Investor Nation: Now

What Is Seller Financing?

Seller financing is when the owner takes a second note, or even finances the entire purchase of the property in order to assist the seller in financing a real estate transaction. Usually sellers will offer this option when a buyer has difficulty qualifying for a conventional loan or meeting the 20-30% required bank down payment. Seller financing differs from a traditional loan because the seller does not give the buyer cash to complete the purchase, as does a lender. Instead, it involves extending a credit against the purchase price of the home while the buyer executes a promissory note and trust deed in the seller's favor. 3 Reasons Seller Financing is more attractive thank bank financing:

• Closing fees are less than conventional bank fees.
• Down payment is less.
• Flexible terms.

The following would be an example of a typical owner finance terms: • 5% owner finance fee • Initial down payment of at least 5%-10% of the sale price • Fully amortized term between 24 and 120 months • Interest rate of 8 to 20% In a buyers market, sellers can take advantage of this strategy and the outcome will be both beneficial for both the buyer and seller.