Seller Financing Benefits

Seller financing is when the person who is selling the home to the buyer helps the prospective buyer to finance a real estate transaction without the buyer having to obtain a loan from a bank or loan company. Normally this is done because the buyer cannot afford to finance the deal and has been unable to attain a loan from a loan company or from their bank.

Benefits

While the obvious benefit lies in the fact that the home seller is able to sell their home via this route, which may not have been possible, had they not agreed to finance the buyer through seller financing, there are also other benefits that can be gained from seller financing of the buyer.

A seller can finance the buyer by one of two ways: taking back a second note or financing the entire purchase.

Seller financing can offer the seller of the property tax breaks, as well as allowing the buyer an alternative form of financing after not being able to qualify for a usual loan.

While the tax breaks are great for the seller, they are in effect acting as a bank or loan company manager when they take out the agreement to purchase the property for the buyer. With this responsibility comes risk, and these are the same risks as those facing any lender: I

Questions

No matter who the buyer is, you should always ask yourself the following questions.

Is the borrower is a good credit risk or a bad one? Will the property hold enough value over time to allow for the repayment of all loans made against it?

To find out the answers to, or supplement what is already know, you should always run a full credit check on the buyer (borrower). Financing, disclosure and repayment-term requirements also need to be finalized and it is intelligent to consult an attorney.