Seller or owner financing is an exchange in which the financing for a real estate purchase is provided at least in part by the seller of the property.
A seller of property may decide to serve as the financing entity in lieu of a third party lender for many reasons, including inability of the purchaser to obtain conventional financing, the purchaser’s desire to sell property quickly, or seller financing being a part of a larger business plan, among many others. In order for the seller to act as lender, however, it is important for the seller to follow many of the same procedures a conventional lender would follow in order to protect his interest in the property. Failure to do so can result in loss of a significant investment. However, seller financing may offer the purchaser and seller more flexibility in terms of the loan and closing procedures. Sellers contemplating seller financing are well advised to consult an attorney before agreeing to seller finance their sale, and often, those new to seller financing may need consultation during the term of the debt.