Will Seller Financing be a bigger thing now with higher rates?

[Alejandro Ferro]

As an agent I see quite often this opportunity missed being presented to clients and sellers.  I am not sure why it is not more common in the residential field when there are a lot of opportunities being missed simply by not mentioning the seller financing option. If you are an agent is this something you bring up to your clients? 

There are a number of benefits for homeowners who sell their homes via seller financing. Not only can they avoid paying capital gain taxes in a lump sum, but they can also make a return on their investment. In addition, the buyer can get into a home without having to go through a bank. This article will explore all the benefits of seller financing and why it is becoming an increasingly popular option for both homeowners and buyers.

As a homeowner, one of the biggest benefits of seller financing is that you can avoid paying capital gain taxes all at once. If you sell your home for more than you paid for it, you might owe capital gain taxes on the difference. However, if you finance the purchase for the buyer, you can avoid this immediate tax implication. In addition, you can make interest on the equity and have a bigger return than taking a lump sum payment at settlement. By going through the homeowner instead of a bank, buyers can avoid a lot of the hassle and red tape that can come with getting a mortgage such as appraisals and inspections. Although still recommended to get it is not a requirement.

This has made seller financing an attractive option for buyers as well. By providing the financing yourself, you are able to work with the buyer on the price and terms of the loan. This can help you sell your home faster and for a higher price than if you were to go through a bank.

In the current market, with the current interest rates, the banks are standing to make the most money, not the consumer. Seller financing shifts that balance as the seller can make that interest and charge a more attractive rate than traditional banks. In a traditional home purchase, the buyer has to go through a bank to get a loan. This can be a lengthy and complicated process, especially if the buyer doesn’t have perfect credit. With seller financing, the buyer can bypass the bank entirely. The seller will make more money than they would in a traditional savings account, the money is secured by real estate, and the buyer is getting more attractive terms than going to a bank.

Seller financing is a great option for both homeowners.

Another big benefit is that you act as the bank. This means that if the buyer doesn’t make their payments, you can foreclose on the home and keep any payments that have been made until that point. Your funds are secured.

There are a number of benefits for both homeowners and buyers when it comes to seller financing. If you’re considering this option, be sure to consult with a financial advisor to see if it’s the right choice for you.

Thoughts?