Georgia have specific owner financing rules.
- Recommend attorneys: Always encourage legal review.
- Document everything: Keep records of all communications and agreements.
- Disclose your role: Be clear about your representation (buyer’s agent, listing agent, etc.).
- TCPA Compliance: Honor all “Do Not Call” and opt-out requests.
Next Steps
Ready to guide clients through sound underwriting and due diligence?- Referral Agreements — Understand your commission and responsibilities
- Protecting Your Buyers — Guide clients through safe transactions
- Deal Structures for Agents — Understand seller finance, subject-to, contract for deed, lease-to-own
- TCPA Compliance Guide — Stay compliant in all communications
Support: Questions about underwriting or due diligence standards for a specific deal? Email support@ownerfi.ai and we’ll help you think through it.