Seller financing in real estate is a simple way to help or get a property sold. Seller financing is when the seller of a property also finances (also known as carrying the note) the purchase for the buyer. Typically the property is owned outright by the seller. The benefits to seller financing for both the buyer and seller are many.
As a seller, financing allows:
- More buyers are available to buy when you offer them financing.
- By charging an interest rate you give yourself additional ROI on the transaction. (Seller financing typically carries a 2% to 5% higher interest rate than normal bank financing.)
- If the buyer fails to make the mortgage payments you will have to foreclose, but you get the property back. Foreclosure works just like a