Four Reasons to Offer Seller Financing

By Steve Gillman - 2006

Here's an example of seller financing: Years ago I bought a small rental property, and nine months later sold it for 15% more, without fixing or improving a thing. Seller financing is what sold it. I took a $1000 down payment, and I still get money every month, with 9% interest.

Reasons To Offer Seller Financing

1. You can get a higher price. Buyers pay for easy terms. Why? Maybe they can't get financing, or don't want to tie up their cash. In the example above, the buyer got a place for almost nothing, that the renters will pay for. He comes out okay even if he later sells it for less than he bought it for.

2. You get a decent return on your money. The 9% I'm getting is okay, but the true return is much higher, since I also sold the property for 15% more than I paid, and I get 9% on the entire balance. For a great return without the headaches of being a landlord, you can simply buy low for cash and sell high with terms.

3. You may sell faster. Anytime you expand the market for a property, you increase the odds of selling it fast. Selling with easy terms invites more buyers to look at your real estate.

4. You can sell difficult properties. If you own a property that is difficult to finance conventionally, offering seller financing may be the only way get it sold, and get a fair price.

Of course the ways you can sell your property are limited by mortgages and other loans. I owned the rental free and clear, so I could sell it any way I wanted. There are more ways to use seller financing though, even if you owe on the property, and there are ways to do this safely too. Those, however, are topics are for another article.

If you are going to try selling it yourself, read the free ebook How to Sell a House -- now here on this site.

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