Seller Financing

[Rigo Medina]

Would someone help me understand why someone would want to seller finance a home they are trying to get rid of? If I was selling a home, I would want my cash now and would not want to be tied to the house or loan for the next 15-30 years.

Or are people doing seller finance for 2-5 years and then the investor sells the house?

[Account Closed]

I've purchased two properties with seller financing.  One was a raw 2 acre parcel, the other a condo.

Both sellers were having a hard time selling their properties, and both owned them free and clear.  I think both of them would actually have preferred to be bought out, but they couldn't find anyone to do so.

The land wasn't selling because the locals hated the guy selling it LOL.  Not kidding.  

The condo wasn't selling, because the market had crashed - it was about 1995 in Davis, CA.  Also, it's hard to get financing for a condo for buyers, because the banks usually want a large downpayment.  Plus, this condo complex allowed a large percentage of rental units, and the banks also don't like that.

The land contract was for 10 years, if I remember correctly.  I improved it and sold it a few years later and paid off the seller with the proceeds.

The condo owner let me pay on a 30 year contract, so the payments would be low - but with a 10 year balloon payment, so they would be paid off in 10 years.  I also sold that condo in just a few years and paid off the owner with the proceeds.

And other than condos not being liked by the banks, other properties just can't get bank financing because of some problem with the property or buildings.  So, you're basically buying an as-is property with problems - and you might have to seller finance it when you are ready to sell it, because of whatever the problems might be.

Examples would be - building built without permits, or other work done without permits.  Or it's in a flood zone, etc.