Whereas in previous years when buyers would pay cash in full for the property they were buying, in today’s climate property sellers are being more flexible to achieve a sale. 

One of the main head winds Phuket’s property market faces is that the majority of foreign buyers do not live here all year round. When a buyer comes to Thailand, they may not have all of the funds available to them to make a purchase on that trip. This can be for many reasons: they are waiting for a bonus to be paid, a business deal to complete, another asset sale etc.

Unfortunately for foreign buyers, no facility exists to obtain a mortgage or bank loan to fund a property purchase here. Therefore without a source of finance, the buyer must wait until subsequent visits to Thailand until they have the full funds available to make a purchase.

For buyers wanting stage payments there has always been the option of buying off-plan and spreading payments throughout the construction period. In more recent years it has become commonplace for property developers to offer short-term finance, typically 1 to 3 years on up to 50 per cent of the purchase price.

Now for the first time in Phuket, through Siam Real Estate’s Vendor Financing terms, private sellers are offering buyers stage payments on property purchases.

Vendor Financing terms are where a seller will accept a down payment, typically 50 per cent of the purchase price, with affordable repayments over 1 to 3 years. The seller retains legal ownership until payments are complete and there is a legally enforceable contract between buyer and seller. Property ownership documents are held in escrow by a lawyer ensuring the property cannot be sold to another party. Should the buyer cease to make payments then the property ownership remains in the seller’s name. This is very similar to a bank loan/mortgage, without the bank fees, and will help buyers to purchase a property sooner than they otherwise could.

Benefits of Vendor Financing:

• Increase the chances of selling your property
• It is not possible for a foreigner to get a bank loan on property in Thailand
• Enables buyers to purchase earlier: Buyers may not have 100 per cent of the purchase price on their current visit
• Flexibility for buyer to pay early with no penalties and reduce interest charges payable.
• Security for buyer and seller: Lawyer safeguards property deeds, ownership not transferred until payments are completed
• Buyer default: seller retains down payment and property
• Buyer takes possession of the property upon down payment: can move in or start renting out the property