Seller-Financed Real Estate Deals

Being a buyer, you will find it difficult to get a mortgage when you find that you will run out of your budget if you make that deal, especially when you are on a job and have a stable carrier. And being a seller you can find difficulty when the buyer wants to buy your home, and he also agrees on the deal that you have put in front of him, but he is having trouble regarding the approval of loan from the bank or any other company that he approaches.

Don’t you think that it will be great if you throw the third party out so that you can make your deal? This can be done by an option which is called Seller Financing.

Seller Financing:

Seller-Financed Real Estate Deals


First of all, the question arises that what is seller financing? It is similar to take a loan from a bank but with your conditions and terms. In this the seller and buyer make a contract in which the buyer has to pay the down payment (that is settled between the buyer and the seller) and then the buyer has to pay the monthly mortgage payments (that is also settled between them) and also the interest to the seller who has been set. The seller can as well put a redeem for breaking any rule by the buyer. The seller can in addition sell his contract to another person than the buyer has to pay his payments to that person.

These types of contracts are for a short time period like for five years so that the buyer can pay the loan with interest and if the buyer is showing carelessness then it can be a law breaking situation.

Seller financing is common in those markets which have these two situations.

  • When someone is having a financial crisis, and he wants to sell his home than the seller goes for options like seller financing.
  • Where mortgages are easy to get but unluckily buyer is not able to get any and then seller doubts on the buyer, that how he is going to pay for the deal OR where loans are difficult to get and the buyer is agreed on the deal but having difficulty regarding finance.

Seller Financing Is Not So Common:

Sellers most probably have issues that they want to make a full transaction rather than completing in a time period so that they can buy another home.

However, Robin Daniels, a real estate investor and landlord in central Florida, says ‘that seller has the right that they can sell their contract to anyone even on the day of their contract, so there is no need for sellers to wait if they want to make another deal with someone else for their next home’.

Another reason of seller financing not so common is that people are unaware of this as Don Tepper of Solutions 3D LLC says, ‘that there are dozens of ways to make a deal happen but the real estate agents, buyers and the sellers are unaware of their actual usage’.

Why A Seller Should Offer Financing?

Seller Financing

There can be many reasons for that a seller should offer financing like the seller wants to minimize the carrying costs so that whenever he finds the buyer whom he was looking for, he can make the deal then.

  • Or so that he can pay down the debt on him.
  • Or to run away from the monthly expensive of that house like billing, taxes and, etc.
  • Or to buy another property from the down payment he gets and can enjoy the monthly mortgage.
  • Or to cause a change in his property from other properties where the market is down.

Seller financing just not only gives benefits to the buyers but also to the sellers in many ways and especially to those who are regular house sellers, who just build houses only to sell them.

Some Of The Advantages For The Buyers:

  • The biggest advantage for the buyer is that he can set the down payment that is in his budget with having a full conversation with the seller. Which means that there is no convention that buyer has to pay 30% as a down payment or whatever the policy of that organization is, but he can settle down the down payment with the seller.
  • The process of your deal can be as fast as you can because in this process when the buyer and seller are ready, then they can make the deal happen right on the spot, there is no need for them to wait for a bank or company officer or any of the men from the legal department.
  • Buyers don’t have to pay the bank fees or any other fees to any officer. He just has to pay for his contract only.

Some Of The Disadvantages To The Buyers:

Some Of The Disadvantages To The Buyers

  • Buyer must have a confirmation that there is not any kind of due on that property because if the deal happens and after that the organization that has put the due on that property will ask from the buyer to pay the due.
  • The seller can sell his contract or promissory note to any other person but that is not a big deal if the buyer is going with the schedule.
  • Buyer must have a good reason that why he is going for the option of seller financing so that seller can trust him and lend him money otherwise the seller won’t trust the buyer and will not make him to go with the option of seller financing.
  • There is a possibility that buyer has to pay a more interest rate than he has to pay anywhere else.

If you think seller financing is the right option for you then how to make it happen?

  • Being a seller you should tell the whole process thoroughly to the buyer so that you don’t face any problem in the future.
  • Being a buyer you should make a comfortable scene for the seller to understand that why you want to go with this option because it can happen that you are a potential buyer, and you want to go with seller financing then make the seller understand the full situation, for example, that you have started a new business that is why you can make the whole payment right in few days that is why you have considered this option.
  • Being a buyer, if you think that seller financing is the right option to you then you can make an adjustment with the seller by presenting him your deal in the right and accurate way so that he  gets a good impression about your deal and considers seller financing as a way-to-go option.
  • Being a seller, you just have to add these words in your list that “seller financing is available” that will let the agents of the buyer to know for your unique option.
  • Being a seller you should put a note outside your property regarding the deal and the kind of seller financing that you have offered so that the buyer can get a full idea about that because most of the people have no idea about seller financing.

As seller financing is not so common so the buyer and the seller first go to the consultant that has the proper idea about seller financing so that both can get full awareness about the deal that they want to make.

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