Seller Financing

Why should you offer seller financing to your buyers? Let me give you an example. Many years ago I bought a rental property, and then realized I didn't want to be a landlord. So nine months later I sold it for 15% more than I paid, without fixing or improving a thing. The easy terms are what sold it. I took $1000 down, and years later, I still get a payment every month, with 9% interest.

Reasons To Offer Seller Financing

1. You'll get a higher price. The example above shows that buyers pay for easy terms. Think about it from my buyers perspective. He got a place for almost nothing, that the renters are paying for. He'll do great even if he later sells it for less than he bought it for. I love the return I'm getting, but if I need to, I can sell the contract for cash.

2. You'll get a decent return on your money. The 9% annual interest I'm getting is nice, but the true return was much higher, since I also sold the property for 15% more than I paid, and I get 9% on the entire balance. In fact, for a great return without the headaches of being a landlord, you can simply buy low for cash and sell high with terms. Of course this is for when you can tie up your assets.

3. You'll sell faster. In this case, I just called the buyer up, made the deal on the phone, and closed a week later. But anytime you expand the potential market for a property, you increase the odds of selling it faster. Seller financing definitely invites more buyers to look at your real estate.

4. You can sell difficult properties. With a property that's difficult to finance conventionally, offering seller financing may be the only way get it sold, and at a fair price. Mobile homes on property can be difficult to finance, for example, so your market is limited. If you instead raise the price 10%, and offer easy terms, you can usually quickly find a family that will be very happy to own instead of rent.

The ways you can sell are limited by mortgages and other loans, of course. I owned the rental free and clear, which meant I could sell it any way I wanted. There are other ways to use seller financing though, even if you owe on the property. There are ways to do this more safely too. However, those topics are for another article.