When selling your home, you may find yourself in a situation where you want to offer seller financing. In this type of situation, you become the lender and offer the buyers enough credit to purchase the house. Seller financing does not mean the seller loans out money, but instead it is about credit and giving the buyers a chance to pay for the sale.
1. The Seller Saves on Cost – If you use a real estate agent, there are closing costs that the seller has to pay out. If, however, the seller carries out the transaction on their own they will be able to keep a higher amount of the money earned. Seller financing can help the seller save on capital gains tax and allow them to keep more of their profit.
2. Faster Transaction – Overall, real estate deals can be months in the making and can take even longer to fully close. Seller financing can allow deals to close within two weeks. As this is a transaction between two parties, it can go faster and not get bogged down in appraisals and other mandatory things.
3. Real Assets – In the case of seller financing, the seller will have their assets tied up in a physical property rather than paper assets. This can benefit the seller if they are moving towards retirement. Instead of receiving one big sum of money, the seller instead is receiving many payments over time, allowing there to be a slow growth and steady income.
Seller financing is a great option if both parties are interested in working together. If you are the seller, you should work closely with a notable firm to make sure you understand your rights and legalities. Working with a firm will help to ensure you and the buyer get the best deal possible.
