Seller Financing

Seller Financing Definition

Seller financing or owner financing means the seller agrees to finance the buyer’s purchase of real estate instead of having the buyer get a loan from another lender and pay the whole amount to the seller at closing.


Seller financing functions similarly to that of a real estate transaction with a traditional mortgage, except the seller is extending financing to the buyer without the involvement of a bank or other lenders.

In a seller financing transaction, the buyer agrees to make monthly installment payments to the seller for the term of the loan.

In seller financing, the seller takes on the active role of a lender, and the buyer signs a promissory note that outlines the terms of the loan.

The closing costs for a buyer in a seller financed transaction is usually a lot lower than in a traditional real estate closing.


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